It was a bounceback year for the North Coast housing industry, with thousands of homes in development or various phases of construction, and 2017 is lining up to be even more active.
“2016 has seen a tremendous spike in construction activity,” said Keith Woods, president and CEO of North Coast Builders Exchange. The “real activity” is what’s coming out of the ground now. The other category of activity are projects in design, getting permits and in need of financing.
“Both have risen in 2016, and there’s more where that came from coming in 2017,” he said. “Construction as a formerly troubled industry is back.”
Brookfield Residential Properties’ University District neighborhood in east Rohnert Park has more than 1,600 homes planned. Signature Homes, KB Homes and Richmond American Homes have more than 300 single-family dwellings under construction there.
This has come about because of a seven-year “drought” of new housing construction, Woods said. Developers had been facing a sea of foreclosed homes, some of them fairly new, that were reselling at well below median home prices.
“I lost track of the number of builders who told me, ‘They could have been given me free land, and I still couldn’t make a profit,’” Woods said.
Median prices that had dipped to nearly $300,000 in Sonoma County, for example, have risen to more than $500,000.
“That now allows builders to make a small profit,” Woods said.
Now, the projects that have survived or changed hands a few times amid belt-tightening have to get built. In the past two years, local governments have been working to streamline their permitting processes to move projects into construction. For example, Santa Rosa set a goal to approve 1,000 new units in 2016. And the builders exchange and local Construction Coalition plan to work with the county of Sonoma in early 2017 on similar measures.
But a “dark cloud” looming over the increased residential and commercial construction activity in coming years is having enough tradespeople to do the work, according to Woods.
“Construction is really having to scramble to find qualified workers,” he said. This has happened as baby-boomer builders have retired and with exits from the industry during the economic downturn. “Not a week goes by without a call to the North Coast Builders Exchange asking for help to find workers.”
North Coast construction employment took a big hit when the housing bubble popped in mid-2006 and an even bigger dive just after the global financial crisis in October 2008. Between June 2006 and August 2010, building industry jobs in Sonoma, Solano, Marin, Napa, Mendocino and Lake counties dropped 40 percent, to 26,000, according to of state Employment Development Department.
Construction employment has been rising gradually since 2012, reaching 35,130 in November. That’s still well below the 44,000-job peak for the trades in mid-2006.
The builders exchange and other North Bay construction industry organizations have been working with career technical education programs at local high schools and junior colleges to encourage the next generation to get trained in construction trades.
“What will happen if that does not get resolved is people who have permits in hand will have to wait until workers are available,” Woods said.
Top stories of 2016
No. 2: 2016 brings a boom in North Bay residential and commercial construction. “Construction as a formerly troubled industry is back,” says the CEO of North Coast Builders Exchange.