Energy codes expected to influence annual permit activity

Can California pick up the pace in permit issuance with only two months left in the year to exceed 2018 annual totals? It’s a possibility. Here’s why…


In case you missed CIRB’s monthly reports on 2019 California building permit activity, here’s a quick reap of the year so far:

  • Q1 Cumulative (Jan-Mar): Total housing units decreased year-to-date by 10%
  • Semi-Annually (Jan-Jun): Total housing units decreased year-to-date by 20%
  • Q3 Cumulative (Jan-Sep): Total housing units are down again year-to-date by 10%
  • Most recent stats (Oct 2019): Total housing units are down 4% from September, but up 17% from October 2018. Cumulative year-to-date statistics are still 10% down from last year.

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Can California pick up the pace in permit issuance with only two months left in the year to exceed 2018 annual totals? It’s a possibility. Here’s why:

According to Mike Hodgson with ConSol, “Fourth quarter 2019 building permits will be significantly affected due to the January 1, 2020 implementation date of the 2019 Title 24 CA Energy Code.”

Hodgson also states, “Most production builders (equating to over 80% of California’s new residential dwelling permits) are applying for their building permits prior to January 1, 2020, so they fall under the 2016 T-24 CA Energy Code.”

Hodgson warns that the anticipated permit increase is solely a response to the upcoming codes in California, not to be confused with an increase in homebuilding activity.

This happened before in the last California code cycle in December 2016, where total housing units jumped by 33% from November to December and put 2016 ahead of 2015 by 2%, according to CIRB permit statistics.

However, even if 2019 totals were to reach the 117,892 units permitted in 2018, the months of November and December 2019 would each need to produce at least 13,835 total housing units, which is a 44% month-to-month increase from October 2019.

It’s a stretch, given CIRB’s forecast model is currently projecting only 109,000 total housing units issued by the close of 2019, but it’s not impossible to expect a substantial increase in response to the 2019 Title 24 Energy Codes taking effect.

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