L.A. County Housing Starts Rise by 74% in March

 A chapter press release today reports that new-home starts in Los Angeles County posted a 74 percent increase in March compared to March 2010, fueled mainly by multi-family projects. Production in Ventura County, meanwhile, remained extremely low, with just 21 building permits pulled countywide during the month.

According to figures compiled by the Construction Industry Research Board, L.A. county housing starts totaled 1,707 units in March – 1,516 condos and apartments and 191 single-family homes. In March 2010, 980 starts were recorded, and in February of this year, new construction totaled 209 units.

A detailed chart showing permit activity and the jurisdictions with the most permits pulled can be found here. Information on statewide housing starts can be found here.

Supply of New Homes Drops; Is Scarcity Next?

The Census Bureau reported this morning that new-home sales rose by 11 percent in March compared to February. Big Builder Magazine's online edition has an interesting take: the supply of new homes nationally fell from 8.2 months in February to 7.3 in March, due to increased sales and limited production. The magazine's veteran housing writer John McManus says:

The March measure indicates that "scarcity" in the new-home arena is more than likely by the end of this year, despite both hostile home finance conditions and the glut of used homes offered at distressed prices.

Ultimately, that distressed oversupply needs to transact from banks to owners--even if they're investor owners. Still, the trend in decreased months' supply means that fear of missing a new home at comparatively low price points and low interest rates, with the added bonus of lower monthly energy-related costs thanks to higher-performance features in new homes could become a common phenomenon before the year ends.

This fear--fear of missing out--is the one Animal Spirits factor that could surprise some of the more conservative estimates on new-home sales for the year. It would take continued progress on the monthly jobs absorption front, which could exert two positive forces on demand for new homes. One is confidence that demand will normalize once the economy starts to create employment and income; and secondly, it's sheer household formation and migration patterns re-emerging from an anomalous low-ebb.

Homebuilders Do Their Part for Earth Day

Today's Ventura County Star includes an op-ed from Chapter CEO Holly Schroeder, who reminds readers just how green today's new homes are. Here are a couple of exerpts:

Everyone knows that Californians have embraced living green. But, today, as we celebrate Earth Day, many Californians aren't aware of how much new homes contribute to our green way of life and how much greener these homes are than ones built even a decade ago.

Some green aspects of new homes are easy to see — like the Energy Star appliances included in most new homes and the toilets, shower heads and faucets that use less water than those fixtures did even a few years ago. But there are many more green components that go into today's new homes.

Perhaps the biggest contribution to improving our environment is the fact new homes use so much less electricity and natural gas than homes built in the past. Not only does that save homebuyers money on their utility bills, it also means that each Californian uses a lot less energy than the average American.

The op-ed goes on to talk about how new homes also save water and how builders reuse or recycle construction and demolition waste, then concludes with an important reminder to state and local policymakers dealing with AB 32 implementation:

California is leading the way in reducing greenhouse gas emissions in its efforts to combat climate change. New homes are doing their part — in fact, new homes already far exceed the greenhouse gas emission levels required to be reached in 2020.

So as we mark another Earth Day, homebuilders — and new-home buyers — can take pride that they're doing something to make the world a bit greener.

You can read the entire op-ed here.

More Green Shoots?

There's a bunch of housing/homebuilding news today and much of it is encouraging.

First, the Realtors reported today that existing home sales rose at an annual rate of 5.1 million in March, up 3.7% from February. Sales were 6.3% lower than in March 2010, but that comparison is a bit misleading because there were federal and state homebuyer tax credits in effect last spring.

As the CNNMoney.com article goes on to say, first-time buyers purchased 33% of homes in March, down from 44% in March 2010 - when those tax credits were in effect. Investors accounted for 22% of sales, up from 19% a year ago. And all-cash sales were at a record high in March, accounting for 35% of existing home sales.

That likely means investors are snapping up foreclosures, which again is a positive trend since the housing market can't begin a more robust recovery until the inventory of foreclosures and short sales drops.

Those numbers also point to a big problem in real estate: you have to have outstanding credit scores to get a mortgage loan. As the Realtors' chief economist, Lawrence Yun, states:

Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago -- before the loose lending practices that created the unprecedented boom and bust cycle.

The L.A. Times' Alejandro Lazo has a lengthy piece in this morning's business section on foreclosures, with reports that the number of loans entering the foreclosure process in California dropped during the first three months of the year to the lowest level since just before the start of the credit crunch. Lazo writes:

The drop was an indication that the worst of the foreclosure mess is probably over and a much-feared wave of bank-owned properties is unlikely, analysts said.

The piece also cites DataQuick statistics that show that most of the loans entering foreclosure today are from the last years of the last housing boom, from 2005 to 2007. Notices of default declined by 15.9 percent in Southern California. L.A. County default notices dropped by 11.6 percent, and in Ventura County they fell 12.5 percent.

And finally, some additional information from the national housing start numbers we reported on yesterday. The Commerce Department said that the nation's unsold inventory dropped to a seasonally adjusted 509,000 units, the lowest level on record since 1968. And as the AP story reports, the number of building permits pulled nationally also rose, which economist Steven A. Wood of Insight Economics said could signal a turnaround in the coming months.

U.S. Housing Construction Bounces Back a Bit in March

The Wall Street Journal's Marketbeat blog reports today that U.S. home construction in March bounced back a bit from the previous month’s very low levels. The Commerce Department released figures showing construction of homes and apartments last month jumped 7.2% from a month earlier to a seasonally adjusted annual rate of 549,000 from a revised 512,000 in February.

Building permits, which nationally are a gauge of future construction, climbed 11.2% from a month earlier to an annual rate of 594,000. (In California, because permits are so expensive, builders seldom pull permits until they are ready to begin construction, making them a good indicator of current construction trends.)

The blog reported that:

Economists surveyed by Dow Jones Newswires expected housing starts would rise by 10%. Permits had been projected to rise 3.0%. The month’s results were driven by rising construction of single-family homes, which made up more than three-quarters of all starts. Single-family construction was up 7.7% to an annual rate of 422,000.

The Chapter will resume releasing monthly new-home sales and housing starts for Los Angeles and Ventura County later this week.