The 2015 housing market was one of the strongest since before the recession, and 2016 looks to do even better. An ongoing problem, especially within the more urban markets, is a historically low inventory of available homes for sale. This has been a problem for several years now, as construction has failed to match demand.
That lack of inventory really shows up in the yearly % change chart. Few urban markets have increased year over year, as they have a much more limited supply of housing, even as demand for urban housing has increased.
Let’s see how this impacted prices.
While urban markets were not necessarily the most expensive compared to suburban, more of them were generally towards the top half of price increases last year.
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. The residential construction trends of Columbus have changed significantly in recent years.
Here is a graph of annual housing construction permits from 2004-2013 broken down by multi-family and single-family types. 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.
