A report by the Real Estate Research Council released today claims that homebuilding was down across Southern California in the first three months of this year. However, San Diego County was down the most compared to the same time period last year. Residential building permits were down 37 percent in San Diego County and multifamily construction was down 50 percent, which was the biggest drop in San Diego County. Russ Valone, president of local industry tracker MarketPointe Realty Advisors, stated:
There was quite a bit of stuff started last year that is still in the construction cycle. (This quarter’s numbers) might be a bit of a fluke.
According to the Research Council, San Diego’s rent increased the most in Southern California compared to last year. Investors have also been concerned with the increase in rent, which could be another issue that is slowing down construction. According to real Answers, a research organization and database publisher specializing in the multifamily housing market, the average rent in San Diego County increased 11 percent in a year. In San Diego, retail and office building permits were low with only 10 permits being pulled in the first quarter compared to 23 last year and no permits being pulled for office buildings compared to 18 in the first quarter of last year. However, there were 39 industrial permits pulled in the first quarter compared to 10 during the same period last year and 70 hotel/motel permits pulled compared to 13 last year during the same period.
This is very bad news for San Diego County and California as a whole because the slowdown in construction means that rental prices will continue to increase in the future.