We know new home construction is undersupplied in SoCal, but how does it stack up with other major metros? There were just 453 active new home projects in the SoCal region as of Q3, which is 47% below the historical average over the last 30 years. Remarkably, the entire region currently has fewer active projects than the far smaller individual metros of Atlanta, Phoenix, Houston, Dallas/Fort Worth, and Atlanta. The Los Angeles/Orange County metro area, considered the most undersupplied metro in the country, has just 11 – 13% of the number of projects as Houston or Dallas.
When comparing the metro’s population per project, the contrast is even more striking. San Diego has nearly 7 times and Los Angeles/Orange County has nearly 10 times the average number of people per project in other major markets. Relatively limited new construction in SoCal is primarily the result of a lack of buildable land/lots, along with significant entitlement hurdles not present to the same extent in other metros. The lack of new home supply in the region has contributed to poor affordability but provides underlying support for home values that will likely preclude any possibility of a mid-2000s type of price correction in the future.
Clarity Real Estate Advisors provides answers to all of your real estate market feasibility questions. Our clients include public and private homebuilders, apartment developers and operators, private equity investors, land bankers, pension funds, bond issuing agencies, and the public sector. Our goal is to help you make the best market-based decisions. We provide Clarity