It's been a tough year for builders, and those who attended Thursday's Central California Housing Summit heard little cheery news about the near future.
Grim statistics were shared about the new-home market by some speakers, while others debated the merits of building smaller, more affordable multifamily housing units.
The Building Industry Association of Central California event at Modesto Centre Plaza attracted about 200 people.
New-home sales have plummeted 62 percent in Stanislaus, San Joaquin and Merced counties since their 2004 peak, said Rick Baldonado, regional director of Hanley Wood Market Intelligence. He said sales in the region's 248 subdivisions are so slow that, at the current pace, it would take nearly four years to fill all the empty lots.
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This fall, subdivisions on average have been selling only one home per month, compared with about six per month in 2005. What's worse, Baldonado said, is that more than 650 finished new homes are sitting vacant, waiting for buyers.
"Standing inventory is definitely a thorn in our side," Baldonado told the builders. He asked audience members to tell him when they thought the market would turn around, and the majority there predicted 2010.
To increase sales, the speakers agreed homes need to cost less.
The high cost of lots approved for construction caused home prices to soar this decade, according to Alan Nevin, the California Building Industry Association's chief economist.
"Improved lot prices got up so ridiculously high that the only way you could make it work was to build McMansions," said Nevin, referring to two-story homes of more than 3,000 square feet that builders priced at more than $500,000. Such homes, however, were too expensive for most Northern San Joaquin Valley residents.
Nevin predicted that empty lots in many large-home subdivisions will be sold at significantly reduced prices to other builders, who then may be able to build houses priced below $250,000.
"There's a whole new wave of people sitting waiting to buy ... homes that are smaller and cost less," Nevin said.
Baldonado agreed more "attached high-density" housing projects are in store for the Northern San Joaquin Valley.
"High-density housing used to be called slums," countered George Petrulakis, a Modesto attorney who specializes in land use law. "Does anybody want to live that way?"
"Young professionals want a more urban lifestyle" and prefer such condos and town houses near city centers, answered Lynn Jacobs, director of California's Department of Housing and Community Development. She called high-density living a "legitimate lifestyle choice."
"Young, sexually active people. They like that lifestyle," said Randal O'Toole, a Cato Institute senior fellow. But he said that when young adults get older and start families, they prefer traditional single-family homes. "We shouldn't be subsidizing that kind of (high-density) housing."
O'Toole argued against all government regulation of housing
"It's land use regulation that's making housing unaffordable," O'Toole said. He said he wants local agency formation commissions, the California Environmental Quality Act and all planning departments eliminated.
Bee staff writer J.N. Sbranti can be reached at firstname.lastname@example.org or 578-2196.