New Evidence Of Bay Area Real Estate Slowdown
June 21 - KGO (KGO) -- There's a slowdown in new home construction in California and a drop of 15 to 20 percent is expected this year compared to last. Meanwhile, the West Coast's largest home building show is underway in San Francisco.
It's as busy as ever at the West Coast's biggest building show with builders looking for new ideas, new hardware, and new sources to build houses. And that seems odd when economists see new home construction dropping 15 to 20 percent.
Alan Nevin, California building industry economist: "Last year was really an aberration. It got so hot and a lot of that heat was generated by the investor market and they're gone now and now what's left are real home buyers & people who really need homes."
So the reason you see so many people here is because contractors are shifting their attention to commercial projects, such as neighborhood shopping centers to support new housing tracts.
Mike Francone, Viega Plumbing & Heating Technology: "Now we have such a large number of houses that have been built in the past two or three years in the central part of California and the Bay Area. Now we have a backlog of commercial buildings that are catching up with the pace of these new homes that are being built."
And we can't forget about home remodeling. That's where this window and door company is focused. Custom carved interior doors, for example, with scenic designs, or even the kids' names on their room doors.
While the cost of building a new subdivision house runs about $100 per square foot, homeowners are spending $300 to $400 per square foot on remodeling. So it's the trades' people who count on big housing developments for a living who may feel the pinch.
Gary Arnold, McMillan companies: "They'll try and stay in the industry if they can. If not, there's other industries that typically are counter-cyclical, and they hopefully will go to comparable jobs in other industries."
The slowdown in new home structure has taken hold, but experts can't predict how long it will last.
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