Permits are down 55 percent from the peak in 2004, but big developments are in the works

By Julie Lynem

Home sales aren’t the only thing that slowed this year.

Fewer residential building permits — nearly 1,000 — were issued throughout the county in 2007 than in any year since 1995, according to the Home Builders Association of the Central Coast. That figure represents a 32 percent drop in permits from the same period last year when there were 1,461 permits issued.

Moreover, permits are down nearly 55 percent from the peak in 2004, when all the cities and the county issued a total of 2,263 residential permits, said Jerry Bunin, spokesman for the home-builders group.

Bunin — the association’s government affairs director, who obtains the figures from the Construction Industry Research Board—attributes the drop in residential permits to the overall housing industry downturn, which has put more homes on the market and made it more difficult for potential buyers to borrow the money they need to finance a home purchase.

He also said some builders are finding this to be a tough market because of the regulatory process and the length of time it takes to get a project approved.

Centex, one of the nation’s largest homebuilders, has plans to leave the Central Coast, Bunin said.

“Most of the builders (that) the Home Builders Association represents are longtime area residents and are not planning to leave. This is home,’’ Bunin said.

“However, a surprising number of them are also starting to work on projects in Idaho, Nevada, and Montana and will be building there until the Central Coast and California market stabilizes.”

Bunin added that 2008 may prove to be a year with even fewer permits issued.

“I hate to be this pessimistic,” he said, “but we expect next year to be as bad or worse than this year.”

Affecting communities

Some city officials say the slower pace is affecting their communities.

“We have certainly seen the slowing of the housing market, both in terms of permits for new applications and new starts happening,’’ said Ron Whisenand, community development director for the city of Paso Robles. “It seems people are still going through with proposals for specific plans.”

During the past several months, the city has heard updates on two major pending projects, the Chandler Ranch and Olsen Beechwood developments, which could add thousands of homes to the city sometime in the next decade.

The City Council is also expected to make a decision on whether a third major project, River Oaks II, can move forward for processing after the first of the year.

“It does not seem to have affected planning for future housing, but clearly the housing permits are down,” Whisenand said.

Atascadero officials can expect a dropoff next year in residential building permits, according to a UCSB Economic Forecast Project presentation in June, which predicted a decrease to 190 in 2008 from 240 this year. That’s down from a peak of 275 residential building permits filed in 2005.

Local Builder Turko Semmes said he expects his business to dip slightly next year but is not bracing for a sharp decline. His company, Semmes and Co., specializes in middle-to high-end residential construction and remodels that employ sustainable building techniques.

Meanwhile, he said, continued interest in green building could help his company weather a downturn that could prove financially disastrous for mass-market builders.

“People are looking for houses that get better gas mileage,” Semmes said, using an automotive analogy to describe his business, “and we sell Priuses.”

No clear pattern

San Luis Obispo is not seeing a clear pattern develop that would indicate the housing downturn is dramatically affecting the local industry, according to chief city building official Tim Girvin.

On the one hand, there were only 75 applications for new dwelling units between Jan. 1 and Dec. 27 out of a total of 549 permits that include mostly residential add-ons, Girvin said. That compares with 154 new dwelling unit applications and a total of 676 total applications for the same period in 2006.

But he said many applications are in the pipeline and more are in the “plan check” phase than at this time last year. That means they could result in building permits in early 2008.

He said an estimated 100 building applications should be finalized in January for the Laurelwood/ Tumbling Waters development off of Orcutt Road near Broad Street.

He also noted that the recent sale of the 33-townhouse Bermant Homes project at Marsh and Nipomo streets to La Playa Properties indicates that is going forward.

Plus, there are plans to build an additional 800 homes in the area known as the Margarita Annexation, along Broad Street between the current city limits and the airport, over the next five years, he added.

Tribune staff writers Leah Etling, Stephen Curran, Sally Connell and Bob Cuddy contributed to this report