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What you need to know for 10/22/2017

Kennedy: Housing market defying norms

Kennedy: Housing market defying norms

Low home-sale numbers are a head-scratcher
Kennedy: Housing market defying norms
Photographer: Shutterstock

Locally and nationally, real estate groups have pointed of late to tight inventory keeping home-sale numbers low.

The National Association of Realtors blamed anemic supply for June’s slip in existing-home sales, noting that the inventory of available homes has fallen year over year for 25 consecutive months.

Likewise, the Greater Capital Association of Realtors reported that while there is “strong demand” for homes locally, closed sales still declined in June and the number of available homes on the market dropped nearly 20 percent from year-ago levels.

It’s a head-scratcher, given that job creation is up and mortgage rates remain low.

But some insight may come from building permit numbers compiled by the Capital District Regional Planning Commission.

The Colonie-based group offers regional data and planning services to Albany, Rensselaer, Saratoga and Schenectady counties — everything from projecting school enrollment trends to providing technical assistance on land use. Last year, it devoted its whole May/June newsletter to building permits.

According to the publication, permits for single-family homes long reigned in data going back 30 years. In 2015, however, multi-family permits outpaced those for single-family homes for the first time, and comprised 68 percent of all permits issued in the four counties.

In raw numbers, multi-family permits — dominated by those for five-plus units — were double those for single-family housing: 2,400 versus close to 1,200.

While permits tend to follow economic boom-and-bust cycles — rising in good times, contracting in bad years — they also skew toward single-family when times are tougher.

But in the aftermath of the Great Recession, when a return to single-family building was expected, multi-family permits picked up instead.

For 2016, the data are not quite as dramatic, with single- and multi-family permits issued in the four counties closer in number – 1,350 versus 1,470. However, permits for five-plus units still dominate the latter.

And year-to-date data for 2017 from the Census Bureau show the trend continuing in the Albany-Schenectady-Troy metro (which adds in Schoharie County), with multi-family permits slightly outpacing single-family and the number of five-plus permits remaining high.

Daniel Harp, who monitors building activity as the Regional Planning Commission’s senior planner, sees the shift in permits as indicative of emerging demand.

Millennials, now the largest demographic group, may not be as opposed to renting as previous generations, he says. And while they may eventually seek out single-family homes, right now that option is too expensive when they’re saddled with college debt and landed jobs in the slow post-recession recovery.

Harp noted in an email that 2016’s 1,350 single-family permits represented the highest number issued in that category since 2007.

“So the market is showing some growth for single-family homes — it’s just that demand for multi-family housing is exceedingly high when compared to historic norms,” he wrote.

Overall residential construction “is still recovering to pre-recession levels,” he added.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at marlenejkennedy@gmail.com.

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