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    Can a vibrant development environment save Ventura County from a recession?

    Dr. Mark Schniepp

    The California and Ventura County economies have effectively recovered from the pandemic recession of 2020. A faster return to normalcy has been evident from the economic reports that monitor business activity in the region, including the labor markets, spending by consumers, hotel utilization, and new development.
    The evidence shows that the California economy is anything but weak. Through August, there is very little trauma visible to date in the state. But the impending recession now haunting the nation threatens to slow down California in 2023.
    Amid pressing economic problems that have emerged in the form of product shortages, higher energy and food prices (and broader inflation in general), labor and capital resources are still being utilized near capacity. Real estate asset valuations remain at or near record levels, and don’t yet appear to be materially impacted by the higher interest rate environment (yet).
    New development of commercial, industrial, and residential structures has always been a key sector of growth for many regions of California. Though the pandemic interrupted much of this flow in 2020, development activity was fully restored by mid-2021. This year, the development momentum has surged in California with much of it is due to the insatiable demand for rental housing and industrial facilities.
    This same demand is also indicative of the real estate environment in Ventura County, but due to much slower economic growth as a result of SOAR, there is far less incentive to develop.
    Residential development in California this year is occurring at a pace that will generate the largest volume of homes started since 2006. The value of commercial and industrial structures started in 2022 is the highest on record.
    The surge in private and public sector development will persist into next year, and help minimize the trauma of recession. If we are lucky, there’s a chance that the state might entirely elude recession, but the odds of that scenario are shrinking.
    Development Update for Ventura County:

    Last year, 1,233 units were authorized through the permitting process within the cities of Ventura County. Sixty percent of that total was apartment units, with most of the single family detached homes located in Santa Paula.
    This year, for the first 8 months of 2022, a total of 2,030 permits for residential units have been issued to builders. That’s an annual pace of 2,500 units for 2022, a level that would exceed last year’s total by 103 percent.
    This is why construction employment has surged in the County.
    Over 70 percent of these units are apartments. The particular cities where this construction is occurring are Santa Paula, Simi Valley, Ventura, and Camarillo. Through August, the City of Simi Valley has permitted 414 residential units, and the City of Ventura has permitted more than 1,000 including ADUs for which there is only a ministerial approval process.
    Phase 1 of the 586 single family home Harvest at Limoneira project is under construction in Santa Paula. It has been underway since 2019. Another 115 homes have started construction this year.
    The Tapo Canyon mixed use project of 278 apartments and 8,000 square feet of commercial space is now underway. The Santa Susana Plaza mixed use development of 280 residential apartment units was approved by the City of Simi Valley in February. The project will demolish a portion of the existing shopping center and construct a four story 307,560 square foot building.
    Site work for the 285 townhome Palmera residential project is underway in Camarillo. Most of the apartment projects that are currently under construction are in Oxnard and Ventura.
    Apartments comprise the lion’s share of the mix of homes because purchase housing is so expensive, especially for millennial families.
    Looking forward, Shea properties recently had their Riverpark Specific Plan amended by the Oxnard City Council to allow for the development of another 1,152 residential units at Riverpark. And needless to say, most of these units would be apartments.
    Written by Dr. Mark Schniepp.   Dr. Schniepp is Director of the California Economic Forecast and a Board member of VCTA.

     


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    Gayle Washburn
    Gayle Washburn
    23 days ago

    Cheerleading for FIRE industries (and county tax collectors) and the myth of “affordable” housing. Ventura County is building so much housing it is turning into a suburb of Los Angeles. And not one homeless person will be housed. Very few homes, if any, will be “affordable”. Average rent in Ventura is over $3,000. Population growth is declining, birth rates and fertility are low. Previous reports have shown that outmigration is greater than in-migration. And if you check HUD reports, you will learn that there are 17 million vacant homes in the US (1.8MM in California). New development is bought as investment or 2nd and 3rd “vacation” homes. Nearly half of Florida homes sit vacant most of the year.

    Sheryl Hamlin
    27 days ago

    Development brings new infrastructure needs. When the costs of new water and wastewater infrastructure are known, costs will escalate. A wastewater plant with all the levels needed to recycle water for potable use could easily cost $45-$50 million for a community of 25,000 to 30,000 people. Utilities are building battery storage facilities which will add $$ to the average electric bill. Desal is a dirty word. And of course, more city employees are needed with each growth spurt (fire, police, schools, etc), whose costs increase faster than taxes, so cities are always in a catch up mode. CA has historically “solved” these problems with taxation. So how vibrant is more taxation? And remember, Limoneira’s Harvest was built on the most prime farmland in the state. We will import all food eventually as the housing frenzy accelerates. Food costs will continue to escalate as we import more. Furthermore when cities such as Santa Paula get hooked on the development fees in the budget, where do they look for revenue when the development is finished?

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