Construction Lag Drives Up Home Prices In Calif.
LOS ANGELES (AP) — Construction on new Southern California homes is lagging, and that's driving up prices for would-be middle-class homebuyers amid a reduced inventory.
Developers are still wary about putting up new construction despite a boom in prices over past year. As a result, the region's supply of new homes dropped to about 2,200 at the end of last year compared with 19,000 in 2006, just before the market collapsed, according to the Real Estate Research Council of Southern California at Cal Poly Pomona.
Analysts say about 15,000 new homes will be sold this year in the six-county region, or 58 percent less than the 20-year average, the Los Angeles Times reported (http://lat.ms/1pQV11v).
The slow investment in new homes has meant trouble for prospective buyers such as Citlali and Israel Gonzales, who are living with family members in Corona to save money.
They wanted a new home when they started looking a year ago. But they now would be happy with a fixer-upper in their price range — and even that is proving elusive.
"It's starting to get discouraging," Israel Gonzales said.
Other factors are also eating into the meager supply of reasonably priced homes on the market.
Cash-rich investors are snapping up homes and renting them out as investments.
Developers are also wary of investing in attached condominium projects, which would typically sell for less for homebuyers looking for a starter home, the newspaper reported.
Only about 10 percent of today's new projects are attached condominiums, compared with half in previous expansions, said housing consultant Jeff Meyers, who heads Meyers Research in Beverly Hills.
It will be at least next year before many new projects are feasible, said Randall Lewis, executive vice president of Lewis Group, an Upland development firm.
Some builders are focusing instead on taking over stalled subdivisions that were abandoned by other builders during the real estate crash, said Steve Ruffner, regional president for KB Home of Los Angeles. "We're looking for ready-to-go, finished lots that we can build a home on," he said.
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