Recovering Housing Market Gets Smart

As the housing market recovers, are we back to the McMansion-binges of the 2000s? Or, are we growing just a little bit smarter?

Read Time: 3 minutes

December 2, 2013, 4:00 PM PST

By Shane Phillips @shanedphillips


A few days ago the LA Times reported that, this October, residential construction permits topped one million for the first time in five years. That fits the narrative of a consistently improving housing market, but I wondered what was behind the numbers: were we back to the McMansion-binges of the 2000s, or were we growing just a little bit smarter?

With multi-family construction permits at a 27-year high (as a share of total residential permits), we're not doing half bad! In 2012, the last full year of data, multi-family residential construction permits accounted for the largest share of total permits issued since 1986. In 2012, 37.5% of new homes were multi-family units, yielding about 1.7 detached homes for every apartment or condo unit. That share reached its nadir in the early 1990s at under 17%—six single-family homes for every multi-family unit!—and held steady at around 25% until 2007:

Data from the US Census Bureau [1] [2]

The hope, at this point, is that that little tail emerging in 2013 doesn't continue its descent. If we build too many single-family homes now, a time may come where current owners can't find buyers. As the National Association of Realtors found in their annual report, the sprawling, suburban model probably can't sustain itself if it continues to account for more than 2/3 of overall growth. Even that may be a stretch in the not too distant future.

Here's the data based on the absolute number of building permits issued, rather than ratios (these are divided between single-family and 5+ unit buildings):

Data from the US Census Bureau [1] [2]

As you can see, construction of single-family homes grew consistently—and rather rapidly—from about 1991 to 2005. Over the next four years, it declined nearly 75%; multi-family construction fell nearly as much, though from a much smaller starting point. That peak in multi-family construction in the 1970s is pretty incredible, and I'd be curious to hear the reason behind it, if anyone knows anything about it. 

The Census data from the last year also includes regional information:

Data from the US Census Bureau [1] [2]

Here you can see that the Northeast is leading the way in the share of multi-family housing being built, with just about one detached home for every condo or apartment. The South is, not surprisingly, building a lot of single-family homes. Its rapid growth accounts for over half of residential building permits in the country, so it skews the nationwide ratio pretty strongly in that direction.

As a side note, it's interesting to look at how construction of 2-, 3-, and 4-unit construction has changed over the years. Since the late 1950s, these building types accounted for at least 6% of total construction, peaking in the early 1980s at over 10%. Since then they've been on a steady decline, falling to almost 3% in recent years. No love for the lowly duplex these days, even with the uptick in multi-family construction.

Data from the US Census Bureau [1] [2]

And for anyone interested in a graph comparing single-family units to bigger multi-family (5+ unit) buildings, here you go. It accentuates the peaks a bit, but otherwise retains the same general shape as the first graph:

Data from the US Census Bureau [1] [2]


Shane Phillips

Shane Phillips is a student at the University of Southern California working on a Masters program in Public Administration and Urban Planning.

Green Healthy Community

Making Healthy Places

The editors of the book "Making Healthy Places," recently published in a second edition by Island Press, discuss the intersections of public health and planning, including key concepts such as green gentrification, health impact assessments, and AI.

September 18, 2022 - Laurie Mazur

Suburban Homes

Where Housing Costs Are Falling Fastest

Although median home prices remain close to record highs in many cities, some of the country’s priciest metro areas are seeing home prices plummet.

September 23, 2022 - Bloomberg

Aerial view of homes west of downtown Chicago, Illinois

Chicago ADUs Concentrated in More Affluent Neighborhoods

An analysis of city-issued permits shows that homeowners in gentrified wards are building accessory dwelling units at much higher rates than those in less well-off communities.

September 18, 2022 - Chicago Sun-Times

Miami and Key Biscayne

The Great American Exodus: A Conservative's Perspective

During his keynote speech on September 11 at the National Conservatism Conference in Miami, Florida Governor Ron DeSantis describes the demographic shifts in America since he became governor in 2019 in what he calls the 'Great American Exodus.'

September 27 - The Wall Street Journal

Downtown Houston and Buffalo Bayou

$100 Million to Help Fund Buffalo Bayou Expansion in Houston

Originally proposed in 2019, the Buffalo Park East Master Plan, which would extend Buffalo Bayou Park to the East End and Fifth Ward neighborhoods, is suddenly in high gear.

September 27 - Buffalo Bayou Partnership

View of Seattle skyline with houses in foreground

Community Land Trusts Make Homeownership Accessible

The organizations sell homes to low-income buyers at rates far below market prices, putting homeownership within reach for more families.

September 27 - Next City

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Hand Drawing Master Plans

This course aims to provide an introduction into Urban Design Sketching focused on how to hand draw master plans using a mix of colored markers.