Most of your "Housing Inaccessibility" cities are now also "Housing Shortage" cities.
The mortgage crackdown in 2008 hit hardest in cities where incomes tend to be lower. That decimated the single-family construction market in most of those cities. Prices collapsed because families were blocked from mortgages, but rents skyrocketed.
Just since 2015, rent (after adjusting for inflation!) in Atlanta, Orlando, and Charlotte are all up 30%-40%.
They look affordable if you just look at prices, because prices collapsed when mortgages were cut off. Rents have finally risen enough that the previously niche build-to-rent single-family segment is rising up to fill the gap. Those new houses will be built when the price of existing homes finally recovers enough to make building new homes economical, but the rents required to make that happen are MUCH higher than they used to be.
Going back to 20th century mortgage standards will be MUCH more helpful in those markets than rent subsidies, etc. will (though of course, there will always be a need for some of that).
The probability of banning the new rental markets appears to be higher than fixing mortgage access.
But, my more basic point is that most of those cities had moderate construction activity before 2008. Since then they have had construction activity and rent inflation more akin to the shortage cities. They are, unfortunately, shortage cities now.
Nolan to what extent does this take into account homes being bought up by Airbnb for short term rental purposes? I’m curious if that creates an impact.
It most certainly does as does the purchase of SFHs by internationals, investors i.e. people with excessive wealth using these structures as money machines, tax havens, etc. which essentially prohibits community driven enclaves which fosters cohesiveness, long term stability, security and safety.
In most of the housing accessibility cities, if you fix crime and schools, you fix the inaccessibility issue. Cheap housing is a function of crime and poor schools in such places; the houses themselves are often fine.
Except for the ones that got their wiring and plumbing stripped by thieves. Lot of that has been going on for a long time. Long enough it was mentioned on The Wire and (I think) The Sopranos.
Not recognizing your name here, I clicked in expecting to be annoyed with an article trying to explain that really, it’s BlackRockStone and landlord greed really driving the housing crisis.
Very happily surprised and discovered a great article with a lot of nuance!
I would love to see this map again, but with climate changes included. Coastal places that will be underwater may no longer have a housing shortage because the available housing has been shredded by hurricanes or, in California decimated by wildfire, and those areas may need to be excluded from suitable building zones, limiting even more the availability of buildable land.
When I looked at your maps, I noticed my rural New York county and the neighboring rural New York county were in different “crisis”groups. Knowing much about the differences between the two counties (such as one being home to a major military post) I can tell you that your research is spot-on. Generally, government reports on our region broad brush-ingly lump us together as having the same economy. Great analysis!
Pretty interesting seeing Knoxville, TN in the green and not red or blue. A couple years ago our rental vacancy rate was 1.4% and had the second highest rent increase in the country! The state is having the University of Tennessee rapidly increase enrollment so you’ve got a lot of out of state kids (particularly northeast) moving down so green definitely makes sense, AND there’s a lack of options like the blue! The worst example I’ve seen here is a neighbor of a friend bought what used to be a quadplex in a historic part of town that has plenty multi family, but the zoning laws wouldn’t let him keep it a quadplex after demo/rebuild! There goes three homes 🙃
Nice work. I’m curious about your statement that a ratio of five between median home price and median household income is an “established upper bound of a healthy housing market.” I don’t doubt it - just wondering what the research is behind this.
I study housing markets for a living. A couple items to add to the discussion:
1) There was a spike in the number of college age people in about 2020. The number of students will decline unless colleges change their admission standards. I would be really careful about investing in student housing right now.
2) You seem to have pre-determined that all the statistical areas necessarily have some form of crisis. There doesn't seem to be any sort of crisis in my town, but you have coded it as a "housing choice crisis."
3) People vastly underestimate how much construction cost plays into housing costs. At a housing conference a couple years ago in Colorado they went over sources and uses for a few recent apartment complexes in non-urban areas. The construction cost figures were $20 million for 80 units. That's $250,000 per unit, and that's /just/ materials plus labor for construction (i.e., doesn't include land, professional fees, or site improvement). When you put some profit on that and add in interest and insurance, you quickly get to the point where the rent isn't going to be affordable to a lot of people. Since we're not even including land, zoning isn't a factor. Zoning might make things worse some places, but construction is still really expensive, and no changes to zoning will make /construction/ appreciably less expensive.
