In 2006, the Los Angeles metropolitan area should see steady growth in housing production, with condominiums leading the way, and jobs gains in all sectors, the California Building Industry Association said in a report on Wednesday.
The Sacramento-based statewide trade association, representing more than 6,300 homebuilders, architects and engineers, said in its “2006 Housing Forecast” that this year will likely look like a repeat of 2005, with more starts in condominiums throughout the urban core. Gradually, national builders are looking to suburbs like Pasadena, Burbank, Woodland Hills and communities in the San Fernando Valley, said CBIA. Production in 2005 equaled that of 2004, with a total of more than 25,000 units permitted, half of them condominiums. Most of the multi-family activity was in condominiums in the urban core; most of the single-family activity was in the Santa Clarita Valley and the Lancaster/Palmdale area.
In 2006, California should see a decline in total units permitted to the 185,000- to 205,000-unit range, down from 2005’s production, which exceeded 200,000 units for the first time since 1989, CBIA said. The weakening will be the result of a gentle slowdown of single-family construction, which will top out at 135,000 to 145,000 units, the report said. Much of the decline will be in the high-end segment in coastal regions. Multi-family construction will likely expand, reaching 50,000 to 65,000 units.
Price advances for the rest of the year will slow dramatically, said the organization. New housing prices overall, on a per-square-foot basis, will increase 5-8 percent. The slowdown of demand at the upper end of the market will also begin to trickle down to the less expensive homes.
In 2006, total wage and salary jobs in L.A. County should increase by 35,000 to 40,000, matching 2005. Last year, job gains were seen in all sectors except manufacturing, which was flat. Gains were led by the transportation and warehousing businesses, TV and movie production, and leisure and hospitality industries.
California overall will experience a modest pull-back in construction employment this year, which will have an overall dampening effect on the state’s economy, CBIA said. Other sectors should remain healthy, including tourism, software, bio-sciences, telecommunications, import/export, entertainment and manufacturing. New jobs should total more than 200,000 to 250,000, roughly half that of 2005’s 400,000 new jobs. The unemployment rate should hover in the 4.8 percent to 5 percent range, according to the report.
In 2005, the jobless rate fell to 4.8 percent, the lowest since April 2001. The loss in manufacturing positions that plagued the economy from 2001 to 2003 fell to nearly zero in late 2004 and throughout 2005. The construction industry was the standout in 2005, accounting for about 13 percent of all new jobs in the state.
