Tag housing

Thanks to Stephen Smith, I recently ran across an interesting database: HUD data on building permits by municipality.   So I decided to find the number of permits per 1,000 for a wide variety of cities, focusing on (1) multifamily permits (because rising rent is a bigger problem in most places than rising home costs) and (2) during 2015 and 2016 (because isn’t two years of data always better than one?).  Here’s what I found for the places I bothered to look up: Growing high cost cities permits per 1000/mean price for units with 5 or more structures  in thousands Seattle 29.4 Denver 19.5 Washington 13.7 Boston 12.5 Portland 12.2 Brooklyn 11.5 Manhattan 10.1 San Francisco 8.8 San Diego 7.6 Los Angeles 6.7   Growing low cost cities Atlanta 28.7 Dallas 15.3 Nashville 14.6 Austin 13.2 (not sure whether this counts as a low-cost city- really its kind of borderline) Charlotte 12 Columbus 7.4 Houston 6.8 Indianapolis 2.3   Low demand (i.e. declining) cities Chicago 5.4 St. Louis 3.6 Cincinnati 2.3 Milwaukee 2.2 Baltimore 2.1 Detroit 1.4 Another fun fact: suburbs of expensive cities lagged behind even the low-demand cities.  Nassau and Suffolk Counties had 0.3 and 0.2 multifamily permits per 1000 respectively, Marin County outside San Francisco 0.7, Orange County outside Los Angeles 4.7. Some takeaways: 1.  Low-demand cities generally had less building than even the most restrictive cities. 2. Within the high-cost city group, it seems to me that there is a strong correlation between permits and prices: Seattle and Denver are certainly cheaper than San Francisco or Los Angeles. 3.  On the other hand, there were some low-cost cities that didn’t have a lot of new construction, like Houston and Indianapolis.   But this weirdness can be explained away by looking at new single-family construction: Houston had more than […]

One common argument against building new housing is that new construction will never reduce housing costs, because the influx of ultra-rich people into high-cost cities creates an insatiable level of demand. I recently found a source of information that may be relevant to this argument: the Wealth Report, which lists the number of high-wealth individuals in a set of world cities, including five American cities (New York, Los Angeles, Chicago, Houston and Miami).  In particular, the report lists the number and percentage growth of “ultra high net worth individuals” (UHNWIs), which it defines as those with over $30 million in wealth. It seems to me that if UHNWI growth was related to high housing costs, then the most expensive cities in this group (New York and Los Angeles) would have the highest UNHWI growth.  In fact, the number of UHNWIs grew most rapidly in Houston (63 percent) between 2005 and 2015.   By contrast, UNHWI growth in the other four cities ranged between 31 and 34 percent. In Canada, UNHWI growth was higher, but roughly equal (ranging between 65 and 70 percent) in Toronto, Vancouver and Montreal- despite the fact that these cities have radically varying housing costs. The median housing unit price in Vancouver tops $1 million, about three times the median price in Montreal. What about UNHWIs as a percentage of city population?  New York has 5600 of them in a city of 8.1 million*- just under 700 per 1 million.  Low-cost Chicago has 2030 in a city of 2.7 million- about 750 per 1 million. Houston has 1318 in a city of 2.1 million, or around 625 per million.  These differences don’t strike me as significant.   *I am assuming these people all live in the central city; I am not actually sure this is the case, […]

I have criticized the idea that the law of supply and demand no longer applies to big-city housing (or, as I call it, supply-and-demand denialism, or “SDD” for short). It just occurred to me that there are a few similarities between supply-and-demand denialists and those who deny climate change. To name a few: *Rejection of science. Climate change denialists reject climate science; SDD true believers reject economics. *Paranoid fantasies about foreigners. Some climate change denialists treat worldwide concern over climate change as a conspiracy by Europeans or Chinese to destroy the U.S. economy; SDD believers are obsessed with foreigners purchasing U.S. or Canadian real estate. *Obsessive fear of change. Climate change denialists assume that any possible limit on fossil fuel emissions will destroy the U.S. economy (despite the fact that we already have lots of taxes and regulations and somehow maintain a more-or-less First World standard of living). I suspect (though I realize this is conjecture) that SDD believers are often NIMBYs who fear, without any obvious basis in reality, that new housing will turn their neighborhood into a slum or into a playground for the rich. *Self-interest generating these fears. Climate change denialists get information from politicians funded by the fossil fuel industry (and media outlets that support those politicians), which has a strong interest in limiting regulation of fossil fuel pollution. NIMBYs are sometimes homeowners who have a financial interest in limiting new housing in order to keep prices and rents high, or housing activists who can more effectively argue for government-subsidized housing if housing prices are high.