Regional Housing

One of the reasons environmentalists are giving for opposing new suburban development is that “they would create more housing than the region needs”, but—in yet another recurring reality negating environmentalist’s arguments—this story in the Sacramento Bee indicates there is a strong need for new housing.

In congruence with our 2012 research report: The American River Parkway’s Suburban Setting: The Sacramento Dream, we support responding to this need by building more suburban communities.

An excerpt from the Bee article.

“Sacramento’s giant home-building machine stopped in its tracks when the housing market collapsed seven years ago. Now, with the market improving, it’s proving difficult to restart.

“Home builders, caught off guard by the suddenness of the upturn, say they’re struggling to meet growing demand – primarily because they can’t find enough lots to put houses on.

“Everybody’s just going as fast as they can, but you can’t just flip a switch and expect to be up to full production,” said Chris Cady, Central California division president of KB Home, one of the nation’s largest builders.

“The bottleneck in home building is limiting the supply of new homes and driving up prices. That’s good for sellers, but not so much for buyers, a growing number of whom are trying to take advantage of record-low mortgage rates. With resale homes in short supply, they’re turning to new homes, only to find those in short supply, too.

“The holdups in home building also are delaying construction-related jobs from recovering more quickly. When it’s humming, construction is a major economic force in the Sacramento region.

“If this picks up momentum and we start to see an expansion in home building again, you’ll feel it,” said economist Jeff Michael with the University of the Pacific in Stockton. “That would make a stronger impact on the job market than anything else in Sacramento.”

“Today, the biggest factor holding back housing construction in the Sacramento region is not a lack of buyers, builders say. It’s a scarcity of lots that are ready or nearly ready to build on.

“Long-term, Sacramento has no lack of land on which to spread out. Local governments approved tens of thousands of new homes during the boom years, development that eventually will spread north, south, east and west of the capital.

“But experts say that – for the moment at least – this abundance is purely on paper.

“For one thing, home builders that once owned thousands of lots sold them off during the downturn to satisfy Wall Street and secure tax breaks.

“Many of the investors who bought those lots are now reluctant to sell them because they expect that the price of land zoned for housing will continue to rise, ensuring them bigger profits.

“Another reason for the land shortage: Construction on essential improvements like roads and utilities nearly ceased after 2006, when the housing market started to fall apart.

“We haven’t been doing a lick of site development in the last seven years,” said Jim Radler, senior marketing consultant with Land Advisors Organization in Roseville. “There’s no finished lot supply.”

“Builders are competing for the relatively small number of lots available for purchase at what Radler called a “frenzied pace.”

“So far this year, more than 3,200 lots on nearly 1,800 acres have been sold in the four-county area for a total of $87 million, he said.”

About David H Lukenbill

I am a native of Sacramento, as are my wife and daughter. I am a consultant to nonprofit organizations, and have a Bachelor of Science degree in Organizational Behavior and a Master of Public Administration degree, both from the University of San Francisco. We live along the American River with two cats and all the wild critters we can feed. I am the founding president of the American River Parkway Preservation Society and currently serve as the CFO and Senior Policy Director. I also volunteer as the President of The Lampstand Foundation, a nonprofit organization I founded in 2003.
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