Even though suburban growth is catching up, the multifamily housing boom that has characterized explosive growth in center cities for the last several years is still driving the economy. With winter finally behind us, permits for new housing grew 8 percent in April; construction on new housing jumped a full 13 percent. Most of these new homes come in the form of apartment units. In April, there were 2,000 new permits for single-family homes versus 81,000 new permits for multifamily units. Housings starts showed the same wide divide: 5,000 new single-family homes versus 124,000 new multifamily units.
But few of those multifamily units are being built in McKinney, Texas—a Dallas exurb that is one of the fastest-growing places in the nation. What explains the mismatch between the kinds of new homes we’re building and the places where we’re moving?
The answer, technically, is that families are filling in vacant houses in the ‘burbs while newcomers move in to the new multifamily construction. But there’s a deeper point here, related to the misleading term “multifamily.” The majority of new “multifamily” construction in Seattle and elsewhere consists of studios and 1BR apartments. Not really family-sized.
Suburbanists argue that families are destined for the suburbs – that yards and kids are inextricably linked (one might note that the nuclear family predates the manicured lawn by several millennia at least). In fact, many families would like to stay in the city, but are priced out. The fixed supply of 3BR+ houses in Seattle’s desirable neighborhoods are currently commanding multiple offers and sometimes selling for 20% over the asking price.
Woody Allen’s Yogi Berra’s line about the crowded restaurant seems apt.
For now, overbuilt suburban housing from the last boom is providing an escape valve for demand. At some point, though there will be a reckoning as household formation rises back to pre-recession levels. What then?