How slow can you go? Statewide homebuilders tap brakes on new projects amid rising costs

Los Angeles /
Aug.August 09, 2019 03:00 PM
Scott Laurie, chief executive of Olson Co. and Christopher Thornberg, founding partner of Beacon Economics
Scott Laurie, chief executive of Olson Co. and Christopher Thornberg, founding partner of Beacon Economics

With rising construction costs and slowing sales, California homebuilders are tapping the brakes on new projects.

The trend is a step backward on what experts say is required to help the state ease its housing crisis, the Los Angeles Times reported. Homebuilders were approved for 51,178 new homes during the first half of this year, a 20-percent drop compared to the same period last year.

In Los Angeles and Orange County, total permits dropped 25 percent. Single-family permits fell 18.5 percent, and multifamily permits dropped 28.6 percent.

The rate has California set for the most significant decline since the recession. Christopher Thornberg, founding partner of Beacon Economics, told the Times, “We are going in exactly the wrong direction.”

Real estate experts and developers said the slowdown is caused by how difficult it has become to make money building homes, as prices and rents continue to soften throughout the state.

Builders said costs are rising for land, government fees, and tariffs on products. Costs for labor and materials have jumped throughout the state while home prices have stayed flat for many areas, according to John Burns Real Estate Consulting.

Scott Laurie, chief executive of Olson Co., said last year the firm walked away from a project in Orange County, sacrificing more $1 million in deposit money because of rising construction costs. [LAT] — Gregory Cornfield


Related Articles

arrow_forward_ios
Construction on the Hotel Tower at The Grand in downtown Los Angeles (Mel Melcon/LAT/Getty)

Developers proposing fewer projects during pandemic

Developers proposing fewer projects during pandemic
Justin Myers, Vice President of Atlas Hospitality

Study: California hotel construction outlook is bleak

Study: California hotel construction outlook is bleak
Fewer homes are selling across Southern California, but low supply helped push pricing up across the region.

Far fewer SoCal homes traded in April, but prices rose

Far fewer SoCal homes traded in April, but prices rose
Construction is still on at the LA County art museum

Los Angeles construction projects continue amid CA confusion

Los Angeles construction projects continue amid CA confusion
Construction in Los Angeles (Credit: Sam Lafoca/Construction Photography/Avalon/Getty Images)

Construction work hasn’t stopped in LA

Construction work hasn’t stopped in LA
Home bidding wars cool a bit nationwide (Credit: iStock)

Fewer LA buyers willing to pay above ask these days

Fewer LA buyers willing to pay above ask these days
The median sales price inched up less than one percent last quarter to $1.51 million from $1.5 million a year prior (Credit: iStock)

In wealthy Los Angeles, home sales are up. But prices aren’t

In wealthy Los Angeles, home sales are up. But prices aren’t
A 24,000-square-foot home in Beverly Hills Post Office

Luxury market rebounds in some LA submarkets, while median home sales hit record

Luxury market rebounds in some LA submarkets, while median home sales hit record
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...