CHICO –A welcome sound can be heard around Chico as the city enters July — foundations being laid and walls going up, as hundreds of new homes are now under construction.
Nearly 700 multi-family units and over 200 single family residences are being built or have finished construction, according to Community Development Director Brendan Vieg. The city’s housing market remains “hot” into summer with homes often getting sold as soon as they enter the market.
That means ongoing construction projects are welcome relief for a shrinking inventory problem Chico has faced for years, particularly after the Camp Fire. The latest Zillow market report reflect housing prices averaging at $388,566 although they fell from about $404,000 in Dec. 2019. Demand and inventory for rentals is more difficult to measure, with the median rent holding at $1,800 per month.
“This will clearly be a significant year for residential development in Chico, especially in the multi-family area,” Vieg said Tuesday of the following approved city developments as of the end of June:
- 123 single-family residences built
- 138 single-family residences under construction
- 693 multi-family units under construction
- 470 multi-family units under review by the Building Division.
A total of 13 accessory dwelling units have also been built, with 33 under construction.
Hot market, low inventory
Carl Henker with Coldwell Banker Real Estate said “I don’t see that activity has slowed down during June.”
Although sales are still down from last year, compared from March to June they are “still moving upward,” Henker said. However, he said the main problem is current inventory of houses in the area is “still way down.”
For example, in June there were 126 homes on the market, down from 149 in May. Additionally of 126 listings, there were 151 pending sales.
“The inventory cannot grow because of that,” he said. “They’re selling as soon as they come on the market.”
Additionally, due to statewide regulations for wearing masks in public, ”It hasn’t gotten any easier to show properties,” he said.
“Every time we think things are starting to loosen up, we have to take a step back.”
And the need for more land that is already developed will grow if developers cannot afford to build infrastructure before starting new lots. It has a direct impact on housing prices — some lots currently underway are between $399,000 — $450,000 and due to current development costs “I don’t expect anything under that to come on the market,” Henker said.
That means the announcement of a $22 million infill and infrastructure grant for Bruce Road, approved by The California Department of Housing and Community Development, is more positive news for Chico.
The grant is expected to quicken construction of 1,305 single family homes, including a minimum of 260 affordable housing units. The project will also complete a four-lane route with a center median from Skyway to State Route Highway 32 and will begin in 2021.
The news is not as favorable in Oroville, based on the Butte County Housing Report, Henker said. The city has “very few” developments underway often due to infrastructure needs.
“It’s certainly a challenge for “affordable” housing,” in both cities, Henker added — a continuing problem since the Camp Fire. However, the Chico City Council approved the final draft of the 2020-2024 consolidated housing plan from the Housing Department, which outlines some affordable housing opportunities in Chico.
Additionally, Henker said he thinks there is hope that more road development in Chico by Public Works could help builders keep their prices down.
“Infrastructure development is first to decrease costs,” he said.
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