Multifamily Permits Drop 27% in California
Apartment permits hit 12-year low as single-family permits rise by 13%.
Measured in building permits, multifamily developers in California have pulled back in the first half of this year while home builders got busy, according to the latest statistics from the U.S. Census Bureau.
Multifamily permits from January through June totaled 19,035 in California, a 27% drop from the previous six months and the lowest number of filings to build apartments in 12 years.
Meanwhile, home builders in the Golden State filed for 31,653 single-family housing permits in the first half of the year, a 13% increase over H2 2023 and 14% more than the 10-year average, the Orange County Register reported.
The report pegged California’s rental vacancy rate at 5.2% in the second quarter, the highest level in 10 years, flattening rent growth and making it difficult for new multifamily projects to pencil out until interest rates come down.
Despite the jump in single-family permits, the total number for all housing types, 50,688, represents a 7% drop compared to H2 2023. The total is 5% below the 10-year average for permits in California.
Home builders are getting active at a time when a limited number of existing homes are for sale and home buyers are attracted to discounted mortgage rates that some builders of single-family homes can offer.
The tilt toward single-family homes—garnering 62% of the permit filings, the largest share since 2010—is not likely to improve the housing affordability metric in California.
The surge in single-family home building comes as home prices in several California metros grew by double-digits in the second quarter. According to the latest data from the National Association of Realtors, the top-10 list of the most expensive U.S. home markets includes seven California metros.
Silicon Valley set a new U.S. record in Q2 2024, becoming the first metro with a median home price topping $2M. Prices for existing single-family homes in the San Jose-Sunnyvale-Santa Clara metro rose 11.4% in the second quarter compared to Q2 2023, raising the median price to $2.08M.
The San Francisco-Oakland-Hayward metro was second on the list, with a median home price of $1.44M in the second quarter, representing an 8.5% increase in the YOY comparison. Anaheim-Santa Ana-Irvine was the third priciest market, with a median home price of $1.43M, a 15% hike from the Q2 2023 median.
San Diego-Carlsbad was fifth on the list, with a $1.05M median that reflected an 11.4% YOY increase; followed by Salinas at $1.03M, a 13.1% increase; Oxnard-Thousand Oaks-Ventura at $928K, a 2.5% increase; and San Luis Obispo-Paso Robles at $895K.