Building permits spike in Solano County, fueling housing boom
New residential building permits in Solano County rose sharply to 1,697 in 2020, a level of housing permit activity in the county has not been seen since the 2007 Great Recession, according to Jordan Levine, vice president and chief economist with the California Association of Realtors.
At 716 permits, the number of multifamily housing permits issued last year was the highest since 2001. Higher costs for building supplies, especially lumber, is a factor driving multi-family dwelling growth, since the cost per square foot is considerably less, however, existing and new single-family units still dominate the market during the current real estate boom.
“Solano County has been asleep — but is now fully awake! We are definitely in record-setting territory where we’ve never been before,” said David Clutts, president of the Northern Solano Association of Realtors and a broker associate with Country Estates Realty in Fairfield. “Solano is the last affordable county in the Bay Area. However, if you want to buy here, you must have enough cash in your bank account to cope with bigger counter offers. For newcomers, it’s like going to an auction. In a volatile market, it is always good to exercise caution.”
He said real estate agents are in a don’t-hate-it market.
“I don’t know how long this will last, but May and June will be the biggest months of the year for home sales,” Clutts said. “The market is expected to slow in August when kids will probably go back to school in full force and parents won’t want to uproot them to make a move.”
Nicole Solari, founder and broker with Level Up Realty, said homebuyers from elsewhere in the Bay Area are competing for Solano homes.
“Few would have believed a year ago that this market would be so hot,” she said. “Buyers include those moving up to buy more bedrooms, as well as those coming from the Bay Area during the wave of outbound migration. Now is the best time in history to sell. Prices are at an all-time high, leading to bidding wars, but home prices in Solano are still lower than in many parts of the North Bay and Bay Area.”
She noted that home insurance is not that difficult to obtain in communities not located in fire zones. For homeowners in fire zones, it is much harder. Some buyers have had trouble getting FEMA flood insurance.
“There are pockets of opportunity in places like Vacaville that continues to grow with the military presence, outlet malls and more companies continuing to locate to this area. With lower housing prices than those in surrounding counties and cities, Solano has become a good option for those priced out of areas such as the Sacramento market,” Solari said.
The alternative work site trend made mandatory for many during the SIP phase of the pandemic is also fueling interest in moving to more affordable areas, said Joe Brasil, an agent with Coldwell Banker.
“The employer for one of my clients gave him a two-year work-from-home contract enabling him to look for a more affordable home, since a long commute no longer part of the equation,” Brasil said.
The question is, how long will remote work arrangements last, or will most employees be required to return to urban offices in the future?
For Kathy Rojas, an agent with REMAX Gold, the current market is insane with people desperate for home ownership.
“At the beginning of the year, one could buy a home in Solano in the $400K range. In February things turned and we started seeing spikes up to $700K on average.
“It’s scary for buyers right now as many are in a panic mode to buy a home before prices rise even more,” Rojas said.
According to Rojas, for buyers with loans backed by the Federal Housing Administration and Veterans Administration, the situation is worse, because those in this category often do not have enough money to compete when creative bids that can go $30,000 or more over appraised values.
She said there are waiting lists for new homes. “People will probably remain in a panic mode until interest rates change, which is not expected for a while.”
Unincorporated areas of Solano County are also seeing growth with a combined total of 1,300 commercial and residential permits granted, and with more single-family dwellings this year due to rebuilds from last year’s LNU Lightning Complex fire, which includes the Hennessey Fire, according to Saeed Iravani, building official with the County of Solano Building Division. The unincorporated residence category includes primary and secondary homes as well as new single family and secondary manufactured homes.
“There are so many buyers, but so little inventory,” said Matt Walsh, Solano County’s principal planner. “County agencies in the state are beginning the process of updating the housing elements of their General Plans. With a state housing shortage of all types, local agencies will be providing more density flexibility to help do their part in meeting demand. Each agency is required to plan for a certain number of housing units (divided by income tiers) and provide General Plan policies and programs to meet these goals.”