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There are 1.5 million housing units under construction, which is an all-time record. It'll be interesting to see how quickly that get absorbed in a market with

There are 1.5 million housing units under construction, which is an all-time record. It'll be interesting to see how quickly that get absorbed in a market with rising interest rates and questionable valuations. There appears to be lots of demand but what I'm seeing in my corner of the world is most of the demand is at the lower end of the market, which I'm guessing isn't what is primarily being developed. People moving up does free up properties at lower ends of the market, so in effect, a trickledown effect, but that takes a while to happen. Maybe we're going to see more and more house sharing and renting of individual rooms (legal or not).

notch656a 5y ago
I think a lot of the supply at the low end is irreplaceable, because building codes and regulations have changed significantly over the years. It's effectively illegal to build some of the more affordable buildings in certain jurisdictions.
- KevinGlass 5y ago
  This is true. I'd estimate at least 70% of all rental unit currently under construction will not be "affordable" for two people working full time for minimum wage. In northern New England it's easily 100% of units. That said all rental projects that I know of in Maine and New Hampshire are all rented before they even finish construction. EDIT: I'd also like to make a point about current regulation and zoning. It's not unusual for a developer to pay around $500,000 or more in state fees, environmental review, and layer time to get a new apartment complex approved. This requires insider connections and specialized knowledge of the municipality if you want it completed in a reasonable time frame. Partially this is because national building codes are more complicated then ever but more often building anything at all requires a zoning exception or amendment. If you pull of the zoning maps for your town or city you'll likely find it riddled with parcels that have been cut out or otherwise exempted from the rest of the zone. This process can be expensive and take years to complete.
  - deleted 5y ago
    [deleted]
  - ClumsyPilot 5y ago
    "not unusual for a developer to pay around $500,000 or more in state fees, environmental review, and layer time to get a new apartment complex approved" If a complex had 500 units, thats a negligible cost
    - notch656a 5y ago
      That's a nice fiction. This is a bit old (1999) [1], but California's own housing policy administration at one point sifted through the data and found it averaged something like $15k/unit for apartments, and worse for other forms of housing. I'm not sure there's any evidence it's gotten an order of magnitude better since then. [1] https://www.hcd.ca.gov/policy-research/plans-reports/docs/pay-to-play-fee-residential-development-fees-1999.pdf https://www.hcd.ca.gov/policy-research/plans-reports/docs/pa...
      - ClumsyPilot 5y ago
        Okay, so thats under 10% of the cost, it does not in anyway explain away the current problem
        notch656a 5y ago
        I can't possibly understand how you can be debating in good faith when someone shows your optimism is likely off by a factor of 10x and you try to spin that into some sort of "doesn't explain it away" non-issue. When you set the bar at $1000 a unit and it is $15k+ (in 1999 dollars) per unit, that's kind of a big deal which you disingenuously brush away because it was fantasy. Development fees are just one piece of the regulatory barrier, these expenses add up, and they absolutely help explain the problem. A house is made up of individual pieces of wood, drywall, bricks that are "under 10% of the cost" individually by the single piece but when stacked up they absolutely help explain the (much greater) cost of the house. It's going to be difficult to point to a single smoking gun; with housing it's death by a thousand cuts (in California development fees are one of the bigger ones).
- otterley 5y ago
  According to architects who know, it’s the price of mandatory parking, especially in MDUs, that drives up the cost of housing much more than the additional cost of adhering to more stringent building codes. See, e.g., https://www.accessmagazine.org/wp-content/uploads/sites/7/2016/05/access48-webprint_cuttingthecost.pdf https://www.accessmagazine.org/wp-content/uploads/sites/7/20...
Isthatablackgsd 5y ago
How many of them are starter homes? Majority of the home constructions I came across is always above 3.5k sqft homes, some are McManison. It is great about 1.5 million housing units, we need starter houses than 4k sqft homes.
- x86_64Ubuntu 5y ago
  At least in the upstate of SC, I see lots of starter homes, some would say too many. Of course, the average price in the state has risen above $300K and I don't know where people are getting this money from. The starter homes/condos seem to have a sqft of between 1200->2000 (best guess unresearched).
  - sweettea 5y ago
    You and me both. Though, the older housing inventory often is 900-1200 sqft, which is a very suitable size for a starter home, but smaller than the modern homes...
- kylehotchkiss 5y ago
  Moving McRichPeople out of normal housing and into McMansions can open up housing availability downstream though. The homes they are moving out of are an upgrade for those in starter homes and then those starter homes become available.
  - notch656a 5y ago
