An economist projected that builders will erect about 1,000 houses in Stanislaus County next year, more than double this year’s pace but far fewer than the 2005 peak.
The trend is up in Merced and San Joaquin counties, too, as the industry slowly emerges from the near shutdown that followed the financial crisis of 2008.
The outlook was discussed at a summit Thursday in Modesto, put on by the Building Industry Association of the Greater Valley and its partners. The Stockton-based group represents six counties that have far fewer people wielding hammers and saws than a decade ago.
“So many people in this room have lived this,” economist Jeffrey Michael told the DoubleTree Hotel audience. “I’m glad to see you’re still living, because it’s obviously been a harrowing experience.”
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Michael is director of the Center for Business & Policy Research at the University of the Pacific. It puts out forecasts for various California regions three times a year, and on Tuesday it released its first North San Joaquin Valley Index.
Census records show that Stanislaus builders took out 4,085 permits for single-family homes in 2005. The industry hit bottom with 113 permits in 2011, and Michael projected about 425 this year.
Merced’s estimate of 640 new houses in 2016 would be twice this year’s output but a far cry from the 3,479 in 2005. San Joaquin is projected at 2,200 permits next year, compared with 1,650 this year and 5,684 in 2005.
13,248 Single-family home permits issued in 2005 in Stanislaus, Merced and San Joaquin counties
981 Permits in 2011, when building industry hit bottom
3,840 Permits projected for 2016
The index, expected to be an annual report, found that the region’s jobless rate has finally returned to prerecession levels but household incomes have not. On the other hand, the collapse in home prices has made them affordable to many more people.
The supply of houses is falling well short of the demand, said John Mulville, vice president and director of consulting at Real Estate Economics in Orange County.
“We’re adding a lot of homes in the upper price ranges,” he said. “We could add a lot more in the lower price ranges.”
The industry needs to sell people on the advantages of buying new compared with the resale market, said Tim Costello, president and chief executive officer at Builders Digital Experience. The Austin-based outfit provides online marketing.
New homes made up 15 percent to 20 percent of total sales for 50 years but now are half that, Costello said. Many of the “used” homes, as he calls them, lack the high ceilings, open floor plans, energy efficiency and other features in new construction. And they might have bugs and mold and even shag carpets.
“We can change people’s perceptions as to the value of a new home,” Costello said.
The summit was co-sponsored by UOP’s Eberhardt School of Business, the Modesto Chamber of Commerce and the Stanislaus Business Alliance.
David White, the alliance’s CEO, said a 2014 survey of 193 local businesses found that 76 percent planned to expand, adding 1,972 jobs over three years.
“These are all good trends,” he said, “and what it told me is we have a dynamic economy here.”
John Holland: 209-578-2385
By the numbers
13,248: Single-family home permits issued in 2005 in Stanislaus, Merced and San Joaquin counties
981: Permits in 2011, when building industry hit bottom
3,840: Permits projected for 2016
Source: Center for Business and Policy Research