Permits for residential construction statewide were taken out ata 188,160 annual rate in June, up 25% from a year earlier,according to the Burbank-based Construction Industry ResearchBoard. Multifamily permits accounted for a healthy 42% of activity,compared to a usual share in the 30%- or even 20%-range, says BenBartolotto, the nonprofit group's economist.

"More than half of all the apartment permits were pulled inthree cities—Irvine, San Diego and San Jose," Bartolotto adds.Vacancies in all three of those communities have dropped to about2%, he notes, as soaring house values have forced more people torent instead of buy.

Overall, says Bartolotto, California developers are expected tobuild about 55,000 apartment units in the state this year. Thoughthat would represent a healthy 40% gain from 1999, it would stillbe far short of demand.

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