Builders may see turnaround by year's end

June 16, 2009 12:00:00 AM PDT
Housing construction, already in its worst slump in more than 50 years, may see a turn-around by the end of the year. That's the word Tuesday night on the eve of the Pacific Coast Builders Conference in San Francisco.

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Attendance will be off about half at the largest builder show in the west -- a reflection of the slump in new home construction. Yet there is hope that California will see a jump in housing starts, along the lines of a 17 percent increase nationally in May.

"Clearly there's a need for this industry to recover and to help lead the state out of the economic crisis that it's in," says John Frith from Pacific Coast Builders.

It's not just about selling new homes; it's also about jobs. The latest numbers say more than 130,000 construction workers are jobless in the Bay Area as of April. That's almost 23,000 higher than a year earlier.

Builders say the state tax credit for new home buyers has helped spur sales. The credit is worth up to $10,000 for first-time buyers. However, the $100 million program is almost tapped out.

"The legislature passed that bill back in March, expected it to last for a year, but the current estimate is that we're going to run out of money by the end of the month," says Frith.

Rental projects such as Strata in San Francisco's Mission Bay District are also important for creating jobs. The managing director of Urban Housing Group, the developer, is less optimistic about a building turn-around.

"What we really need to see in order to induce capital to invest or reinvest in the San Francisco market again, is proof that we've hit the bottom," says Dan Deibel from Urban Housing Group.

Deibel says his company is proceeding cautiously with new projects. He's waiting to see positive job growth -- something economists say could be a year off. So, builders and their suppliers will be putting their instincts on the line.

Economists say it takes a long time to turn around a housing market, but there's a growing sense of optimism.

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