Construction is Booming in “Millennial Counties,” but There’s a ProblemDecember 16, 2019
The National Association of Home Builders’ Home Building Geography Index uses county-level single- and multifamily permit information to gauge housing construction in submarkets. It’s a way of looking at building activity in a more nuanced, specific way.
The data from the most recent report is telling us that most single-family and multifamily housing is happening in counties with the greatest concentration of millennials, the so-called millennials counties
What Exactly is a Millennial County?
Millennial counties” are defined as geographic areas where at least 26 percent of the population consists of this growing demographic group.
These millennial counties are diverse, representing major metro areas including several California markets, Seattle, Portland, Boston, and Washington, D.C., as well as more rural counties in places such as Ohio, Kansas and Missouri. Those counties account for 62 percent of the entire U.S. population.
And therein lies the problem
Millennial counties account for account for 59 percent of single-family home building, which at first glance seems fine. 62 percent of the population getting 59 percent of the home construction.
According to NAHB Chief Economist Robert Dietz, “you would expect the single-family construction share to be higher in millennial intensive areas, which tend to feature greater amounts of household formation and population growth that require additional housing.”
Even more worrying? The very areas that need the most additional home construction are the same ones where NAHB HBGI data shows two consecutive quarters of declines for single-family construction.
Other interesting findings from the HBGI
- Multifamily housing construction is leveling off nationally. Interestingly, it’s decreasing in urban areas and showing gains in less densely populated areas, like small towns and rural counties where multifamily construction is rare.
- In areas where manufacturing makes up the majority of employment, single-family home construction is declining faster than the national average
- There remains a mismatch between where housing is most needed and where supply can be affordably increased, and that’s due to many inefficient zoning practices, regulatory burdens and land cost in close-in suburbs
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