May 17–California developers filed 30 percent more building permits already this year, but that’s not making much progress.
Permits statewide were filed to build 28,352 residential units across the state in the first quarter, the third-largest tally among the states, according to Census Bureau stats. Building permits are seen as a solid indicator of developers’ construction plans.
My trusty spreadsheet tells me this is a noteworthy jump. California permits were up 6,480 units vs. 2017’s first three months, the biggest gain in the U.S. And, FYI, California’s surge equaled one-third of total permitting increases nationwide.
Even when you consider California’s economic heft, the 30 percent jump in permits to start 2018 was the ninth-largest jump in the U.S. on a percentage basis. Permits nationwide grew 6.8 percent in the same period.
But let me temper this growth story with a reality check. The good news: California employers continue to hire briskly! The bad news: Bosses in the state are adding workers faster than California’s developers can build.
In the 12 months ended in March, federal job stats show 321,000 new jobs in California, No. 1 among the states. Even on a percentage basis, California’s 1.9 percent job growth ranked No. 10 nationally and topped U.S. job growth of 1.5 percent.
But the building speed and the hiring pace are a mismatch.
Ponder that California’s share of U.S. hiring in the past year was a noteworthy 15 percent. Then note that the state’s share of nationwide permitting was a relatively lackluster 9 percent.
Or look at the building gap this way, assuming California developers continue to file permits at their first-quarter pace for the rest of 2018: For every 2.8 California jobs created in the past year, there will be just one new housing unit in the works. The national pace was 1.8 new workers for each planned unit.
California ranked sixth-worst among the states when linking employment growth to residential construction plans. Rhode Island — at 6.3 jobs per permit — was the poorest performer, followed by Pennsylvania at four hires per unit; Michigan at 3.8; New York at 3.4; and Massachusetts at three per unit.
This hiring-to-building imbalance is why it’s likely that — until California bosses stop boosting their staffs (not a good thing) or homebuilding ramps up massively (unlikely) — the price of ownership and rental options will remain pricey for state residents.
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This article provided by NewsEdge.