Report: Housing construction collapses in San Diego County – The San Diego Union-Tribune

Homebuilding was down across Southern California in the first three months of 2017, but nowhere more than San Diego County, said a Real Estate Research Council report released Monday.

Residential building permits were down by 10 percent in the seven-county region compared to the same time last year and 37 percent in San Diego County.

It follows a trend that has worried local industry watchers for months, but might not be as bad as it sounds.

The biggest drop in San Diego County, 50 percent, was in multifamily construction apartments and condos but theres a catch. There were a lot of multifamily projects that began construction at the end of last year and could be a major reason for fewer permits being pulled at the start of this year.

Russ Valone, president of local industry tracker MarketPointe Realty Advisors, said there are roughly 3,100 units now in some stage of being built.

There was quite a bit of stuff started last year that is still in the construction cycle, he said. (This quarters numbers) might be a bit of a fluke.

Another potential for the slowdown is investors are concerned that rent has gone up too quickly. Valone said lenders are getting more cautious out of fear the market is getting overbuilt.

San Diego Countys rent went up the most in Southern California in the past year, said the Research Council, using rental estimates from Novato-based real Answers .

Data from real Answers showed average rent in San Diego County had increased 11 percent in a year, more than any other Southern California county. It was followed by Riverside County at 9 percent; San Bernardino County at 8 percent; Orange, Los Angeles and Ventura counties at 7 percent; and Santa Barbara County at 5 percent.

Estimates from real Answers are higher than other regional trackers that have San Diego County rent increasing 5 percent to 8 percent in a year.

Theres a little concern out there they are pushing the (rental price) envelope a little too much, Valone said.

Lastly, multifamily permits can be erratic because one building could mean an increase of 400 permits, as opposed to just a handful of single-family houses.

The only Southern California counties that showed an increase in residential permits in the first quarter from the same time last year were San Bernardino, 7 percent, and Riverside, 27 percent.

When it comes to the traditional house, Riverside County continues to be a standout in Southern California.

Riverside County had the second-highest number of single family permits pulled, 1,181, with Los Angeles County leading the pack at 1,252. San Diego County had 590 single family permits in the first quarter.

Alan Nevin, apartment industry analyst at Xpera Group, said San Diego County will have a stronger second half of the year because of single-family housing projects in Otay Ranch. Developers Baldwin and Sons, Shea Homes and Cornerstone Communities are all working on projects there.

Thats going to have a major effect on our numbers, he said. We will get better in the second quarter.

San Diego retail and office building permits were also low. Just 10 retail permits were pulled in the first quarter, down from 23 at the same time in 2016. No permits were granted for office buildings, down from 18 in 2016.

Industrial and hotel permits were up in the first quarter. There were 39 industrial permits in the first quarter, up from 10 in 2016, and 70 hotel/motel permits, up from 13 in 2016.

* * *

Residential building permits in the first quarter 2017

(County, number of permits and percentage change from first quarter 2016)

Los Angeles County: 4,313, -11%

Orange County: 2,258, -12%

Riverside County: 1,502, +27%

San Bernardino County: 1,383, +7%

Ventura County: 351, 0%

San Diego County: 1,409, -37%

Santa Barbara County: 125, -20%

phillip.molnar@sduniontribune.com (619) 293-1891 Twitter: @phillipmolnar

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Report: Housing construction collapses in San Diego County - The San Diego Union-Tribune