California's home builders' forecast isn't as bullish as the state's real estate agents when it comes to the Golden State's expected home price increases in 2006.

The Sacramento-based California Building Industry Association (CBIA) reported last week that new home prices this year will rise only 5 percent to 8 percent -- well off the double digit increases of recent years past.

The California Association of Realtors' sees nothing less than a 10 percent increase in resale home prices.

"The industry has been moving at a torrid pace to keep up with demand, but we expect prices will finally level off to a manageable level. Unfortunately, home builders are still not able to meet the needs of many home buyers," said CBIA chief economist Alan Nevin.

CBIA also expects an overall drop in the production of all new homes from 212,000 in 2004 and 2005 to between 185,000 and 205,000 in 2006, (a 3.4 percent to 12.7 percent decline) which includes a slight uptick in the multi-family category, comprised primarily of condo-type homes.

When it comes to sales, CBIA is hedging it's bets claiming new home sales will remain in the 240,000 range, but high prices and interest rate increases that have been pushing sales down for months are to blame for housing start declines since October 2005.

CAR is calling for a two percent decline in existing home sales in 2006.

In its common refrain, CBIA says California's high-cost of housing, in part, is causing a sales slow down and the high cost stems from builders' inability to construct enough homes to meet the demand.

The shortage, CBIA claims, is due to environmental laws used to delay construction and block new construction, land shortages and burdensome regulations that prevent developing long-term housing plans for the state.

"For too long, bureaucratic red tape and unnecessary regulations have hampered the state's ability to plan for the future and develop a framework to address the state's long-term housing needs," said CBIA Chairman Layne Marceau said.

"The entitlement process takes five and even 10 years to complete. That makes it impossible for home building companies to meet the market demand, and drives up the cost of a new home dramatically," he said.

CBIA plans to sponsor legislation designed to solve the housing affordability crisis.

The legislation would:

 

• Ensure there's an adequate supply of land to build well-planned housing in all communities. A CBIA "Housing Opportunity Plan" would require jurisdictions to develop a housing map for the next 20 years and ensure that there's a supply of land approved and ready to build on;

   

• Streamline the approval process to encourage the production of more affordable higher-density homes and condominiums in the state's job centers;

   

• Require local governments to justify and be held accountable for the imposition of home fees, paid by new-home buyers, that drive up the cost of each new home by tens of thousands of dollars.