The COVID-19 pandemic significantly impacted the housing market across the United States, causing a concerning decrease in home availability due to a lack of construction. In response, California is experiencing increased development, driven by population growth, substantial infrastructure investments, and technological advancements. As interest rates begin to subside, developers are ramping up efforts to build new apartments, condos, and single-family homes across the state. In this blog, California Builder Services will break down this increase in construction and its potential implications for builders and future buyers.
Increased Population Leads to Demand for Housing
Since COVID-19, California’s population has seen a resurgence, boasting just over 39 million residents, making it the nation’s most populous state, according to the California Department of Finance. This population increase has led to a heightened demand for housing, tasking residential general contractors with creating new infrastructure to meet the needs of new Californians. The surge in residential construction is also fueled by low interest rates and favorable lending conditions, making homeownership more accessible for many. However, the increasing need to build new homes may face challenges due to higher prices and shortages of lumber, lots, and labor.
New Projects and Initiatives
In 2024, the California state government allocated significant funding for infrastructure development, focusing on transportation, healthcare, and education. Improved transportation systems, highways, and bridges will encourage more people to move to California, creating new opportunities for construction companies to participate in large-scale projects.
A notable example is Apple launching a $50 million fund to address the housing crisis in the San Francisco Bay Area, focusing on affordable housing initiatives across California. This fund will create over 400 homes in the next two years, bringing Apple’s total contribution to affordable housing initiatives in California to over $1.6 billion, directly benefiting more than 60,000 Californians.
Technological Advancements
Technological advancements, such as Building Information Modeling (BIM) and 3D printing, enhance efficiency while reducing construction costs and time. BIM is a collaborative process where architects, engineers, contractors, real estate developers, and other construction professionals plan, create, and build structures or buildings within a 3D model. Landscape architecture firm Pacific Coast Land Design (PCLD) has utilized BIM in two major LEED-certified green public projects in Westview Village and Old Town Newhall, demonstrating the benefits of its integrated planning and design processes.
What to Expect
According to the NAHB’s Housing Market Index (HMI), builder confidence (the measure of how confident home builders are in the current and future state of the single-family housing market) saw positive movement in the first half of 2024, but as of June 2024, confidence has declined to 43 out of 100. This slowdown in residential construction suggests that the recovery in single-family
