San Diego County builders have managed to steadily increase homebuilding this year despite labor and supply shortages.

There have been 7,646 building permits pulled in the first nine months of the year, according to data from the Real Estate Research Council of Southern California released Wednesday. That’s a 14.% percent increase from the same time last year and includes all housing types: single-family, apartments, townhouses and condos.

It is possible San Diego County could build more than 10,000 homes in 2021 — a feat not achieved since 2006. Housing analysts say home price growth throughout the pandemic, as well as rising rent prices, have motivated builders to get housing constructed despite obstacles.

Lori Holt Pfeiler, CEO of the San Diego County Building Industry Association, said it looked like building permits could finally hit 10,000 this year. She noted that it still wouldn’t reach projections for housing needs from the San Diego Association of Governments of around 21,000 homes a year.

“We met about half the need,” she said.

Pfeiler credited builders with muscling through an often difficult entitlement process to build more than the previous year.

Nathan Moeder, principal with local real estate analysts London Moeder Advisors, said an ideal construction number for San Diego County would be 12,000 to 13,000 homes a year just to keep up with population growth. However, he said that assumes the region has not been underbuilding housing for decades. Moeder said to make up for losses would require 20,000 to 30,000 units a year for a decade.

“This is not a pat-ourselves-on-the-back moment because there are more (building permits) this year,” he said.

Increasing housing has been a political priority across California for several years, but building levels have stayed about the same. From 2015 to 2020, the county built roughly 9,000 homes a year. That’s down from the heyday of the housing boom when San Diego County pumped out 17,306 homes in 2004.

Moeder said the challenge is the region has pretty much run out of land zoned for housing, leaving only infill development. He said unless more land is zoned for housing in other areas, such as unincorporated parts of the county, the conversations around homebuilding in San Diego will probably be the same for the next 50 years.

Prices for housing materials — lumber, concrete, gypsum (used in plaster and drywall), steel — was up 12.2 percent annually as of October, said the National Association of Home Builders. Moeder said rising rent prices have kept builders going on new projects despite the added costs.

Average rent in San Diego County was $2,139 a month in the third quarter, said real estate tracker CoStar, an increase of 13 percent increase in a year. It marks the biggest annual jump in rent prices that CoStar has tracked in records going back to 2001.

There were 4,975 multifamily permits — mainly apartments — pulled in the first nine months, a nearly 20 percent increase from the previous year.

Single-family home permits were also up so far this year with 2,671 permits, an increase of 6.2 percent.

Prices for newly built properties continues to rise. For example, new single-family homes in the Cantamar project in Otay Ranch show three-bedroom homes advertised as starting in the “low $1 millions.”

San Diego County is not alone in housing shortages in the United States and worldwide. A lot of the issues across the nation are tied to a major slowdown following the housing market collapse during the Great Recession. In its effort to introduce new housing legislation, the Biden administration has cited data from the Federal Reserve that showed housing starts as a share of the population decreased by roughly 39 percent in the 15-year period from January 2006 to June 2021.

Most of Southern California saw upticks in construction this year with a 21.6 percent increase over last year. Los Angeles County constructed the most new homes, 18,179, in the first nine months — an increase of 25.5 percent. It was followed by San Diego County with 7,646.

Riverside County built the third most, 5,959, but was actually down 10.9 percent. Orange County built 5,911, up 37.9 percent; San Bernardino County built 5,338, up 64.2 percent; Ventura County built 780, up 13 percent; and Santa Barbara County built 413, up 44 percent.

Source: SDuniontribune by Phillip Molnar