San Diego County built more than 10,000 homes in 2021, something that hasn’t happened in 15 years.

There were 10,188 building permits pulled last year, up 7 percent from 2020, said data released by the Real Estate Research Council of Southern California. Construction was primarily led by new apartments, spurred on by the biggest rent increases in at least 20 years.

San Diego wasn’t alone, with homebuilding up across California increasing 12 percent year over year. Analysts said the biggest motivation for more building was historic rent and home price growth, as well as statewide legislation aimed at making multifamily building easier.

“When there is tremendous demand, someone will try to meet that demand,” said Lori Holt Pfeiler, CEO of the San Diego County Building Industry Association.

She said the latest numbers don’t mean she is jumping for joy — she estimates the region would need 20,000 new units a year to keep up with demand — but that it was encouraging to see an increase. Pfeiler said the heightened demand for new housing motivated developers to do whatever it took to get projects approved by governing bodies and take advantage of density bonus laws.

As of December, the median home price in San Diego County was $743,000, said CoreLogic/DQNews, an annual increase of 15.2 percent. Rent closed out the fourth quarter at an average $2,174 a month, said CoStar, an increase of 13.7 percent in a year. It was the most rent has ever increased annually in San Diego County say CoStar records going back to 2000.

There were 6,662 multifamily permits pulled in 2021, an increase of 5 percent from the previous year. The figure includes townhouses and condos, but is mainly apartments. The biggest apartment projects to open last year were the 455-unit The Society Bradbury complex in Mission Valley, the 368-unit Modera San Diego building and the 333-unit Broadway Towers, both in East Village.

Nathan Moeder, principal with local real estate analysts London Moeder Advisors, said local efforts to make it easier to build have made a difference. One example he gave was the Complete Communities program from the city of San Diego, passed in 2020.

It gives developers incentives — and speeds up approvals — for adding parks and promenades to a project, building more studios and one-bedroom apartments (instead of larger, more expensive units) and putting projects near transit lines. It also allowed developers to calculate their fees based on square footage instead of per unit, so the fees for a larger apartment would be higher than the fees for a smaller one.

Regardless of new laws, Moeder said the growth of apartments doesn’t take a lot of overthinking: “When rents are crazy, apartment units become more valuable to investors,” he said.

He said the influx of new apartments does not mean rent would go down, because he doubted the number of units was enough to slow demand. He also said for-sale housing costs are even more likely to escalate because the state is more focused on building density, limiting for-sale supply.

There were 3,526 single-family homes constructed in 2021, an increase of 12 percent from the previous year. For comparison, there were 9,555 constructed in 2004.

Some of the hotspots for new home construction were Chula Vista’s Otay Ranch community, Park Circle in Valley Center, Fallbrook and Pacific Highlands Ranch in northern San Diego.

Most estimates predict California will continue to build around the same number of homes this year. The California Association of Realtors forecast 117,277 new permits, up 1.5 percent from 2021. California Department of Finance predicts 125,627 permits, up 4.5 percent.

Most of Southern California saw increases in residential construction. The seven-county region had a 15 percent increase over 2020.

Los Angeles County constructed the most new homes, 23,420, an increase of 16 percent. It was followed by San Diego County with 10,188.

Riverside County built the third most, 8,480, down 7 percent from the previous year. It was followed by Orange County with 7,471 permits, up 26 percent; San Bernardino County with 6,976, up 53 percent; Ventura County with 1,233, up 29 percent; and Santa Barbara County with 521, an increase of 37 percent.

Data for Southern California building permits in the research council’s report is provided by the Construction Industry Research Board, which contacts all 58 counties and 538 cities in California for permit data. It sometimes is different from widely used census data that provides estimates and has been criticized for a wide margin of error.

Source: SDuniontribune by Phillip Molnar