The region’s residential development in 2018
Community Development Committee
We still need more housing.
June 3, 2019
2
• About the building permit survey
• Trends in residential development
– Has development leveled off?
– Is the region building enough new housing?
– Is the region providing choice with respect to housing type?
– Is the region providing choice with respect to location?
• Discussion
Overview
About the building permit survey
4
Building permit survey
• Data collected by the Council annually since 1970
• Developed in collaboration with local governments
• Validated with federal sources, other Council datasets
• 2018 response rate: 98.4%
• Single comprehensive look across the region
5
What we capture
• Housing type
• Number of units
• Permit type (new construction,
demolition, etc.)
• Location
• Whether age-restricted
• Value
• Nonresidential data
– Value
– Classification
6
What we don’t capture
• Tenure
• Affordability
• When units are started or completed
• Number of bedrooms
Coming later 2019
7
What we do with the data
• Summaries of development
– Community Profiles
– Interactive data visualization
– MN Geospatial Commons
• Key input into other data
sources
– Population estimates
– Foundation for affordable
housing production data
– Help advance a complete
count in the 2020 Census
Now available on metrocouncil.org/data
What are relevant trends in residential
development?
9
Residential development trends
Has residential development peaked? ?
Is the region building enough new
housing? ?
To what extent is the region providing
choice with respect to housing type? ?
To what extent is the region providing
choice with respect to location? ?
10
Permitted units: How many?
Source: Metropolitan Council Building Permit Survey.
Data reflect new construction only.
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
1970-2017
average:
15,327 units
per year
In 2018:
17,127
units
11
• Previous chart: just new construction (data for 1970 onward)
• Other kinds of permits also affect the housing stock
– Demolitions
– Conversions from (or to) commercial uses
– Remodeling that adds or subtracts units
• All subsequent slides: net housing change (data for 2000 onward)
Components of supply
12
Components of supply
5,258
6,032
11,10612,087
10,026
11,797
13,712
15,53416,492
2010 2011 2012 2013 2014 2015 2016 2017 2018
Added units
New construction
Conversion
Other addition
Lost units
Demolition
Other loss
Net change
Source: Metropolitan Council Building Permit Survey.
“Net change” is the total added units minus the total lost units.
13
Net change: How many?19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
2000-2017
average:
12,886 units
per year
In 2018:
16,492
units
Data on net change not available before 2000
Source: Metropolitan Council Building Permit Survey.
Data reflect net change resulting from all types of permits (including demolitions).
14
Residential development trends
Has residential development peaked? Not yet
Is the region building enough new
housing? ?
To what extent is the region providing
choice with respect to housing type? ?
To what extent is the region providing
choice with respect to location? ?
15
Housing unit growth: Peer regions
20.8%
12.9% 12.0%10.8% 10.5%
9.0%7.2%
5.3% 4.8% 4.8%
2.5% 1.6%
27.0%
17.4%16.1% 15.4% 14.8%
11.5%12.7%
8.5%7.2%
9.3%
-1.3%
0.4%
AUS DFW CLT DEN SEA PDX ATL MSP BOS SFO PIT CHI
Housing unit change (2010-2018) Population change (2010-2018)
Source: U.S. Census Bureau Population Estimates Program. Population growth rate includes only people in
households.
Divide these
→
How far
behind is
housing
production
relative to the
population
growth rate?
16
Housing unit growth: Peer regions
-23%
-26%-25%
-30%-29%
-22%
-43%
-38%
-33%
-49%
AUS DFW CLT DEN SEA PDX ATL MSP BOS SFO PIT CHI
How far behind
is housing
production
relative to the
population
growth rate?
[housing growth
exceeds
population growth]
Source: U.S. Census Bureau Population Estimates Program. Population growth rate includes only people in
households.
17
The importance of “healthy” vacancy rates
$0
$200
$400
$600
$800
$1,000
$1,200
0%
1%
2%
3%
4%
5%
6%
7%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: CoStar data on
multifamily rentals in the
seven-county Twin Cities
region. Data series begins
in the third quarter of 2009
(when the current period of
national economic
expansion began).
Rental vacancy rate
Average asking rent
Inflation
Average asking rent is
$175 higher than if rents
had risen with inflation
18
How far behind are we?
75,600 15,200
Units built since 2010 Census
(current vacancy rate = 3.8%)
Source: Metropolitan Council, 2018 preliminary housing stock and household estimates.
Additional units
needed for 5%
vacancy
19
Net change: How many?
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
An extra
15,600
units2000-2016 average:
12,733 units per
year
Source: Metropolitan Council Building Permit Survey.
Data reflect net change resulting from all types of permits (including demolitions).
20
Residential development trends
Has residential development peaked? Not yet
Is the region building enough new
housing?No, not even relative to other metros
To what extent is the region providing
choice with respect to housing type? ?
To what extent is the region providing
choice with respect to location? ?
21
Housing types
0
6,000
12,000
18,000
24,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Metropolitan Council Building Permit Survey.
Data reflect net change resulting from all types of permits (including demolitions).).
Share of total
net change,
2010-2018
Single-family detached
Duplex/triplex/quadplex
Townhomes
Multifamily
35%
-1%
7%
59%
22
• Forecasts of the “next 370,000
housing units” 2010-2040
Other
Single family detached
29%
Multifamily and attached
70%
Comparing forecasts and housing production
Multifamily and attached
65%
Single family detached
35%
Source: Metropolitan Council Regional Forecast and Building Permit Survey.
Data reflect net change resulting from all types of permits (including demolitions).
