No new homes?

Green Escrow | New Construction

In the nine-county Bay Area – over 7 million people – only 266 new homes, townhomes, and condos were sold in January of this year. This is the lowest total in at least 20 years according to CoreLogic.

And the trend continues: new home sales were down in July by 9 percent over 2018.

While prices are high, demand remains strong but the outlook for new housing is not good. Permits for new construction are down nearly 50 percent in San Mateo County, 30 percent in Alameda County, nearly 10 percent in Santa Clara County and 7 percent in Contra Costa County.

New housing to account for sea level rise

Green Escrow Services | Adding value to home

A new development at Monarch Bay in San Leandro is taking into account significant sea level rise in the coming decades. Cal-Coast, based out of Los Angeles, will submit an application to San Leandro calling for 485 homes, a 220-room Hyatt Hotel, two restaurants and a 25-acre park on a 52-acre plot of land near the waterfront.

When the project first came to light in 2012, the San Francisco Bay Conservation and Development Commission (BCDC) raised concerns over a possible 65 inch sea level rise over the years.

Cal-Coast amended their proposal, pushing the homes more than 100 feet from the shoreline, and thus, out of the jurisdiction of the BCDC but still plan to elevate the homes,

New Home Construction

Green Escrow | New Construction

Despite the low inventory of home for sale and the high demand, new home construction is up only marginally from 2017. Why? According to the National Association of Home builders (NAHB) there are several reasons:

  • Shortage of labor: Despite low overall unemployment, the housing industry has only recovered 50 percent of the jobs lost during the recession
  • Higher lumber prices: As of Feruary, lumber prices were up 45% year over year, which will only get worse due to the new tariff on Canadian lumber
  • Shortage of available lots: 65% of home builders say that land shortage is a major constraint on the construction of new homes
  • Regulatory costs: Government agency costs have risen over 29 percent since 2011
  • Available financing: Since the recession, lending standards have been tightened for both homebuyers and builders of multi-family projects. This may be easing.

New Construction Coming – Maybe

Green Escrow | New construction, housing

All the conditions seem to be in place: steady economic and job growth, low interest rates, and an ever-increasing demand; so why isn’t more construction of single-family homes? According to the National Association of Home Builders a shortage of available lots, lack of qualified labor and continued tight access to construction and development loans remain stumbling blocks.

Nevertheless, NAHB is predicting single-family home construction will increase by 14 percent in 2016 to 812,000 and then rise another 19 percent in 2017 to 964,000 units.

All signs suggest that millennials’ goal is to purchase a single-family home in the suburbs. Builders remain “cautiously optimistic” that this will become more likely in the next two years.