4) You, like many planners, seem to think that people would walk or bike more if only that were an option. You're wrong. People like to drive. I walk the dog every morning past the school. There are a lot of families that live close enough to walk, and we have good sidewalks, but there is only one family that does walk. There's nothing stopping people from riding a bicycle to get to downtown from many neighborhoods, but no one does.
Last May we took an Alaska cruise. You'd think if bicycles would work anywhere it would be Seattle. They have dedicated, separated bicycle lanes and they even have separate traffic signals for the bicycles. We were there on Thursday and Friday before the ship left on Saturday morning. We did a lot of walking. I saw ZERO bicycles making use of the bicycle infrastructure. There were some (not many) electric scooters in the bike lanes (mostly kids), but no bicycles. That's on two weekdays and a weekend. And the weather was perfect.
5) Something I learned selling my Dad's house. You can only sell a house that's move-in ready. His house needed carpet and paint, but was otherwise fine. We figured it needed about $15,000 to fix up, so we discounted it $30,000. No one was interested. After the contract expired we took it off the market, spent $15k, increased the price $30k, and had it sold in a month.
I actually live in SW Chicagoland's Palos Park, which is shown in your "yellow" high-opportunity suburb category on the map above. I live 500ft away from the regional Metra "commuter" rail but there are problems here with the state road IL-7 that separates my residence from the train station (I can see the train station from inside my house, yet it is dangerous to walk there due to the "Legacy Highway" that splits this residential lined area). Constant speeding cars and crashing at a place where it should be safe to get to the Train station, but it is NOT safe or walkable (people do anyway though because the area is real nice - except for the roadway infrastructure)...this is due to the presence of an unmarked, misaligned intersection/crossover which is the only Pedestrian Access Route in the immediate area...but...I think it's only a matter of time before they will have to fix it but for now, it is a glaring deficiency.
Since I am a Civil Engineer I have been "rattling cages" locally on the issue and documenting the problem here for 4 years now.
Crash / VRU Reports:
MAJOR Community Traffic Hazard Hwy IL-7 at Timber Ln in Palos Park_Current_Volume1_90Percent.pdf
When I moved back to Pennsylvania in 2022, I was pleased to see that south central Pennsylvania is in that rare data blip where neither the recession nor housing boom impacted prices. People are neither under water with their mortgage, nor do they realize a 200% profit when they sell.
If you think any Oregon reforms are going to have an impact on Oregon’s housing supply you have no clue about Oregon, or to be more precise Portland. Development is an anathema to the intellectual adolescents running the city and county.
Housing is essential for people to become productive members of society. It’s also essential for families. This is one of the greatest and most urgent challenges facing the US today.
Can you double check the CT data? I am very surprised to see the state falling under "inaccessibility" given the definition is "housing is cheap by national standards" while CT has some of the highest home prices in the country. Is accessibility defined as what percent housing costs are of household income? I could maybe see CT offsetting prices with higher income.
Great post.
But I'm going to push a little bit, Nolan.
Most of your "Housing Inaccessibility" cities are now also "Housing Shortage" cities.
The mortgage crackdown in 2008 hit hardest in cities where incomes tend to be lower. That decimated the single-family construction market in most of those cities. Prices collapsed because families were blocked from mortgages, but rents skyrocketed.
Just since 2015, rent (after adjusting for inflation!) in Atlanta, Orlando, and Charlotte are all up 30%-40%.
They look affordable if you just look at prices, because prices collapsed when mortgages were cut off. Rents have finally risen enough that the previously niche build-to-rent single-family segment is rising up to fill the gap. Those new houses will be built when the price of existing homes finally recovers enough to make building new homes economical, but the rents required to make that happen are MUCH higher than they used to be.
Going back to 20th century mortgage standards will be MUCH more helpful in those markets than rent subsidies, etc. will (though of course, there will always be a need for some of that).
The probability of banning the new rental markets appears to be higher than fixing mortgage access.
But, my more basic point is that most of those cities had moderate construction activity before 2008. Since then they have had construction activity and rent inflation more akin to the shortage cities. They are, unfortunately, shortage cities now.
I agree! Mortgage standards play a huge role in affecting accessibility. And I don't think I made it clear enough how fluid these categories are.
Thanks Nolan. Maybe be careful with headlines like this: folks that just read headlines will think this justifies their denial.
Perhaps next time give it a “The United States doesn’t Have a Housing Crisis. It has three of them” or something
Nolan to what extent does this take into account homes being bought up by Airbnb for short term rental purposes? I’m curious if that creates an impact.
