Home construction in the Northern San Joaquin Valley, by far the economic sector most battered over the past decade, is showing signs of life.
Builders took out permits for 1,552 houses in 2014, according to the Building Industry Association of the Greater Valley. That was a fivefold increase over 2008, when the business hit bottom, but still far off the peak of 11,518 in 2003.
San Joaquin County had most of the building last year, in part because of its closer proximity for Bay Area commuters, but Stanislaus and Merced saw some activity, too. This year so far, the uptick continues.
“We feel the market is picking up and there is a higher demand for housing,” said Randy Bling, director of forward planning for Florsheim Homes. “We feel very confident about the Modesto market.”
The Stockton-based company this fall will start building its first new subdivision in Modesto in seven years. The 114-home Rose Park on Mable project is off Oakdale Road between Mable and Claratina avenues.
Brent Sinclair, deputy city manager for Modesto, said this is among about half a dozen subdivisions in the city’s planning pipeline. He said he expects developers to start building the new homes in about a year.
The building boom early in the last decade came with a runup in home prices. They topped out at a median of $396,000 for new and resale homes in Stanislaus County in late 2005, according to the DataQuick market research firm. Prices plunged by about two-thirds but have recovered somewhat, leaving the county’s median at $219,500 as of January.
The drop in home values led to a huge wave of foreclosures in the North Valley and other vulnerable parts of the nation. That in turn brought about a crisis at financial institutions that had invested heavily in mortgage-backed securities.
The ensuing economic downturn hurt retail, services, government and other sectors to varying degrees, but none as badly as homebuilding, which was reduced to 3 percent of its peak volume. Carpenters, roofers, painters and other workers lost jobs in big numbers.
“I cannot overstate how bad the last seven years have been for our industry,” said John Beckman, chief executive officer at the builder group, which serves San Joaquin, Stanislaus, Merced and adjacent Sierra Nevada counties.
Beckman said San Joaquin County is leading the way because of higher employment and wages and soaring home prices in the Bay Area. The median price in that region was $572,000 in January, according to DataQuick, attractive to buyers willing to make the long commute.
Beckman said reduced fees for development also have helped San Joaquin builders, including those in Manteca, Lathrop and Lodi.
“Further south, the jobs have not come back as much, the wages have not gone up as much, and the cities have not been proactive in reducing their fees,” he said.
The 52-home River Walk at Mossdale Landing project in Lathrop is among those driving the mini-boom in San Joaquin County. It had its grand opening Feb. 21 and 22.
“We are seeing a significant increase in traffic and sales,” said Scott Hoisington, division president for Woodside Homes of Northern California. A rise in interest rates last year slowed the growth for a while, he said. “We’re more optimistic than we have been in the last year or year and a half.”
River Walk prices start in the low $300,000s. This compares well with Pleasanton homes that are running $800,000 to $1 million, Hoisington said.
“It drives demand over the hill into the Central Valley,” he said.
Woodside, which operates in five Western states, built homes in Stanislaus and Merced counties during the better times. Hoisington said that could happen again, but perhaps not this year.
Bee staff writer John Holland can be reached at email@example.com or (209) 578-2385.
Bee staff writer Kevin Valine can be reached at firstname.lastname@example.org or (209) 578-2316.