Real Estate News

New Elk Grove construction spurs hope for housing market

Miguel Villa of Elk Grove, bottom right, cuts wood as his crew builds a new home Monday in Elk Grove. The sounds of nail guns, hammers and saws are returning as more building permits are issued for the area.
Miguel Villa of Elk Grove, bottom right, cuts wood as his crew builds a new home Monday in Elk Grove. The sounds of nail guns, hammers and saws are returning as more building permits are issued for the area. hamezcua@sacbee.com

In Elk Grove’s Madeira community, once-familiar sounds are returning. Workers scale rooftops and pound away at forms, building the homes that will create a new neighborhood.

Construction workers were busy Monday afternoon in Madeira, where their presence hints at a housing revival for Elk Grove. Builders in the region’s second-largest city pulled 238 residential permits in the final six months of 2014, an increase of more than 240 percent over the 69 housing permits issued by the city during the same six-month period in 2013, according to figures tucked inside Elk Grove’s midyear budget review.

Despite the large percentage increase, those numbers are still modest, and miles away from the glory days of the Sacramento region’s early-2000s building boom, when Elk Grove was one of the nation’s fastest-growing cities. In 2004, at the height of the housing boom, local governments around the four-county region authorized construction of 22,000 housing units. Five years ago, at the bottom of the bust, they issued 2,500 permits.

Elk Grove’s recent burst of activity makes the city an outlier. Housing starts around the region were flat last year.

Housing experts said Elk Grove’s experience is not a fluke; rather, it’s a sign that the region’s new home market is starting to re-emerge.

“It’s an optimistic uptick and something I expect to continue,” said Jeff Michael, director of the Business Forecasting Center at the University of the Pacific. He cited an improving economy and years of pent-up housing demand.

“This is a building industry that’s been in depression for seven years – seven years of real, substantial underbuilding,” Michael said. He predicted “fairly significant” building activity in the region over the next three years.

Pat Shea is president of Lyon Real Estate, the region’s largest Realtor, and lives in Elk Grove. He said the regional economy is improving and that suburban housing construction will surely follow.

“Builders want to build houses, and what builders are seeing is a major bounceback in the Sacramento market,” Shea said. “It’s a good sign. As the population continues to grow and as political leaders are focused on bringing business and commerce to the region, we’re going to need housing.”

Shea and others in the real estate industry said a number of forces are combining to produce an improved homebuilding climate: low interest rates on home loans and heightened consumer confidence; an improved economy and a shrinking jobless rate; soaring prices for Bay Area real estate and a comparatively affordable Sacramento-area market; and more homebuyers who see Sacramento and surrounding communities as a potential new address.

“There’s still a ways to go, but in many ways, Sacramento and the entire region, it’s become a destination. The city’s on the upswing,” said Ioannis Kazanis, a spokesman for the North State Building Industry Association. “Bay Area (residents) can stretch their dollar a little more, interest rates are still low and Sacramento continues to grow its profile.”

Workers in the building trades are hoping the momentum continues. After years of decline, the construction industry is slowly rising in Sacramento. It employed about 46,000 local residents, on average, each month in 2014, up by 3,000 from 2013. At the height of the boom, about 73,000 local residents worked in construction, according to the state Employment Development Department.

Martin Galvez knows the lean times well. The landscaper and custom concrete finisher was wrapping up a job at a home in Bellmore at Parkgate, the new development going up in the Madeira. He flipped through a portfolio of his recent jobs: patios, driveways, breezeways and brickwork.

A couple doors away, a crane lifted materials to the rafters of a home still under construction. Four years ago, Galvez was fortunate to land only the occasional job.

“Construction is coming back little by little,” Galvez said, watching the crane lift its load. “In 2010, 2011, I worked maybe once a month. Now, I have three jobs a week.”

Call The Bee’s Darrell Smith, (916) 321-1040.

BY THE NUMBERS

Construction in the Sacramento region

Year

New housing units

Construction jobs

2004

22,005

70,775

2009

2,750

43,508

2014

4,108

46,083

Source: U.S. Census Bureau, California Employment Development Department

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