Housing starts in Capital Region shifting direction

PHOTOGRAPHER: Marc Schultz

A Bellevue Builders truck delivers lumber to the Iroquois Village Apartments being constructed on Hillside Avenue in Niskayuna in March.

Permits issued for multi-family units in the region exceeded the number of permits given for single-family units in 2015, marking the first time that’s happened, according to a recent report.

The latest issue of Capital District Data, from the Capital District Regional Planning Commission, shows a spike in the number of permits given to multi-family units. The number of permits for those types of buildings — apartments, townhouses and condominiums — has been steadily increasing for the last five years. The spike can be attributed partly to millennials forgoing a starter house, and baby boomers looking to downsize.

“As the economy has improved, so has the housing market,” the report states. “Somewhat unexpectedly, the improvement in the housing market has been driven exclusively by multi-family units, leaving demand for single-family units flat and a shrinking piece of the pie.”

Dan Harp, editor of Capital District Data, which released its issue on Thursday dedicated to building permits, said that in the past younger people would look to find a starter house, available with a 15 percent to 20 percent down payment. However, these houses are becoming harder to come by locally, Harp said.

As a result, millennials now are looking for apartments or townhouses to act as replacements, he said.

On the other end of the age spectrum, Harp said, baby boomers who are retiring are often looking to downsize.

“Instead, they move into an apartment or a condo or townhouse where maintenance costs are nil, because you pay rent, and they don’t have the extra responsibility,” Harp said.

The increased demand for apartments and townhouses has led to a steady increase over the last few years in the number of permits issued in the Capital Region for multi-family housing units. In 2010, just 330 permits were issued for multi-family units. That number jumped to 871 in 2011, according to the Capital District Data report.

From 2014 to 2015, the number of permits issued for multi-family units spiked from 1,030 to 2,434, according to the report.

In comparison, the number of permits issued for single-family units has remained fairly constant. In 2010, 1,065 were issued. In 2015, it landed in the same range, with 1,167 issued, according to the report.

“It’s safe to say the days where 80 percent of permits are going to single-family homes are probably behind us,” Harp said.

As a result of changing demand and many areas becoming built out, Harp said it’s more likely to see close to a 50-50 split between multi-family and single-family permits.

Data from 2015 showed 68 percent of permits going toward multi-family units, with the remaining 32 percent issued to single-family units.

The shift in demand comes with a cost. Most noticeably, rent. In the Capital Region, specifically in Saratoga Springs and Troy, Harp said, rents have gone through the roof in recent years. Over the short-term, Harp said he would expect rent to continue to climb as supply catches up with demand.

“New places aren’t too concerned with affordable housing. Usually it’s more targeted at higher-end consumers,” he said. “Eventually [rent] will balance out. Whether it’s in two years or five years, it’s tough to say.”

The overall number of permits reached a 26-year high in 2015, according to the report. While most of the permits were for Saratoga and Albany counties, Schenectady County saw permits roughly double from 2014 to 2015, according to the data.

In 2014, Schenectady County had 228 permits issued for multi-family or single-family housing, and in 2015, that number jumped to 464.

There are other effects associated with the boom in multi-family housing units, one of which is relieving pressures created by sprawl, Harp said.

By building housing that’s more densely populated, it can help eliminate the potential for residents to keep building single-family homes far away from municipal services, requiring cities and towns to deal with extending sewer lines and other projects.

Reach Gazette reporter Brett Samuels 395-3113, [email protected] or @Brett_Samuels27.