The number of housing starts in Merced County more than doubled in the first half of 2016 compared with last year, the biggest such increase in the central San Joaquin Valley, according to a report released Wednesday from a building industry publisher.
Across the Valley, home building was a mixed bag, according to Metrostudy, which is a part of the Washington, D.C.-based publisher Hanley Wood. The statewide average was an increase of 8 percent in the first half of the year compared to the same period of 2015.
Over the first two quarters, Merced County’s housing starts rose by 132 percent compared to 60 percent in Stanislaus County; 22 percent in Kings County; 14 percent in Tulare County; and 13 percent in San Joaquin County.
Of the 18,974 finished lots – those that are ready for construction – in the valley, about 25 percent were counted in Merced County, according to Metrostudy.
Merced was the epicenter of the housing market boom and bust that began to take hold in 2006, and many developers stopped building. One in 10 homes saw a foreclosure in 2009, according to Sun-Star archives.
132 percentMerced County’s year-over-year growth in housing starts
So, Merced’s housing market has room to improve. “Without a lot of building for a long time, it tends to build up a demand,” Merced planning manager Kim Espinosa said Wednesday. “There hasn’t been any new housing stock for so many years.”
In 2005, Merced saw developers pull about 1,600 permits to build in that single year, she said. From 2010 through 2013, after the market bubble popped, the city issued a total of 12 permits in four years.
The city of Merced is now seeing what staffers call a healthier amount of growth. This year is set to outpace 2015’s total of 100 new homes, Espinosa said.
The recent news that the city of Merced and Merced County have come to a tax-sharing agreement, Espinosa said, has increased interest from developers of homes and commercial spaces. The agreement is seen as vital for development around UC Merced.
The Westside is seeing even more interest from developers as the Bay Area is short on available housing, which is also considerably more expensive than Valley living.
“The same exact home being built in Hollister is literally half (the price) in Los Banos,” Los Banos’ senior planner Stacy Souza Elms said.
That side of the county was in a similar predicament before the bottom of the market fell out. Souza Elms said Los Banos issued close to 700 permits in 2006, and then went mostly without building any new homes from 2008 through 2012.
Without a lot of building for a long time, it tends to build up a demand. There hasn’t been any new housing stock for so many years.
Merced planning manager Kim Espinosa
So far this year, she said, the city has issued 165 permits compared to last year’s 82 through July 2015.
Construction is not moving full tilt everywhere in the Valley, according to the housing report. Kern County’s home building remained flat, while Fresno County’s dipped by 10 percent and Madera County’s fell by 22 percent.
“Annual starts and closings have risen dramatically since (the second quarter of 2012), and the mixed starts pace throughout the region suggests demand is beginning to stabilize in the more expensive markets, and picking up in the more affordable markets,” Greg Gross, director of Metrostudy’s central California market, said in the report.
The health of the construction industry is often a bellwether for the general health of the economy, according to Steven Gutierrez, a labor market analyst for the state Employment Development Department.
Builders buy materials and pay workers. New homeowners pay for furnishings inside the house. Retailers look to build where the population is growing.
“That has a trickle down effect,” he said. “It kind of indicates that a healthy economy is going.”