The number of housing units under construction fell again in November, but it's worth noting that total construction is still higher than it was at the peak of the housing bubble: 1.43 million units vs. 1.42 million units on an annual basis. However, the composition of construction has changed dramatically:
We never recovered our outsize taste for single-family homes, but the number of apartment units under construction has doubled.¹ Two decades ago we built half as many apartment units as single-family homes; today we build more than twice as many:
¹Note that these are units in large-ish buildings of five or more units. Our taste for small apartment buildings has been modest for a long time and hasn't changed much.
Apartments are great- write a check, somebody else does the maintenance. Home equity is overrated, I’d make more if I put the equity portion of my mortgage payment into an index fund. If my current neighborhood had modern apartments with the same number of bedrooms, I’d offload my house in a heartbeat.
Well, that's good, I guess. My experiences in living in "the student ghettos" were that apartment owners rarely, if ever, did repairs, no matter how much one begged. And you had to set up and pay separately all your own utilities: water, gas, electricity, etc. The landlord would not even help or give advice with how to contact the right agencies.
anecdotia is always a reliable source of evidence
Oh, I know. And a Texas student ghetto is, one fervently hopes, not at all representative of the nation's housing market. Still, a reminder of some of the abuses is helpful, if only to anticipate and deal with thej.
Different strokes, of course, but I love not having to share a wall/floor/ceiling with anyone; being able to change my domicile however I want; having a yard; being able to have a pet; not worrying about my or my visitors' cars being towed; not having to go to an office to retrieve a package; knowing my mortgage payment (when I had one) wasn't going to go up each year...I could go one.
“America is in love with apartments”
I suspect the more honest answer, Americans struggle to afford buying a house: thus, there is broad demand for apartments.
And, specifically, rental apartments. Anecdata from Bethesda Maryland: all the downtown housing being built right now is rental— condo owners with sub 3% mortgages are not interested in selling.
Once again, it wasn't a housing bubble - it was a financing bubble.
Terming it a housing bubble is not really accurate because when you look at the graph of housing starts, the so-called bubble is not all that much higher than the long-term average.
Also, why are you using Census Bureau data on this and not FRED? Because FRED shows that current housing construction rates are nowhere near their 2006 peak.
https://fred.stlouisfed.org/series/HOUST
More on the housing bubble point: was the 70s a housing bubble? Because I don't remember anybody ever saying anything about a housing bubble in the 70s, and look at that rate of housing construction - and then remember that the population was lower in the 70s, too.
It's no fucking wonder prices were stable for so long and then exploded.
The Census:
https://www.census.gov/econ/currentdata/?programCode=RESCONST&startYear=1959&endYear=2024&categories%5B%5D=ASTARTS&dataType=TOTAL&geoLevel=US&adjusted=1¬Adjusted=0&errorData=0#table-results
also shows much higher rates of construction at the peak of the bubble in 2006 (and these are not per capita).
As usual Kevin gives no actual reference so we don't know what he is talking about.
Your final graph does not show that we build twice as many apartments as single family housing. It shows 122% or about a quarter more.
Yah, I caught that too. I think he meant that the apartment-only portion of new housing starts today is double the size that it was a few years ago.
The single family detached home devotion was a result of decades of work by realtor organizations. History buffs might want to pick up "A Nation of Realtors" to see the progression. Defining the middle class as home owners was a masterstroke in terms of marketing and fighting multifamily (and especially public housing) was purely to further their own economic interests.
Logistically, you can put roofs over far more heads through apartments than you can single family detached.
With ownership costs being astronomical, investment is now going into "build to rent" communities. Rental is just the reality based wave of the future. Land near job centers is expensive and maximizing number of people it can support is the logical use case.
This is a positive development IMHO. We need to get away from suburban sprawl, for a lot of reasons.
No one's building small, inexpensive starter homes that people could actually buy. Why would they? It's a one-time sale for them. Nope, throw up another 500-unit "luxury" apartment complex and create another recurring income stream instead. Ownership in this country - of anything from homes to software - is dying. Everything is about rents that go to the 0.1%.
The infrastructure build out costs exceed what you can sell a starter home for. Cities push all those costs onto developers (roads, schools, sewer, etc..) because their budgets are strapped as well. When you factor in the cost of land and the development costs, the only thing that makes sense from a budget perspective is larger, move-up homes. Move up buyers want more floor space and are willing to give up lot size to get it (we've all seen the ginormous homes on postage stamp lots).
I would suggest an alternate headline. "American Construction Industry is in love with Apartments."
It is useful to compare the US norms with those of other countries. In Switzerland, where I lived for 10 years, fewer than 30% of residents own their own home. Those that do own homes mostly build multi-unit properties, and rent out the other units as an investment. Single-family homes do exist, but to a large extent it's the very wealthy that own them.
Voilà !
https://thinc.blog/2024/12/18/insurance-cracking-under-climate-stress/