One constant in determining value and desirability of homes in a given area is the number of new homes constructed in a given period. The reason is simple. Developers aren’t going to go through the time and expense of building new homes if the return on their investment–read profit–isn’t there. If there is good profit opportunity to be had, developers will be among the first to seize it and get to work.
Building-permit activity increased by almost 95 percent in San Francisco last year when compared with the historic average over the previous 36 years, ranking the city No. 1 the nation for new-construction growth.
- San Jose ranked No. 8 in the U.S. for home building gains, issuing a total of about 8,500 permits in 2017.
- Oakland posted a 16.9 percent gain in issued permits, about 40 percent of them for single-family homes.
Construction cranes have become a familiar sight in San Francisco in recent years, and the city in fact ranked No. 1 the U.S. for residential building activity last year, helping to put a dent in continued inventory shortages.
That’s according to a Trulia report, which ranks 84 U.S. metropolitan areas for building-permit activity in 2017. San Francisco led the nation for the growth rate of permits issued — 94.6 percent above its historical average over the period between 1980 and 2016. In a blog post last summer, Trulia predicted that Austin, Texas, which ranked No. 2 for most permits issued last year, would see the biggest uptick in activity in 2017.
San Francisco issued a total of 6,270 permits last year, the second lowest number of the top 10 home building cities included on Trulia’s list. Of those, just 427 were for single-family homes, while 92 percent were for high-density residences, defined as those with five or more units. The company notes that cities with the largest spikes in permits are expanding housing inventory by building up rather than out.
San Jose also ranked in the top 10 for 2017 building-permit increases — welcome news for a region where job growth is outpacing housing growth by more than 7 to 1. The region posted a 43.8 percent gain in issued permits last year when compared with the average over the previous 36 years. In total, San Jose issued 8,565 permits in 2017, about one-third for single-family homes and two-thirds for high-density housing.
Oakland saw more modest growth in the number of permits issued according to supplemental Truila data, up by 16.9 percent over the historic average. The city issued a total of 10,626 permits last year, 40 percent of them for single-family residences.
Major metropolitan areas in Southern California all saw fewer permits issued in 2017 than is the norm: Los Angeles (-2.4 percent), Orange County (-10.4 percent), and San Diego (-24.0 percent). Combined, those three metro areas added a total of more than 61,000 permits in 2017. These trends also carry through to Marin County.
For more insight into the latest new-condominium construction trends in California and elsewhere on the West Coast, check out The Mark Company’s most recent Trend Sheets, which offer insights into activity in San Francisco, Los Angeles, San Diego, and Seattle in January 2018.
How does this impact you as a Buyer or Seller? Simple! If you’re considering purchasing a home, growth in value means that you’ll likely pay more today for a house than you would have a year ago. If a Seller you be, you’ll be more likely to be able to receive a higher price for the home you plan to sell.
If you’d like more information on either situation, give us a call. We can provide you all the latest news to make your decision the right one at the right price. By now, you know the numbers: Peter: (415) 279-6466; Jane: (415) 531-4091. We’re here to help!