Market Urbanism reports:
Between 2010 and 2016, when overall national housing permits ticked up each year following the recession, most major metros have issued housing permit numbers in the high 4- or low 5-figures annually. But three metros have stood far above the rest.
The Dallas-Fort Worth-Arlington MSA issued 273,853 housing permits over this 7-year period; New York-Newark-Jersey City issued 283,814; and Houston-The Woodlands-Sugar Land topped every metro with 316,639 permits. Combined, the 3 metros accounted for 13.5% of the nation’s approved housing units.
There are 382 MSAs in the US, so to have 14% of permits in just those three is something.
To see how, let’s look at the nation’s 11 largest metro areas, which include the 6 listed above, plus Chicago, Philadelphia, Miami, Boston and San Francisco. These metros vary somewhat, but are cut from the same cloth–they would all fit sociologist Saskia Sassen’s “Global City” description, given they are massive agglomerations for business and wealth. And except for Chicago and Philadelphia–which both still have their other foot in the post-industrial decline model–all of them are growing rapidly by population, increasing by at least 200,000 people from early 2010 to mid-2015, and in many cases by 2 or 3 times that. It stands to reason, then, that this massive jobs and population growth would lead to a dogfight for housing in each of these metros, as large numbers of wealthy and non-wealthy people compete for the limited supply.
But this is the case only in some metros, not others.
Houston and Dallas are the most notable examples of where such scarcity has not occurred–in fact, it’s almost been the opposite. Between 2010 and 2015, these two metros had the most net population growth, at 736,531 and 676,582, respectively. They are also perennially among the leaders in corporate and business relocation, job growth, and wage growth. But they have the 2nd and 3rd cheapest median home prices of the 11 metros, at $176,000 and $202,000, respectively
So they have strong population growth and the cheapest house prices. So the solution is not to blame house prices on people with Chinese sounding surnames.
These statistics are glaring, and show that the urban housing affordability crisis, and its solution, is far simpler than many pundits suspect. In their ongoing quest to satisfy their anti-growth biases, they’ve settled on demand-side responses (read: government subsidies) that ignore or worsen the fundamental problem of under-supply; while they continue to blame various third party boogeymen, including developers, landlords, Airbnb hosts, techies, hipsters, Asian families buying second homes, and migrants in general.
But, again, the Census data sheds light on the actual nature of the issue: some metros in America are building a LOT of housing. Other metros may think they are, but actually are not. And housing prices within given metros are either stabilizing or skyrocketing based on this decision. While it’s not clear just how many units metros like San Francisco need to reach market equilibrium, it’s obviously more than 10,000 per year, given that the population is growing by 60,000 people annually. Meanwhile, only 3 of these major destination metros are issuing truly significant permit numbers, and only two of them–Dallas and Houston–are doing so without tacking on a bunch of added regulatory costs. Not coincidentally, they’re also America’s two leading affordability success stories, growing by the largest raw population numbers, yet maintaining some of the cheapest housing.
And Dallas and Houston have planning laws that make it easy to build.