Lonely mark: Solano solo in home construction increase

Lonely mark: Solano solo in home construction increase
By Rachel /Raskin-Zrihen
Times-Herald staff writer
Posted: 07/26/2009

Solano County was the only area in the state to see an increase in single-family home construction starts in June over last year, new industry figures reveal.

Though small, the Vallejo-Fairfield Metropolitan Statistical Area's 5.6 percent year-over increase compares to declines ranging from 12 percent to more than 80 percent in the rest of California.

At 105 percent, Solano also saw the third highest increase in such construction starts in June over May, according to the most recent report by the California Building Industry Association. This area was bested only by Merced's 300 percent increase, the San Luis Obispo area's 181 percent increase and a nearly 130 percent increase in the San Jose area during the same period.

An association spokesman said he doesn't know if Solano's figures are an anomaly or an indication of a trend suggesting increased builder confidence.

But it's positive in any case, association spokesman Mike Castillo said.

"It's good news that home building is happening, but I can't tell if it's because of the tax credit or something else."

Home Builders Association of Northern California CEO Cheryl O'Connor said she's convinced the area's on a roll.

"It absolutely is a trend," she said. "We've finally gotten through a lot of inventory and prices have come down so much that building is coming back."

Industry officials suggest that a significant increase statewide in total housing starts in June compared to May is added evidence that the state's new-homebuyer tax credit enacted earlier this year is working.

"It's helping to generate new-home sales, and in turn, job-generating home construction," he said.

"Builders are reporting that the demand spurred by the tax credit has helped clear out new-home inventories and we are now seeing an increase in housing production as builders ramp up projects to meet the demand," association president Robert Rivinius said in a statement.

According to statistics compiled by the Construction Industry Research Board, builders statewide pulled permits for 3,446 total housing units in June, up 17 percent from May. Permits for single-family units totaled 2,772, up 20 percent from May and the largest single-family total since July of last year, the figures show.

Association officials urged legislators not to let the program expire, the statement notes.

"The Franchise Tax Board has stopped taking applications for the state tax credit for new home purchases as the allocated funds for the program have already run out in only four months," Rivinius said. "The increase in single-family construction over the past couple of months has shown that the popular program is a success and we'd like to keep it going."

The association, which represents thousands of building industry professionals statewide, predicts permits will be pulled for just 40,000 total units statewide in 2009, which would be by far the lowest total on record, the statement notes.