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Building permits show a faltering recovery

New building construction – a key indicator of economic activity – declined in Nevada County in 2009 and continued to plunge for the first 10 weeks of 2010.

The gloomy numbers show the economic recovery is not yet extending to the housing sector, mirroring the continued decline in new housing starts nationally.

But they also show a small bright spot for remodeling businesses: Some homeowners still are spending to upgrade what they have.



Building permits for construction in the unincorporated areas and Nevada City have been falling off steadily since the beginning of 2008, Building Department Director Brian Washko said Tuesday.

County permits issued for all new houses, commercial buildings and small improvements dropped from 2,393 in 2008 to 1,859 in 2009, Washko said.




The slide in construction is continuing into 2010, with 280 permits issued by Tuesday, Washko said. If that trend remains true for the rest of the year, the county can expect to issue fewer than 1,100 total building permits for 2010.

Nationally, new housing starts were down 5.9 percent in February, the National Association of Home Builders reported Tuesday.

While bad weather back East has been a factor in the national numbers, foreclosures are adding to the problem like they are in Nevada County.

“The large number of distressed properties for sale and the continuing hesitancy of potential buyers due to the weak job market are definitely weighing on builder confidence at this time,” said National Association of Home Builders Chief Economist David Crowe.

In Nevada County, permits for new homes also continue to decline. The Building Department issued five permits for new houses in the first six weeks of 2010. Officials issued 66 permits for new houses in 2009 and 121 new home permits in 2008.

With about 10 percent of all permits issued for commercial construction, remaining permits in each year are for remodels, upgrades and small improvements such as additions and decks.

“It’s the depressed economy,” Washko said. “People build depending on the money they have and the money they think they will have.”

As in the rest of the United States, bank foreclosures are depressing both sale prices of existing houses and the incentive to build new, Washko added.

“We have mostly (speculative) homes here and not a lot of tract building,” Washko said. “If you can buy a nice, foreclosed home for $400,000, why would you pay $600,000 for a new one?”

“You can’t build a house for what you can pick it up for right now,” agreed Executive Director Barbara Bashall of the Nevada County Contractors Association. “There are some nice houses out there for sale.”

Commercial building follows residential, Washko said.

“If you don’t have enough people in houses, the commercial buildings for services won’t follow,” he said.

“It’s terrible,” added Bashall, whose organization represents hundreds of small business people in the construction trades.

“I’m learning of some new (home) construction being booked, but nothing huge,” Bashall said. “Fortunately, people still want to move here and build their dream house.”

In Grass Valley, permits for new construction have been flat the past two years – and they are not encouraging for 2010.

City statistics show 480 total permits issued for 2008, with five new homes in the mix and seven commercial buildings.

That increased slightly in 2009 to 488 permits – with four for homes and three for commercial buildings.

In 2010 as of March 16, officials have issued 72 total permits, with no homes and one commercial building. If that trend keeps up, the city will see about 375 permits for 2010.

Like in the rest of the county, most permits are for renovations and upgrades, City Administrator Dan Holler said.

“People are reinvesting in their homes,” Holler said. “It makes a lot more sense to them compared to building something new, with construction prices the way they are.”

After much of the decade saw fears of rampant growth in the city, the poor economy has stifled home building in town.

“There aren’t a lot of lots left out there to build on anymore, either,” Holler noted.

To contact Senior Staff Writer Dave Moller, e-mail dmoller@theunion.com or call (530) 477-4237.


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