• Net change in housing units,
2010-2018
23
• Townhomes
– 2000-2009: 1/3 of all single-family permits
– 2010-2018: 1/6 of all single-family permits
• Duplex/triplex/quadplex
– Net loss in each of the last 12 years (-1,215 units total)
– Wiped out gains in 2004-2006
• Accessory dwelling units (ADUs)
– 2016: 29 ADUs added
– 2017: 27 ADUs added
– 2018: 18 ADUs added
The “missing middle”
Source: Metropolitan Council Building Permit Survey.
Data reflect net change resulting from all types of permits (including demolitions).
For units that tend to
be less expensive,
not many are being
added
24
Multifamily age-restricted permits
0
6,000
12,000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Metropolitan Council Building Permit Survey.
Data reflect new construction and conversions from commercial uses only.).
Share of total
permits, 2010-
2018
Older adults
Students or youth
General population
30%
5%
65%
25
Residential development trends
Has residential development peaked? Not yet
Is the region building enough new
housing?No, not even relative to other metros
To what extent is the region providing
choice with respect to housing type?
A mix of multifamily and single-family,
but not enough of the “missing middle”
To what extent is the region providing
choice with respect to location? ?
26
Cities with largest net change in 2018
-500 0 500 1000 1500 2000 2500 3000 3500 4000
Minneapolis
Saint Paul
Woodbury
Lakeville
Maple Grove
Eden Prairie
Apple Valley
Blaine
Chanhassen
Plymouth
Multifamily (5+ units)
Single-family detached
Other attached
Source: Metropolitan Council Building Permit Survey.
Data reflect net change resulting from all types of permits (including demolitions).
The most permits since
we began tracking!
27
Net housing change by community: 2018Net change in units, 2018
Added 3,652 units (Minneapolis) or
1,142 units (Saint Paul)
500 – 743 units
100 – 499 units
50 – 99 units
Fewer than 50 units
No additions or loss
Source: Metropolitan Council Building Permit Survey.
Data reflect net change resulting from all types of
permits (including demolitions).
28
Net housing change by community: 2010-2018Net change in units, 2010-2018
Added 20,730 units (Minneapolis)
5,706 units (Saint Paul)
900 – 4,112 units
450 – 899 units
Fewer than 450 units
No additions or loss
Source: Metropolitan Council Building Permit Survey.
Data reflect net change resulting from all types of permits
(including demolitions).
Because this map reflects nine years of permit activity, the
category boundaries are nine times the single-year map to
enable easier comparisons.
29
Net change by Thrive community designations
Source: Metropolitan Council Building Permit Survey.
Data reflect net change resulting from all types of permits (including demolitions).
Rural: 4.3%
Emerging Suburban Edge: 16.9%
Suburban Edge: 22.3%
Suburban: 18.4%
Urban: 8.5%
Urban Center: 29.6%
11,303 permits per year, 2010-2018
Rural: 9.1%
Emerging Suburban Edge: 22.0%
Suburban Edge: 28.7%
Suburban: 20.1%
Urban: 5.0%
Urban Center: 15.1%
14,091 permits per year, 2000-2010
30
Multifamily age-restricted permits (2010-2018)
4,315
10,608
25,387
0
132
3,308
5,537
9,372
3,140
Suburban Edge & EmergingSuburban Edge
Urban & Suburban
Urban Center
General population For students or youth For older adults
Source: Metropolitan Council Building Permit Survey.
Data reflect new construction and conversions from commercial uses only.).
Only 53% for general population
Only 44% for general population
31
Uneven development within communities
Source: Metropolitan Council Building
Permit Survey.
Data reflect net change resulting from all
types of permits (including demolitions).
Years before 2015 are excluded because
address-level permit data was incomplete.
Net change in units,
2015-2018
Added 250+ units
100-249 units
10-99 units
1-9 units
No change or lost units
32
Uneven development within communitiesNet change in units,
2015-2018
Added 250+ units
100-249 units
10-99 units
1-9 units
No change or lost units
Source: Metropolitan Council Building
Permit Survey.
Data reflect net change resulting from all
types of permits (including demolitions).
Years before 2015 are excluded because
address-level permit data was incomplete.
Areas of Concentrated Poverty
where at least half of residents
are people of color (ACP50s)
33
Residential development trends
Has residential development peaked? Not yet
Is the region building enough new
housing?No, not even relative to other metros
To what extent is the region providing
choice with respect to housing type?
A mix of multifamily and single-family, but
not enough of the “missing middle”
To what extent is the region providing
choice with respect to location?
Development is happening throughout the
region, but not in all places within cities
34
What’s next?
• Recession predicted in next couple years → housing demand drops
• Ownership market analysts predict:
– Seller’s market will become more balanced
– Probably no major crash in home values at most price points
• Rental market analysts predict:
– Strong market fundamentals should yield ongoing apartment development
– Ongoing rent increases despite increased vacancy rates
– 1,800 affordable units should be delivered in 2019 (Dougherty Mortgage), but still not
enough to meet demand
35
Rent increases are slowing
0%
1%
2%
3%
4%
5%
6%
2011 2012 2013 2014 2015 2016 2017 2018 2019
Faster rent
increases
Slower rent
increases
Chart shows year-over-year changes in rent by quarters
(three-month increments).
36
Contributors
• Elias Anthan (IS)
• Deb Conley (Research)
• Jim Dudley (IS)
• Joel Nyhus (Research)
• Julie Opitz (IS)
• Matt Schroeder (Research; presenting)
Discussion