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Housing construction is booming in SoCal's Inland Empire

The Commerce Department reported Monday that spending on residential housing rose in May to the highest level in 4½ years, helping to send overall construction spending higher despite a big drop in nonresidential activity. (Photo: A construction worker cuts a piece of wood on the top of a home under construction at a new housing development last year in Petaluma, Calif.)
Justin Sullivan/Getty Images
Development in the Inland Empire is soaring in 2017, with more than 100,000 people employed in construction.

The first half of this year saw a sharp rise in the number of residential building permits in San Bernardino and Riverside counties, a promising development for efforts to overcome the state's ongoing housing shortage.

Nearly 8,000 housing units were permitted in the Inland Empire in the first half of 2017, which is 55 percent more than in the same period last year, according to an economic activity index produced by UC Riverside's Center for Business Forecasting.

Residential construction permitting in the Inland Empire is finally at pre-recession levels, said Robert Kleinhenz, the center's executive director of research.

"The fact it's finally returning to those levels is really good to see, because if there is an area where there’s an opportunity to build more housing, because there is space, it’s going to be in the Inland Empire," he said.

Kleinhenz tempered the good news with a reality check on California's disappointing track record adding new housing in recent years. Since 2013, the state has added between 80,000-100,000 new housing units each year – about half of what was needed to keep up with population growth, according to the state's Department of Housing and Community Development.

This year looks to be better. Kleinhenz said California is on track to add 115,000 units of new housing this year, a 15 percent increase from last year, due in part to the wave of new housing in the Inland Empire.

Developers say over the past few decades, it's become increasingly difficult to build and sell homes in California. They cite scarce and expensive land, NIMBYism, state and local regulations, tighter financing and a shortage of skilled construction workers. After the recession, many contractors relocated or took up different jobs. While many have returned to the construction field, some have not.

Kleinhenz said in the Inland Empire, about 110,000 people are employed in construction, the highest number since the recession. Before the recession, the area's construction workforce topped out at about 130,000 people.