    Agreed, although it may be the case that many McRich are buying additional housing rather than trading one house for another.
    - mikem170 5y ago
      Or replacing small houses with bigger ones...
    - coding123 5y ago
Kye 5y ago
How many of these will be snatched up by scalpers looking to rent them out? It doesn't matter if they build 1.5 million houses if they all end up as rentals anyway.
- gizmo686 5y ago
  Housing bought by landlords looking to rent is the most relevent, as it increases competition among landlords putting pressure on them to be less selective.
dylan604 5y ago
How many of these new construction numbers ignore the number of existing units taken "offline" in order to make way for this new construction?
ChrisMarshallNY 5y ago
Around these parts, these new housing units are insanely expensive. They are building a lot of them, but there's no altruism involved. Not even one tiny bit. They are building these gigantic highrises, that are destined to be packed with yuppies. There are cranes everywhere in NYC. Brooklyn and Queens; formerly "affordable" places to live in New York, are now getting $4,000 (or more)/mo for 1-bedroom cribs. I've seen it with my own eyes, in Manhattan. Areas like Alphabet City, that used to be considered "dangerous," are now primo real estate, and well-dressed young couples walk their toy poodles around these neighborhoods. It's only a matter of time, before NYC becomes an East Coast San Francisco. Manhattan is pretty much there. I am not personally familiar with the way France is structured, but I have been told that the cities are where the wealthy live, and the suburbs are where the not-wealthy live. From what I have seen, Seattle is becoming that way. I was pretty surprised, when I visited some friends, down in the suburbs south of Seattle, and saw that it was actually a rather scruffy area. I had gotten used to Bellevue and Redmond.
- throwawayboise 5y ago
  Supply is supply. Unless they are tearing down older units, new expensive apartments should make the older, less trendy units cheaper.
  - ChrisMarshallNY 5y ago
    You mean the ones they knock down, to make room for the highrises? Supply is supply, and there's only so much real estate in NYC.
    - otterley 5y ago
      There are still a whole lot of brownstones waiting to be bulldozed!
    - Dylan16807 5y ago
      If you knock down 300 units to make 800, that's still going to improve things.
EricE 5y ago
Remind me - how many people are streaming across the boarder each month? And those are just the ones we know about. Want to talk about trickle down effects!
- onlyrealcuzzo 5y ago
  > An estimated 870,000 Mexican migrants came to the U.S. between 2013 and 2018, while an estimated 710,000 left the U.S. for Mexico during that period. That translates to net migration of about 160,000 people from Mexico to the U.S., according to government data from both countries. https://www.pewresearch.org/fact-tank/2021/07/09/before-covid-19-more-mexicans-came-to-the-u-s-than-left-for-mexico-for-the-first-time-in-years/ https://www.pewresearch.org/fact-tank/2021/07/09/before-covi... 160,000 / 5 years / 12 months = 2,666 per month = negligible compared to US population growth of ~0.6% (167,500). It's almost as if there's another thing to blame beside Mexican Boogeymen...
  - deleted 5y ago
    [deleted]
  - blindmute 5y ago
    You can't honestly believe those numbers
jeffbee 5y ago
The all-time record for housing under construction is far from a positive indicator. It is caused by taking longer to complete them.
TheOtherHobbes 5y ago
1.5 million housing units != 1.5 million housing units for affordable rent London literally has tens of thousands of dwellings sitting empty. Many are investment properties and will be sold multiple times without ever being lived in. It's easy to make money at the high end from rising property values without the hassle of dealing with tenants. It's easy to make money at the low end by packing as many tenants as possible into small properties and spending as little as possible on maintenance. There's occasionally some legal hassle with evictions, but generally for landlords it's a seller's market, with minimal regulation and enforcement.
- kuang_eleven 5y ago
  What isn't false in this comment is misleading. There is, indeed, tens of thousands of empty homes in London. In a city with millions of homes. Current statistics show a vacancy rate of 2.2% [1], which is an incredibly low rate, which implies a pathologically supply-constrained market. Additionally, there is no evidence to support that even a statistically relevant proportion of those empty homes are empty for investment purposes; vacancies can happen for a number of reasons, including being between tenants, non-primary homes, etc. 1. https://data.london.gov.uk/housing/housing-in-london/ https://data.london.gov.uk/housing/housing-in-london/
seoaeu 5y ago
> There are 1.5 million housing units under construction, which is an all-time record. No, it isn't. Back in the early 1970s, the US was averaging about 2.4 million housing units started per year [0]. And at the time US population was only about 210 million, compared to 330 million today... [0]: https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST

notch656a 5y ago

I think a lot of the supply at the low end is irreplaceable, because building codes and regulations have changed significantly over the years. It's effectively illegal to build some of the more affordable buildings in certain jurisdictions.

