Permits for new construction is down 10% from last year in Southern California. Only two counties saw increases in the number of permits pulled. San Bernardino saw increase of 7% and Riverside, 27 %.
Everywhere else saw declines in permit numbers, led by San Diego with a decline of 37%. San Diego permits for multifamily dwellings declined a whopping 50% .
The declines are due to a number of factors, including big rush of new development last year that was trying to take advantage of low interest rates before they were raised. Yet, longer term, banks are becoming reticent to finance rental projects, especially multifamily, based on rapidly increasing rents that probably aren’t sustainable.
“San Diego County had increased 11 percent in a year, more than any other Southern California county. It was followed by Riverside County at 9 percent; San Bernardino County at 8 percent; Orange, Los Angeles and Ventura counties at 7 percent; and Santa Barbara County at 5 percent.”
On the commercial side, retail and offices were down and industrial and hotel development was up. With retail continuing to struggle in its battle with online sellers, retail permits fell over 50% and no permits for new offices were pulled. As part of the regional trend, hotel development was red hot with increase of over 500%. Industrial permits grew 4 fourfold.