Housing Starts in California Reach Record Highs This Year

SACRAMENTO —  Construction crews wielding saws, hammers and nail guns this year began work on the most new houses in California since 1989 and the most apartments since 1990 -- but it isn’t enough to ease the nation’s worst housing shortage, experts say.

California builders Monday reported starting 191,866 homes and apartments in 2003, and predict slightly more next year before rising interest rates force a slowdown in 2005.

Only Florida reported more home construction during 2003, starting 205,000 new units for a population half the size of California’s.

With its 36 million residents, California saw 135,016 construction begin on new houses during 2003, mostly in the sea of new subdivisions that stretch from San Diego and Riverside counties to the boomtowns of the Central Valley and the San Francisco Bay Area.

Builders also started 56,850 new apartments statewide, the most since they started 60,494 in 1990.

Home builders credit the construction spree to the lowest interest rates in a generation, giving thousands of people more buying power even as prices surged because of supply and demand. Home values rose an estimated 17% during the year, reaching a median price of $369,500, where half the homes cost more and half cost less.

But the percentage of California buyers who could afford such a home plunged to 25%, reported the California Assn. of Realtors, forcing renters to find roommates and compete for apartments.

“California is probably the only part of the country talking about a housing shortage,” said economist Michael Carliner of the Washington-based National Assn. of Home Builders. “I can’t think of any other state where that’s a topic of discussion.”

State officials have said the state needs to build more than 220,000 new residences a year until 2020 to handle annual population growth of 600,000 and overcome a 1990s construction slowdown.

Builders last passed the 220,000 mark in 1989, when housing starts numbered 237,747. The state’s construction record is 314,600 homes and apartments in 1986.

This year’s home building came amid significant slow-growth activism that blocked plans for 3,050 homes on the 2,900-acre Ahmanson Ranch straddling the borders of Los Angeles and Ventura counties.

But weeks later, Newhall Land & Farming Co. won a go-ahead to build a 20,885-home development over the next 20 years, one of the last major housing projects in Los Angeles County.