Developer fees were lowered in Riverside County by the Western Riverside Council of Governments to mirror the national construction cost index, which has been moving downward due to the lower costs of labor, steel and concrete. Development fees for a single family residence (SFR) in Riverside County has decreased $234 due to the annual adjustment. Though homebuyers will not directly benefit from the fee reduction, the government agency hopes the lowered development fees will trigger new construction in Riverside County sufficient to provide employment for this ailing sector of the Inland Empire.
first tuesday take: The government does not get it. We have a massive inventory of housing that is both vacant and on the market, or is yet to hit the market. We have an oversold population of homeowners who are tenants by instinct, not property owners, and are headed back to renting. We do not need new SFR housing for sale to the public for at least the next two or three years. The government should be considering the subsidy of builders and their employees by payments to induce them to leave their undeveloped land vacant, no differently than the subsidy that farmers get to keep their land fallow to avoid over-production of crops.
The cost of construction must be brought back to the equilibrium trend of cost inflation, rather than the boom distortion in costs resulting from a breakdown in construction efficiency for getting the job done on time and within cost projections. To conclude the government must put people back to work producing what has been overbuilt for years to come is to blindly ignore what just happened in recent years. Construction workers were pre-paid for prematurely building that which should have been produced over a much longer period of time, and then responsibly built as the market absorbed what they were building. Relaxing costs and codes for construction to stimulate construction employment is nonsense. But then, hurt construction workers are screaming louder than the real estate marketplace they damaged first.
Re: “Reduced development costs awaited in western Riverside County” from the Press-Enterprise