Can building permits predict the next housing bubble?

Whispers of a building activity slow-down are all over the industry, but are they accurate? We’re diving into the value of permit data and why the numbers never lie.

Building permits are a valuable indicator of economic activity, especially California building permits, being that California is currently the 5th largest economy in the world.

When it comes to housing booms and recessions, annual permits issued capture these historical trends and tell an interesting story of building activity in California:

CIRB California Housing Units

According to the graph above, generated with annual CIRB permit numbers, the year with the highest total housing units issued in California was 1963 at 322,018 combined single- and multi-family units.

The lowest number of statewide units in CIRB’s recorded history was 36,421 in 2009.

But how far has our state come in almost 10 years, and are we about to experience another recession?

Assuming California will issue 120,000 permits by the close of 2018 (which is not likely, considering the October 2018 California Construction Review only indicated a 3.8% increase of year-to-date units issued from this same time in 2017), our state would still produce 43% less than the 212,960 total housing units issued in the most recent peak year of 2004.

So in conclusion, we may not hit another full-blown recession anytime soon, but 2018 housing permit issuance will either barely surpass that of the 115,670 total statewide units issued in 2017 or could, quite possibly, fall short.

Complete annual totals will be published in the 2018 CIRB Annual Building Permit Summary Report, scheduled for release in May 2019. Purchase the 2017 Annual here!

Subscribe to the monthly ‘Construction Review’ now to receive a free copy of this Annual report or order preliminary 2018 statistics from the CIRB Research Team anytime at