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Los Angeles metro area posted dip in housing building permits

Permits for housing construction in the Los Angeles metropolitan area declined in 2016 compared to the previous year, a reversal in what had been a steady post-recession recovery, according to figures from the U.S. Census Bureau.

Housing units permitted last year numbered 32,008, compared to 34,034 for 2015, a drop of about 6 percent in the metro area, which includes Long Beach and Anaheim. The units have been largely condominiums and apartments.

The decline interrupted a six-year run of increases since permitted units hit a recession-era low of 7,281 in 2009.

A pullback in bank lending and new land use regulations may be contributing to a slowdown, said Paul Habibi, a developer who lectures on real estate at UCLA's Anderson Graduate School of Management. He said developers also struggle to find available land to build on.

“Anytime you want to introduce a new unit of something, you generally have to tear something down," Habibi said.

What's unclear is whether the decline is a cyclical pause or a trend in the making.

Continuing declines in housing construction would negatively impact the cost and availability of homes for buyers. Housing inventory is already low as building has lagged behind population growth.

The Los Angeles-Long Beach-Anaheim metropolitan area posted a dip in building permits last year, reflecting the first yearly decline since the depths of the recession.
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The Los Angeles-Long Beach-Anaheim metropolitan area posted a dip in building permits last year, reflecting the first yearly decline since the depths of the recession.

Most of the new construction is concentrated in areas such as downtown L.A., where developers can build higher and more densely — and generate more profit.

"Most of the housing stock is being built at the highest income strata. So it's not like we're building affordable units," Habibi said. 

None of this was good news for Kimberly Lopez, a California State University, Los Angeles civil engineering student who wants to move out of her parents’ place and into her own. Waiting for a bus across the street from the construction site of the future Park Fifth mixed-use development in downtown, Lopez said she knew that the apartments were out of reach for her.

"This is for the rich, the people who work in the buildings, the financial buildings right here. Not for me," Lopez said.

It’ll take decades for those apartments to come down in price, not that Lopez is holding her breath. She’s planning on getting roommates for her new apartment.

According to the census data, cities smaller than Los Angeles such as Houston and Dallas have been building homes at a faster rate, far outpacing L.A.

Habibi said building projects in those areas face an easier time than those in L.A. in getting the necessary approvals, and there is also more space in Texas to further suburban sprawl.

Metropolitan area                                            Total units permitted in 2016
Dallas-Fort Worth-Arlington, TX                   55,618
Houston-The Woodlands-Sugar Land          44,643
New York-Newark-Jersey City                        42,466
Atlanta-Sandy Springs-Roswell                      36,121
Los Angeles-Long Beach-Anaheim                32,008

Source: U.S. Census Bureau

This story has been updated.