KevinGlass 5y ago
This is true. I'd estimate at least 70% of all rental unit currently under construction will not be "affordable" for two people working full time for minimum wage. In northern New England it's easily 100% of units. That said all rental projects that I know of in Maine and New Hampshire are all rented before they even finish construction. EDIT: I'd also like to make a point about current regulation and zoning. It's not unusual for a developer to pay around $500,000 or more in state fees, environmental review, and layer time to get a new apartment complex approved. This requires insider connections and specialized knowledge of the municipality if you want it completed in a reasonable time frame. Partially this is because national building codes are more complicated then ever but more often building anything at all requires a zoning exception or amendment. If you pull of the zoning maps for your town or city you'll likely find it riddled with parcels that have been cut out or otherwise exempted from the rest of the zone. This process can be expensive and take years to complete.
- deleted 5y ago
  [deleted]
- ClumsyPilot 5y ago
  "not unusual for a developer to pay around $500,000 or more in state fees, environmental review, and layer time to get a new apartment complex approved" If a complex had 500 units, thats a negligible cost
  - notch656a 5y ago
    That's a nice fiction. This is a bit old (1999) [1], but California's own housing policy administration at one point sifted through the data and found it averaged something like $15k/unit for apartments, and worse for other forms of housing. I'm not sure there's any evidence it's gotten an order of magnitude better since then. [1] https://www.hcd.ca.gov/policy-research/plans-reports/docs/pay-to-play-fee-residential-development-fees-1999.pdf https://www.hcd.ca.gov/policy-research/plans-reports/docs/pa...
    - ClumsyPilot 5y ago
      Okay, so thats under 10% of the cost, it does not in anyway explain away the current problem
      - notch656a 5y ago
        I can't possibly understand how you can be debating in good faith when someone shows your optimism is likely off by a factor of 10x and you try to spin that into some sort of "doesn't explain it away" non-issue. When you set the bar at $1000 a unit and it is $15k+ (in 1999 dollars) per unit, that's kind of a big deal which you disingenuously brush away because it was fantasy. Development fees are just one piece of the regulatory barrier, these expenses add up, and they absolutely help explain the problem. A house is made up of individual pieces of wood, drywall, bricks that are "under 10% of the cost" individually by the single piece but when stacked up they absolutely help explain the (much greater) cost of the house. It's going to be difficult to point to a single smoking gun; with housing it's death by a thousand cuts (in California development fees are one of the bigger ones).
otterley 5y ago
According to architects who know, it’s the price of mandatory parking, especially in MDUs, that drives up the cost of housing much more than the additional cost of adhering to more stringent building codes. See, e.g., https://www.accessmagazine.org/wp-content/uploads/sites/7/2016/05/access48-webprint_cuttingthecost.pdf https://www.accessmagazine.org/wp-content/uploads/sites/7/20...

Isthatablackgsd 5y ago

How many of them are starter homes? Majority of the home constructions I came across is always above 3.5k sqft homes, some are McManison. It is great about 1.5 million housing units, we need starter houses than 4k sqft homes.

x86_64Ubuntu 5y ago
At least in the upstate of SC, I see lots of starter homes, some would say too many. Of course, the average price in the state has risen above $300K and I don't know where people are getting this money from. The starter homes/condos seem to have a sqft of between 1200->2000 (best guess unresearched).
- sweettea 5y ago
  You and me both. Though, the older housing inventory often is 900-1200 sqft, which is a very suitable size for a starter home, but smaller than the modern homes...
kylehotchkiss 5y ago
Moving McRichPeople out of normal housing and into McMansions can open up housing availability downstream though. The homes they are moving out of are an upgrade for those in starter homes and then those starter homes become available.
- notch656a 5y ago
  Agreed, although it may be the case that many McRich are buying additional housing rather than trading one house for another.
  - mikem170 5y ago
    Or replacing small houses with bigger ones...
  - coding123 5y ago

Kye 5y ago

How many of these will be snatched up by scalpers looking to rent them out? It doesn't matter if they build 1.5 million houses if they all end up as rentals anyway.

gizmo686 5y ago
Housing bought by landlords looking to rent is the most relevent, as it increases competition among landlords putting pressure on them to be less selective.

dylan604 5y ago

How many of these new construction numbers ignore the number of existing units taken "offline" in order to make way for this new construction?

