As many of you know, there have been some very interesting developments in American cities over the past couple of years. Some cities have experienced decreased car ownership, there was a decrease in Vehicle Miles Travelled in 2008, and even the American Dream of homeownership has taken a left turn. Now, the Environmental Protection Agency reports that the proportion of homes being built in central cities has doubled since 2006.
The EPA report Residential Construction Trends in America’s Metropolitan Regions summarizes a study that examined residential permit data over 19 years (1990-2008) in 50 metropolitan regions. In roughly half of the regions, there has been a dramatic increase in the share of new residential permits built in inner cities and older suburbs.
Among the cities that saw a substantial increase are New York, Los Angeles, Oakland, Sacramento, Miami, Chicago, Denver, Portland, Seattle, and Fort Worth. But even smaller centres like Birmingham, Milwaukee, and Kansas City saw substantial increases in the share of residential permits in their inner cities. Cities with low increases include St. Louis, Detroit, and Salt Lake City, while Cincinnati, Cleveland, Hartford, Providence, and Buffalo all had slight decreases. Particularly interesting are the graphs which show detailed trends for specific metropolitan regions, contrasting urban fringe, 1st tier suburb, and city permits. In many cases, we can see the beginning the mortgage crisis on these graphs: between 2004 and 2006, urban fringe areas began their decline and cities began their ascent.
A lot of this has to do with housing type: national data confirms that the proportion of single detached housing permits decreased from 71% in 2000 to 59% in 2008. Townhouses remained relatively stable, while condos increased from 4% to 7%, rented condos from 16% to 24% and large multifamily buildings from 11% to 23%. I find these numbers surprising: little by little, the American Dream seems to be crumbling before our eyes. We have to remember that not all of this change can be pinned on the dismal housing market, since the trends persist over 19 years.
The EPA cautions that, while the data reveals a substantial shift in residential patterns, a large percentage of construction still takes place on previously undeveloped land. While the share of residential permits increased in many regions, in some these still account for less than half the overall share at the regional level. They would like to do further research on what is driving the shift: real estate market fundamentals or public sector policies? What type of residential units are being built on previously-developed land, and what percentage of these are transit-accessible? However, they did feel safe in saying that, ”This acceleration of residential construction in urban neighborhoods reflects a fundamental shift in the real estate market,” citing lower crime rates in urban areas and increased demand for homes in walkable neighbourhoods close to jobs.