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An Extraordinary Portrait of the New Homes Market in America’s 12 Largest Cities (Part 2)

Feb 26, 2015

Part 1 of this Economy at a Glance examined annual average housing permits/starts according to three categories – ‘total’, ‘single-family’ and ‘multi-family’ – in the 12 largest (by population) U.S. cities over the past 10 years. 

2015 02 23 Foreign Trade Graphic

Continued from "An Extraordinary Portrait of the New Homes Market in America’s 12 Largest Cities (Part 1)".

(The Census Bureau’s permit series has been adopted as a proxy for starts.)

Part 2 brings the analysis up to date. For the same dozen cities, it compares the ratio of starts in the most recent year, 2014, to levels in 2004.

Adopting 2004 as the base period has two advantages. First, it’s simply easiest to say that the look-back is over the past decade.

Second, since 2004 preceded both the exaggerated highs of 2005-2006 and the dizzying lows of 2008-2009 (i.e., after the ‘bubble’ burst), it’s a good representative time period.

It’s astonishing to note from Table 4 that only one of the nation’s ‘Top 12’ cities recorded a level of total new home starts in 2014 that was above 2004, Houston (113.6%).

The other 11 cities broke into three clusters.

Ranging between 75% and 83% were New York, Boston, Dallas and Los Angeles.

With proportions of approximately two-thirds (61% to 66%) were Washington, San Francisco and Philadelphia.

At only one-third (31% to 36%) were Atlanta, Miami, Chicago and Phoenix.

The average ratio for all 12 cities in Table 4 was 75.3%, or almost exactly three-quarters.  

The most shocking numbers are in Table 5, showing 2014-to-2004 ratios for single-family home starts.

The best performance of any city in the single-family homes market was Houston, at 84.8%; then there was a steep drop-off to next-in-line Boston, 60.4%. This can also be expressed, rather alarmingly, as follows. By 2014, none of the ‘Top 12’ had made it all the way back.

Three cities recorded single-family home starts in 2014 that were barely more than one-fifth of what they were ten years before in 2004 – Phoenix (20.4%); Chicago (21.7%); and Miami (23.6%).

The average ratio for all 12 cities in Table 5 was 52.5%. In other words, single-family home starts in the latest annual period, in the nation’s 12 largest cities, were only slightly more than half of their level a decade prior.

That qualifies for an entry in ‘Ripley’s Believe It or Not’.

The picture is considerably brighter in the multi-family category as shown in Table 6.

More than half of the dozen cities achieved levels of multi-unit starts last year that were above 2004. Especially noteworthy were Houston (232.6%) and Dallas (219.2%). The economy of Texas has been riding a wave of energy patch prosperity. With the drop in the world price of oil, some of that enthusiasm is bound to dissipate. North of the border, Alberta is experiencing a similar effect, with the residential real estate sector being among the first to feel the pinch.

Most disappointing were Miami (46.5%), Atlanta (56.9%) and Chicago (68.0%).

The average ratio for all 12 cities in Table 6 was a quite healthy 135.6%.

In future articles, I plan to expand the list of ‘Top 12’ U.S. cities to ‘Top 20’. My preliminary choices won’t adhere strictly to population levels, though.

I’ll probably include: Seattle (ranked 15th for population); Minneapolis-St. Paul (16); San Diego (17); Tampa (18); St. Louis (19); Denver (21); Charlotte (23); and finally it’s a toss-up between Las Vegas (31) and Nashville (36).

This will provide solid regional representation. Plus, employing the vernacular, it will add in obvious ‘comers’ – i.e., cities where the population is expanding most rapidly and the local economy is experiencing a growth spurt that sets it apart.

Table 4: 12 Most Populous U.S. Cities Ranked by Degree of Recovery versus
10 Years Ago Total Residential Building Permits

Ratio 2014/2004
1 Houston-The Woodlands-Sugar Land (5)  113.6%
2 New York-Newark-Jersey City (1) 83.4%
3 Boston-Cambridge-Newton (10) 79.5%
4 Dallas-Fort Worth-Arlington (4)  75.2%
5 Los Angeles-Long Beach-Anaheim (2)  75.2%
6 Washington-Arlington-Alexandria (7)  66.0%
7 San Francisco-Oakland-Hayward (11)  65.6%
8 Philadelphia-Camden-Wilmington (6)  60.6%
9 Atlanta-Sandy Springs-Roswell (9) 35.7%
10 Miami-Fort Lauderdale-West Palm Beach (8) 34.3%
11 Chicago-Naperville-Elgin (3)  33.1%
12 Phoenix-Mesa-Scottsdale (12)  31.2%

 

The number in brackets after each city is its population ranking.

Data source: U.S. Census Bureau / Table: CMD.

Table 5: 12 Most Populous U.S. Cities Ranked by Degree of Recovery versus
10 Years Ago Single-family Building Permits

Ratio 2014/2004
1 Houston-The Woodlands-Sugar Land (5)  84.8%
2 Boston-Cambridge-Newton (10) 60.4%
3 New York-Newark-Jersey City (1) 56.8%
4 Dallas-Fort Worth-Arlington (4)  49.3%
5 San Francisco-Oakland-Hayward (11)  46.5%
6 Washington-Arlington-Alexandria (7)  46.3%
7 Los Angeles-Long Beach-Anaheim (2)  46.2%
8 Philadelphia-Camden-Wilmington (6)  39.2%
9 Atlanta-Sandy Springs-Roswell (9) 29.5%
10 Miami-Fort Lauderdale-West Palm Beach (8) 23.6%
11 Chicago-Naperville-Elgin (3)  21.7%
12 Phoenix-Mesa-Scottsdale (12)  20.4%

 

The number in brackets after each city is its population ranking.

Data source: U.S. Census Bureau / Table: CMD.

Table 6: 12 Most Populous U.S. Cities Ranked by Degree of Recovery versus
10 Years Ago Multi-family Building Permits

Ratio 2014/2004
1 Houston-The Woodlands-Sugar Land (5)  232.6%
2 Dallas-Fort Worth-Arlington (4)  219.2%
3 Philadelphia-Camden-Wilmington (6)  121.1%
4 Washington-Arlington-Alexandria (7)  113.7%
5 Phoenix-Mesa-Scottsdale (12)  109.6%
6 Los Angeles-Long Beach-Anaheim (2)  103.2%
7 Boston-Cambridge-Newton (10) 101.1%
8 New York-Newark-Jersey City (1) 97.6%
9 San Francisco-Oakland-Hayward (11)  86.6%
10 Chicago-Naperville-Elgin (3)  68.0%
11 Atlanta-Sandy Springs-Roswell (9) 56.9%
12 Miami-Fort Lauderdale-West Palm Beach (8) 46.5%

 

The number in brackets after each city is its population ranking.

Data source: U.S. Census Bureau / Table: CMD.



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