It most certainly does as does the purchase of SFHs by internationals, investors i.e. people with excessive wealth using these structures as money machines, tax havens, etc. which essentially prohibits community driven enclaves which fosters cohesiveness, long term stability, security and safety.
In most of the housing accessibility cities, if you fix crime and schools, you fix the inaccessibility issue. Cheap housing is a function of crime and poor schools in such places; the houses themselves are often fine.
Except for the ones that got their wiring and plumbing stripped by thieves. Lot of that has been going on for a long time. Long enough it was mentioned on The Wire and (I think) The Sopranos.
Not recognizing your name here, I clicked in expecting to be annoyed with an article trying to explain that really, it’s BlackRockStone and landlord greed really driving the housing crisis.
Very happily surprised and discovered a great article with a lot of nuance!
I would love to see this map again, but with climate changes included. Coastal places that will be underwater may no longer have a housing shortage because the available housing has been shredded by hurricanes or, in California decimated by wildfire, and those areas may need to be excluded from suitable building zones, limiting even more the availability of buildable land.
When I looked at your maps, I noticed my rural New York county and the neighboring rural New York county were in different “crisis”groups. Knowing much about the differences between the two counties (such as one being home to a major military post) I can tell you that your research is spot-on. Generally, government reports on our region broad brush-ingly lump us together as having the same economy. Great analysis!
Pretty interesting seeing Knoxville, TN in the green and not red or blue. A couple years ago our rental vacancy rate was 1.4% and had the second highest rent increase in the country! The state is having the University of Tennessee rapidly increase enrollment so you’ve got a lot of out of state kids (particularly northeast) moving down so green definitely makes sense, AND there’s a lack of options like the blue! The worst example I’ve seen here is a neighbor of a friend bought what used to be a quadplex in a historic part of town that has plenty multi family, but the zoning laws wouldn’t let him keep it a quadplex after demo/rebuild! There goes three homes 🙃
Yeah, maybe I should use rental vacancies as another shortage flag. I'm less familiar with that data.
Nice work. I’m curious about your statement that a ratio of five between median home price and median household income is an “established upper bound of a healthy housing market.” I don’t doubt it - just wondering what the research is behind this.
Outstanding stuff. Housing value must match the underlying economic reality and the local labor market. Nowhere in America is this true.
I study housing markets for a living. A couple items to add to the discussion:
1) There was a spike in the number of college age people in about 2020. The number of students will decline unless colleges change their admission standards. I would be really careful about investing in student housing right now.
2) You seem to have pre-determined that all the statistical areas necessarily have some form of crisis. There doesn't seem to be any sort of crisis in my town, but you have coded it as a "housing choice crisis."
3) People vastly underestimate how much construction cost plays into housing costs. At a housing conference a couple years ago in Colorado they went over sources and uses for a few recent apartment complexes in non-urban areas. The construction cost figures were $20 million for 80 units. That's $250,000 per unit, and that's /just/ materials plus labor for construction (i.e., doesn't include land, professional fees, or site improvement). When you put some profit on that and add in interest and insurance, you quickly get to the point where the rent isn't going to be affordable to a lot of people. Since we're not even including land, zoning isn't a factor. Zoning might make things worse some places, but construction is still really expensive, and no changes to zoning will make /construction/ appreciably less expensive.
4) You, like many planners, seem to think that people would walk or bike more if only that were an option. You're wrong. People like to drive. I walk the dog every morning past the school. There are a lot of families that live close enough to walk, and we have good sidewalks, but there is only one family that does walk. There's nothing stopping people from riding a bicycle to get to downtown from many neighborhoods, but no one does.
Last May we took an Alaska cruise. You'd think if bicycles would work anywhere it would be Seattle. They have dedicated, separated bicycle lanes and they even have separate traffic signals for the bicycles. We were there on Thursday and Friday before the ship left on Saturday morning. We did a lot of walking. I saw ZERO bicycles making use of the bicycle infrastructure. There were some (not many) electric scooters in the bike lanes (mostly kids), but no bicycles. That's on two weekdays and a weekend. And the weather was perfect.
5) Something I learned selling my Dad's house. You can only sell a house that's move-in ready. His house needed carpet and paint, but was otherwise fine. We figured it needed about $15,000 to fix up, so we discounted it $30,000. No one was interested. After the contract expired we took it off the market, spent $15k, increased the price $30k, and had it sold in a month.