ChrisMarshallNY 5y ago

Around these parts, these new housing units are insanely expensive. They are building a lot of them, but there's no altruism involved. Not even one tiny bit. They are building these gigantic highrises, that are destined to be packed with yuppies. There are cranes everywhere in NYC. Brooklyn and Queens; formerly "affordable" places to live in New York, are now getting $4,000 (or more)/mo for 1-bedroom cribs. I've seen it with my own eyes, in Manhattan. Areas like Alphabet City, that used to be considered "dangerous," are now primo real estate, and well-dressed young couples walk their toy poodles around these neighborhoods. It's only a matter of time, before NYC becomes an East Coast San Francisco. Manhattan is pretty much there. I am not personally familiar with the way France is structured, but I have been told that the cities are where the wealthy live, and the suburbs are where the not-wealthy live. From what I have seen, Seattle is becoming that way. I was pretty surprised, when I visited some friends, down in the suburbs south of Seattle, and saw that it was actually a rather scruffy area. I had gotten used to Bellevue and Redmond.

throwawayboise 5y ago
Supply is supply. Unless they are tearing down older units, new expensive apartments should make the older, less trendy units cheaper.
- ChrisMarshallNY 5y ago
  You mean the ones they knock down, to make room for the highrises? Supply is supply, and there's only so much real estate in NYC.
  - otterley 5y ago
    There are still a whole lot of brownstones waiting to be bulldozed!
  - Dylan16807 5y ago
    If you knock down 300 units to make 800, that's still going to improve things.

EricE 5y ago

Remind me - how many people are streaming across the boarder each month? And those are just the ones we know about. Want to talk about trickle down effects!

onlyrealcuzzo 5y ago
> An estimated 870,000 Mexican migrants came to the U.S. between 2013 and 2018, while an estimated 710,000 left the U.S. for Mexico during that period. That translates to net migration of about 160,000 people from Mexico to the U.S., according to government data from both countries. https://www.pewresearch.org/fact-tank/2021/07/09/before-covid-19-more-mexicans-came-to-the-u-s-than-left-for-mexico-for-the-first-time-in-years/ https://www.pewresearch.org/fact-tank/2021/07/09/before-covi... 160,000 / 5 years / 12 months = 2,666 per month = negligible compared to US population growth of ~0.6% (167,500). It's almost as if there's another thing to blame beside Mexican Boogeymen...
- deleted 5y ago
  [deleted]
- blindmute 5y ago
  You can't honestly believe those numbers

jeffbee 5y ago

The all-time record for housing under construction is far from a positive indicator. It is caused by taking longer to complete them.

TheOtherHobbes 5y ago

1.5 million housing units != 1.5 million housing units for affordable rent London literally has tens of thousands of dwellings sitting empty. Many are investment properties and will be sold multiple times without ever being lived in. It's easy to make money at the high end from rising property values without the hassle of dealing with tenants. It's easy to make money at the low end by packing as many tenants as possible into small properties and spending as little as possible on maintenance. There's occasionally some legal hassle with evictions, but generally for landlords it's a seller's market, with minimal regulation and enforcement.

kuang_eleven 5y ago
What isn't false in this comment is misleading. There is, indeed, tens of thousands of empty homes in London. In a city with millions of homes. Current statistics show a vacancy rate of 2.2% [1], which is an incredibly low rate, which implies a pathologically supply-constrained market. Additionally, there is no evidence to support that even a statistically relevant proportion of those empty homes are empty for investment purposes; vacancies can happen for a number of reasons, including being between tenants, non-primary homes, etc. 1. https://data.london.gov.uk/housing/housing-in-london/ https://data.london.gov.uk/housing/housing-in-london/

seoaeu 5y ago

> There are 1.5 million housing units under construction, which is an all-time record. No, it isn't. Back in the early 1970s, the US was averaging about 2.4 million housing units started per year [0]. And at the time US population was only about 210 million, compared to 330 million today... [0]: https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST