Post by mhbruin on Feb 21, 2024 9:34:47 GMT -8
No Homeowner Wants More Housing Built in His or Her Neighborhood.
Depending on who's doing the estimating, America is short anywhere from 2 million to 6 million homes. If you've tried to buy or rent a place in the past year, or you know anyone who has, then you didn't need me to tell you that. Hardly anything's on the market, and none of us can afford what is. The question is: Why?
That simple question, oddly, has been impossible to answer with any real precision. The housing shortage may be national, but the problem is local. Where homes get built, how many, what type, how big the lot has to be, how many meetings it takes to build something new — those things are all governed by zoning rules. And every town and village and city zones itself. Which means there are more than 30,000 different sets of zoning rules in America. When it comes to housing, we're a nation of islands, governed by no central authority.
To make matters worse, each of those 30,000 islands has its very own language for those rules. Many maps favor the suburban ideal of single-family homes on expansive lots, while essentially disallowing every other form of housing. One place might call a two-family home a duplex (and allow it), where another code might call it a "townhome" or just "multifamily" (and nix it). In some places, "mixed-use" means a neighborhood that combines homes and shops (nope!); in others it means a combination of offices and industry (sure, why not?). Some cities have maps digitally coded into a standard geospatial data format; other towns still use paper. In city after city, the rules are woefully outdated, head-scratchingly obscure, or outright racist.
Prospective homeowners are facing the double whammy of higher home prices and higher mortgage rates. But there's another problem that they have to contend with, one that's both more straightforward in theory but tougher to solve than financial impediments: there simply aren't enough houses to go around.
Active listings are hovering around 669,000 in August, according to data from the St. Louis Fed, down 54% since the earliest available data in 2016. And new homes aren't coming online as quickly as homebuyers might like.
The latest data from the Census Bureau shows that housing starts have fallen to their lowest levels in years as the burden of higher mortgage rates reduce the numbers of would-be homebuyers, prompting homebuilders to cut production, keeping inventory limited.
An early September report by Point2, an online real-estate marketplace, echoes that data. In the first half of this year, new housing permits plummeted 17.5% compared to the first half of 2022.
"In the first half of 2022, an impressive 30 states saw year-over-year increases in their numbers of permits. Sustained by the strong, pandemic-fueled demand for housing, developers were eager to cover the gap between supply and demand," wrote Point2's Andra Hopulele. "However, this year, worsening financial conditions and the volume of existing new builds that developers have not unloaded yet have weakened the pace of both permitting activity and housing starts."
But there may be some relief ahead. Last week's Census report also showed that housing permits rose at their fastest rate in over a year in August, with applications to build new homes up 6.9% month-over-month.
Here's where Point2's report shows fewer new homebuilding permits are being issued — and where homebuyers may find a future opportunity.
The best and worst markets for new housing permits
Regionally, the West saw the largest decline in house permits at -22.2%, followed closely by the Northeast at -21.7%. The West also had the largest decline in total housing starts, falling -21.89%, and Hopulele noted that the West also had a low number of housing completions compared to the other regions.
On the other hand, the South had a relatively strong first half of the year. It had the "smallest drop in permits, as well as the smallest decline in starts for housing projects," according to Hopulele. "And, although it had the smallest year-over-year increase in completed units, these numbers show that housing development in the South is more resilient."
Unfortunately, for any homeowners hoping for relief from houses that are currently being built or completed, they may not find it. Hopulele also noted that even as permits have fallen across the country, completed builds have risen in the first two quarters of the year — but that trend may not last for much longer.
"However, shortages of materials and higher borrowing costs — which were already plaguing developers — might eventually derail this segment, as well, delaying homeownership for even more aspiring buyers," she wrote.
All told, of the 384 metro areas that Point2 tracks data from, a mere 90 saw the number of housing permits increase year over year.
Among those 384 metro areas, 56 fall under the large category, meaning they have populations of 1 million or more. Within those larger areas, only 13 saw housing permits rise in the first half of this year, indicating any potential homeowners hunting for their dream home may want to keep a close eye on the supply that will be coming online in these cities — they may be some of the few areas where would-be homebuyers can even find a place to call their own.
All 13 large metro areas are below, along with the number of housing permits issued there in the first half of last year, the number of permits issued in the first half of this year, and the year-over-year increase.
If you could decipher all those rules, and make comparisons between different cities and states, you might be able to figure out which rules let more homes get built, and which ones don't. But no one has ever assembled America's zoning regulations in one place, let alone force them to use the same words to mean the same things — until now.
For the first time, a team of researchers is compiling every city's zoning rules into a National Zoning Atlas. That means everyone from policymakers to homeowners will be able to look at their local zoning maps and understand their town's hidden architecture. And maybe, armed with that information, we'll finally be able to remodel America's fixer-upper of zoning policies into a tasteful showcase for starter homes and cheap apartments.
"Zoning is hugely influential on all of our lives, and people don't know enough about it," says Sara Bronin, an architect and attorney at Cornell University who founded the atlas. "Our project really aims to demystify these hidden rules, and encourage policymakers, researchers, and advocates to mine that information."
The atlas also aims to translate the nation's multitude of local zoning rules into what Bronin calls a "common set of definitions and practices" — a rationality that will enable analysts, at long last, to make "apples-to-apples comparisons." In other words, we'll finally be able to say, with certainty, which policies build more homes and bring prices down, and which policies don't.
A Housing Shortage in Your Neighborhood Keeps the Price of Your House Rising.
Depending on who's doing the estimating, America is short anywhere from 2 million to 6 million homes. If you've tried to buy or rent a place in the past year, or you know anyone who has, then you didn't need me to tell you that. Hardly anything's on the market, and none of us can afford what is. The question is: Why?
That simple question, oddly, has been impossible to answer with any real precision. The housing shortage may be national, but the problem is local. Where homes get built, how many, what type, how big the lot has to be, how many meetings it takes to build something new — those things are all governed by zoning rules. And every town and village and city zones itself. Which means there are more than 30,000 different sets of zoning rules in America. When it comes to housing, we're a nation of islands, governed by no central authority.
To make matters worse, each of those 30,000 islands has its very own language for those rules. Many maps favor the suburban ideal of single-family homes on expansive lots, while essentially disallowing every other form of housing. One place might call a two-family home a duplex (and allow it), where another code might call it a "townhome" or just "multifamily" (and nix it). In some places, "mixed-use" means a neighborhood that combines homes and shops (nope!); in others it means a combination of offices and industry (sure, why not?). Some cities have maps digitally coded into a standard geospatial data format; other towns still use paper. In city after city, the rules are woefully outdated, head-scratchingly obscure, or outright racist.
Prospective homeowners are facing the double whammy of higher home prices and higher mortgage rates. But there's another problem that they have to contend with, one that's both more straightforward in theory but tougher to solve than financial impediments: there simply aren't enough houses to go around.
Active listings are hovering around 669,000 in August, according to data from the St. Louis Fed, down 54% since the earliest available data in 2016. And new homes aren't coming online as quickly as homebuyers might like.
The latest data from the Census Bureau shows that housing starts have fallen to their lowest levels in years as the burden of higher mortgage rates reduce the numbers of would-be homebuyers, prompting homebuilders to cut production, keeping inventory limited.
An early September report by Point2, an online real-estate marketplace, echoes that data. In the first half of this year, new housing permits plummeted 17.5% compared to the first half of 2022.
"In the first half of 2022, an impressive 30 states saw year-over-year increases in their numbers of permits. Sustained by the strong, pandemic-fueled demand for housing, developers were eager to cover the gap between supply and demand," wrote Point2's Andra Hopulele. "However, this year, worsening financial conditions and the volume of existing new builds that developers have not unloaded yet have weakened the pace of both permitting activity and housing starts."
But there may be some relief ahead. Last week's Census report also showed that housing permits rose at their fastest rate in over a year in August, with applications to build new homes up 6.9% month-over-month.
Here's where Point2's report shows fewer new homebuilding permits are being issued — and where homebuyers may find a future opportunity.
The best and worst markets for new housing permits
Regionally, the West saw the largest decline in house permits at -22.2%, followed closely by the Northeast at -21.7%. The West also had the largest decline in total housing starts, falling -21.89%, and Hopulele noted that the West also had a low number of housing completions compared to the other regions.
On the other hand, the South had a relatively strong first half of the year. It had the "smallest drop in permits, as well as the smallest decline in starts for housing projects," according to Hopulele. "And, although it had the smallest year-over-year increase in completed units, these numbers show that housing development in the South is more resilient."
Unfortunately, for any homeowners hoping for relief from houses that are currently being built or completed, they may not find it. Hopulele also noted that even as permits have fallen across the country, completed builds have risen in the first two quarters of the year — but that trend may not last for much longer.
"However, shortages of materials and higher borrowing costs — which were already plaguing developers — might eventually derail this segment, as well, delaying homeownership for even more aspiring buyers," she wrote.
All told, of the 384 metro areas that Point2 tracks data from, a mere 90 saw the number of housing permits increase year over year.
Among those 384 metro areas, 56 fall under the large category, meaning they have populations of 1 million or more. Within those larger areas, only 13 saw housing permits rise in the first half of this year, indicating any potential homeowners hunting for their dream home may want to keep a close eye on the supply that will be coming online in these cities — they may be some of the few areas where would-be homebuyers can even find a place to call their own.
All 13 large metro areas are below, along with the number of housing permits issued there in the first half of last year, the number of permits issued in the first half of this year, and the year-over-year increase.
If you could decipher all those rules, and make comparisons between different cities and states, you might be able to figure out which rules let more homes get built, and which ones don't. But no one has ever assembled America's zoning regulations in one place, let alone force them to use the same words to mean the same things — until now.
For the first time, a team of researchers is compiling every city's zoning rules into a National Zoning Atlas. That means everyone from policymakers to homeowners will be able to look at their local zoning maps and understand their town's hidden architecture. And maybe, armed with that information, we'll finally be able to remodel America's fixer-upper of zoning policies into a tasteful showcase for starter homes and cheap apartments.
"Zoning is hugely influential on all of our lives, and people don't know enough about it," says Sara Bronin, an architect and attorney at Cornell University who founded the atlas. "Our project really aims to demystify these hidden rules, and encourage policymakers, researchers, and advocates to mine that information."
The atlas also aims to translate the nation's multitude of local zoning rules into what Bronin calls a "common set of definitions and practices" — a rationality that will enable analysts, at long last, to make "apples-to-apples comparisons." In other words, we'll finally be able to say, with certainty, which policies build more homes and bring prices down, and which policies don't.
A Housing Shortage in Your Neighborhood Keeps the Price of Your House Rising.