I actually live in SW Chicagoland's Palos Park, which is shown in your "yellow" high-opportunity suburb category on the map above. I live 500ft away from the regional Metra "commuter" rail but there are problems here with the state road IL-7 that separates my residence from the train station (I can see the train station from inside my house, yet it is dangerous to walk there due to the "Legacy Highway" that splits this residential lined area). Constant speeding cars and crashing at a place where it should be safe to get to the Train station, but it is NOT safe or walkable (people do anyway though because the area is real nice - except for the roadway infrastructure)...this is due to the presence of an unmarked, misaligned intersection/crossover which is the only Pedestrian Access Route in the immediate area...but...I think it's only a matter of time before they will have to fix it but for now, it is a glaring deficiency.
Since I am a Civil Engineer I have been "rattling cages" locally on the issue and documenting the problem here for 4 years now.
Crash / VRU Reports:
MAJOR Community Traffic Hazard Hwy IL-7 at Timber Ln in Palos Park_Current_Volume1_90Percent.pdf
https://drive.google.com/file/d/1S0v8jnJ_pqAwd-JQyqIQz2OGaqXXQFiG/view?usp=drivesdk
MAJOR Community Traffic Hazard SW Hwy IL-7 at Timber Ln in Palos Park_Current_Volume2_90Percent.pdf
https://drive.google.com/file/d/11KXIIzfHFQ_QEjQ1Q0YWH4PZw3zjW3dx/view?usp=drivesdk
Palos Park 2018 Bikeways and Trails Plan
https://drive.google.com/file/d/1Gr7vnmnwur3IN0HV7F8WU3_4SF1YaTQQ/view?usp=share_link
CMAP Complete Streets:
https://cmap.illinois.gov/focus-areas/planning/complete-streets/
Cars over 70mph in 40mph Residential Area Near Metra Station, Park, & Two Major Regional Trail Systems
https://youtube.com/playlist?list=PLMfNAGP-iqfjctZ2JAq2MQ4X3Gqch2tG3
Cars Racing In Residential Area
https://youtube.com/playlist?list=PLMfNAGP-iqfhIdd_slxdvUSsNglyBJF_T
Crashes / Collisions
https://youtube.com/playlist?list=PLMfNAGP-iqfhSodZr8JiSf3PlVNbPeP0m
Kids Crossing SW Hwy
https://youtube.com/playlist?list=PLMfNAGP-iqfiC8j0o4t-C1b6D0-AnlpEZ
Kids & People With No Safe Sidewalks
https://youtube.com/playlist?list=PLMfNAGP-iqfiZtumbPzkIUyndNiGewLmt
Walkers & Joggers Crossing SW Hwy
https://youtube.com/playlist?list=PLMfNAGP-iqfhMHPnXuD1FJmg4FFnCDRNI
Cyclists Crossing SW Hwy
https://youtube.com/playlist?list=PLMfNAGP-iqfiXKag2SIgr6--a3ZPk0rIt
Cars Who "Punch It" Aggressively After Having To Wait Behind Turning Cars Due To No Turn Lane
https://youtube.com/playlist?list=PLMfNAGP-iqfiKOcXHbEEV-T7aU5q2P0Lf
Metra Commuters Crossing SW Hwy
https://www.youtube.com/playlist?list=PLMfNAGP-iqfi4fgcd0lpf7B5G4PEv6O5Z
Cook County Safety Action Plan w Interactive Hazard Areas Map:
https://engage.cmap.illinois.gov/cook
Good post! Thank you.
When I moved back to Pennsylvania in 2022, I was pleased to see that south central Pennsylvania is in that rare data blip where neither the recession nor housing boom impacted prices. People are neither under water with their mortgage, nor do they realize a 200% profit when they sell.
I like that stability.
If you think any Oregon reforms are going to have an impact on Oregon’s housing supply you have no clue about Oregon, or to be more precise Portland. Development is an anathema to the intellectual adolescents running the city and county.
Housing is essential for people to become productive members of society. It’s also essential for families. This is one of the greatest and most urgent challenges facing the US today.
Can you double check the CT data? I am very surprised to see the state falling under "inaccessibility" given the definition is "housing is cheap by national standards" while CT has some of the highest home prices in the country. Is accessibility defined as what percent housing costs are of household income? I could maybe see CT offsetting prices with higher income.