Year in Review: 2014 Housing Stats

In terms of housing in the Columbus area, the big story of 2014 housing was that there simply weren’t that many places for sale. The housing supply was consistently lower than demand throughout the year, pushing prices higher in every month.

Here are the final numbers for the 22 Columbus area markets that I looked at.

Residential Construction Trends of Columbus In One Graph

We’ve been hearing a lot the last few years about how residential construction has largely turned toward the rental variety, and no more so than in the urban areas. I have tried to document the level of activity in the city in my development page, but it doesn’t quite show what’s going on in the city overall. I did a little research and found some surprising realities that fully support the rental boom.

Here is a graph of annual housing construction permits from 2004-2013 broken down by multi-family and single-family types.

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The chart above is based on the # of units, not the number of overall projects.

So what do the numbers say? Well, it raises some interesting questions. First, was the amount of single-family home construction on the decline before 2004 given the downward trend from that year through 2005? And was multi-family construction on the rise during the same period? Did the recession merely interrupt a trend that began more than a decade ago and resurfaced strongly in recent years? It’s hard to say for sure as I don’t have information before 2004, but regardless, it is clear that multi-family construction is the preferred residential preference right now by builders. Single-family home construction, however, has remained steady and well below its previous peak of the last decade.

This continued low level of single-family construction has likely contributed to the fact that area sales in that market have been down for several months now due to a lack of inventory. Prices, however, have risen.

Columbus Area Residential Development Booming

During and just after the recession’s housing crash, single-family home construction in the Columbus area seemed to fall apart, much like it did across the nation. Foreclosure rates soared, prices fell and builders were suddenly left with too many homes they couldn’t get rid of.

Out of the ashes of this market rose a surge in rental demand. It suddenly made more and more sense to rent rather than to own, especially for young professionals and empty nesters who wanted to downsize during tough economic times. Not only did what housing people wanted change, but so did where they wanted it to be located.

Columbus experienced a relative boom in rental housing during the late 1990s into the first few years of the 2000s, but almost all of that rental housing was constructed along and outside of I-270, where the suburbs were exploding with growth. Inside of 270 saw little of this, and the urban core neighborhoods around Downtown were almost completely ignored altogether. Single-family housing became popular again during the early 2000s mild recession, and the housing boom that would help lead to the Great Recession of 2007-2009 really began at that time. However, it was in 2002 that the City and Mayor Coleman came up with a 10-year plan to help bring more residents to Downtown. It began offering tax incentives to developers who would build there, in some cases 100% abatements, in a goal to have 10,000 residential units built in and around Downtown by 2012.

I’ve done a ton of research on the results of this move by the city, and it did have an impact. From what I’ve been able to find (so far), Downtown and the surrounding neighborhoods saw the addition of less than 200 residential units between 2000 and 2002. 2003 saw over 500 alone with the new incentives package in place. Between 2003 and 2006, the area added over 2,000 new residential units, most of them condos. As the Great Recession hit in 2007, the rate of new projects slowed to half of what it was, though still higher than it was prior to 2003.

As the Great Recession eased and more financing became available, construction began to pick up once more. With the new trends in favor of urban living and rentals, the rental market exploded, as represented by the chart below that details the 2007-2014 period of complete/planned total residential units by year.

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Of course, for 2014-2015, the numbers are fairly preliminary as more projects will inevitably be added. These numbers also only show Downtown and its immediate surrounding neighborhoods, while there is infill going on across the city.