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LANCASTER - A new study by the Public Policy Institute of California reinforces that the Antelope Valley is still a pressure release valve for a house-hungry urban population.
The study, which says the housing shortage is not as severe as previously reported, admits significant shortages are still evident in the state's three largest metropolitan areas - Los Angeles, the San Francisco Bay Area and San Diego.

"In Short Supply? Cycles and Trends in California Housing," reported there is a 138,000-unit housing shortage statewide, a low figure compared to the 1-million-unit shortfall reported elsewhere, according to a recent article published on the Building Industry Association of Southern California.

The California Building Industry has maintained for 10 years that the housing shortfall is between 150,000 and 200,000, said Gretchen Gutierrez, executive director of the Antelope Valley chapter of the Building Industry Association. The independent study confirms that figure.

The study takes into consideration different factors than previous studies, such as nationwide housing production, immigration levels, demographics of immigrant families and the state's economy.

Demand for housing in the Antelope Valley is continuing to put pressure on the new and resale markets. Real estate professionals note pre-owned home inventories are at an all-time low. And, although the prices of new homes are rising almost daily, home buyers are lining up to sign construction contracts for bigger and more expensive homes.

From November 2003 to January 2004, new home prices averaged out to $302,041 in Palmdale and $302,024 in Lancaster, Gutierrez said. The difference in the average prices has changed dramatically from early 2003 when a new Palmdale home averaged $202,622 and one in Lancaster cost an average of $176,606, she said.

"Lancaster has obviously crept up," she said.

Gutierrez predicts the tables may turn in the next three months when the first 1,400-home construction phase of the Anaverde development in southwest Palmdale begins. The multi-builder project is finishing up infrastructure for about 5,000 homes and several schools.

Considering the housing market in the Los Angeles area, it is unlikely that the announcement from the Federal Reserve Board that the prime lending interest rate will begin to rise this summer will discourage people from buying homes in the Valley.

But other changes may occur, as well.

"I don't know if we'll see a reduction in purchasing," said Chris Hamilton, loan consultant for Performance Mortgage in Lancaster. "But, with the increase in interest rates, home values should start to stabilize."

For the last year the housing market in the Valley has been so competitive that people would bid above the asking price of a home. If the appraisal came in lower and the lender wouldn't fund the entire price, people would bring cash to the table, he said.

There being no reason to ease up on construction, developers have continued to increase the number and value of building permits drawn for the Antelope Valley over and above those of the first three months of 2003.

In the unincorporated regions of the Valley the number of permits issued in the first three months of 2004 were more than 34% above those issued in the same three months in 2003, rising from 64 to 86 homes, according to the Construction Industry Research Board's monthly statistics.

Lancaster saw 339 permits issued for that time span in 2004 compared to 180 in 2003, an increase of 88.3%.

Lancaster also permitted 76 multi-family units in the first three months of 2004.

Overall, housing permit activity in the Valley rose by 27.9% in January, February and March of 2004.

The city of Los Angeles saw an increase of 41.5% for single-family homes in that time span, up to 369 homes compared to 261 last year.

The value of the permits issued rose 67.5% in the Valley's unincorporated areas and 134.7% in Lancaster, but lost ground in Palmdale, dropping 14.7%.

The entire Valley saw an increase of 41.4% in residential building values.

New-home construction helped drive California's economic recovery in 2003 as the industry generated $59 billion in economic activity and more than 526,000 jobs, according to a study by the Sacramento Regional Research Institute.

"Homebuilding has been a major driver of California's economic growth for the past several years," noted Sunne Wright McPeak, secretary of the state's Business, Transportation and Housing Agency and a longtime housing advocate. "This report reminds us of how important housing production is not only to meeting the needs of working men and women of California but to the health and stability of the state's economy."

The report, "The Economic Benefits of Housing in California," examined three key aspects of the industry: the impact of new-home construction; the overall impact of the housing industry as a whole, including economic activity generated by existing homes; and the regional benefits in 25 of California's metropolitan areas.

While new-home construction alone is a major part of the economy, the report also found that the housing industry as a whole (including expenditures on existing housing) contributes $218 billion to the economy, supports almost 1 million jobs and accounts for approximately 10% of all statewide economic activity.

Every dollar invested in new housing activity generates almost two dollars in total economic activity, and the industry is a major force in every region of the state, the report said.

As important to the state as homebuilding is, CBIA President Sherman D. Harmer Jr., a San Diego homebuilder, pointed out that the study emphasized the "untapped potential" of the homebuilding industry.

"The report's calculations are based on the 188,000 housing starts recorded in 2003, but according to the state Department of Finance, the statewide annual housing need is far greater, about 230,000 homes and apartments each year," Harmer said. "If the industry were producing enough homes to meet the need, the economic impact for the state and for regional economies would be significantly greater."

And with the state's population increasing by 600,000 people a year, Harmer said the only way to ease California's worsening housing affordability crisis is to build enough new homes and apartments to meet that demand for places to live.

Across the U.S. new construction starts in March were up 3% to about $537 billion, according to the McGraw Hill Construction report.

awishart@avpress.com

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