Two Graphs That Illustrate America’s Dysfunctional Housing Market

Jed Kolko, chief economist at real estate information giant Trulia, recently shared these two graphs that give us an interesting glimpse into what’s happening in the American housing market.

This first graph shows that housing development is growing fastest in the suburbs. To be precise, the most sprawling, suburban of suburbs.

Jed Kolko via Twitter
Chart: Jed Kolko via Twitter

But that’s only part of the story. If you look at where housing prices are rising fastest, the pattern flips. The most urban neighborhoods are where prices are heating up the most.

Chart: Jed Kolko via Twitter
Chart: Jed Kolko via Twitter

What does this tell us? A few things.

As Kolko put it in a follow-up tweet, “limited supply” is “constraining urban growth.” It’s much, much easier to build new homes in undeveloped greenfields than in central cities, where zoning and NIMBYism prevent housing construction. If we’re going to reduce sprawl and make city living affordable, we’re going to need to ratchet up housing construction in urban areas.

  • Fakey McFakename

    And the embarrassing thing is that the zoning that’s blocking infill is in liberal areas like NY, LA, and the Bay Area. Desperately need planning law reforms.

  • Melody G

    Important to remember the need for affordable housing set-asides and other policy approaches to keep urban/walkable/bikeable/transit-friendly places accessible to everyone. The last thing we need is for walkability to be available only to the affluent.

  • Ennnne

    If people already in an area don’t want it to get more dense, why should you-all here have the right to force them? Build your own neighborhood.

    And even though I share concerns about affordability, I have two objections: a) unless you vastly expand Section 8, city housing in decent areas is not going to be “affordable” any time soon. Do you have the money or the will to make that happen? If not, this is all just talk. and b) in my perfect world, I’d like people to have some choice about where to live that *isn’t* just constrained by money. Ie, if a non-rich person wants to live in a ‘burb, let them. They can drive a clean car (if they are getting paid a living wage, that is…) It’s not the end of the world that you’ve been taught.

    Greenhouse gases and climate change are the problems, not necessarily where someone lives. Focus, people. Most people don’t want to feel like rats in a cage, so you are going to need to make peace with a certain amount of sprawl. Deal with it.

  • Kenny Easwaran

    “Greenhouse gases and climate change are the problems, not necessarily where someone lives. Focus, people. Most people don’t want to feel like rats in a cage, so you are going to need to make peace with a certain amount of sprawl.”

    The best way to fix problems of greenhouse gases and climate change is to allow people to live in neighborhoods where greenhouse gas generation is lowest, because you’re close to many of the places you go on a regular basis. That means allowing new people to live in central neighborhoods, even if some of their neighbors don’t want them to.

    And it may be true that most people don’t want to live in urban neighborhoods. But enough people do that the market pushes the price upwards. Even if a majority of people want to live in suburban neighborhoods, what the market tells me is that a lot of people are being forced to live there against their will.

    Upzoning downtown neighborhoods doesn’t force people to live like rats in a cage – it allows people who want to live there to live there, while people who don’t can take advantage of the cheap suburban areas.

  • Bolwerk

    I don’t know about LA, but anyone who thinks New York politics aren’t some of the most conservative in the USA hasn’t been paying attention to us. :-p

    Quite seriously: our pols cling to old, dumb ideas decades after most other places give them up.

    (I get the impression is the same with San Fran, but I confess to knowing less about it.)

  • We’re struggling with this particular problem — somewhat successfully, I might note — in the “sixth borough” of Hoboken, N.J. Interestingly, as recently as two decades ago, Hoboken was about to succumb to the suburban urge to keep retail away from housing in any new development. Luck, and/or calmer, saner viewpoints, prevailed.

    Ennnne (sp?) makes a point or two for personal preference that have some kernels of merit. But I assure the writer this city dweller does not feel like a rat in a cage. Sometimes, in fact, quite the opposite.

  • JoeBl

    Nobody is “forcing” anyone. It is about choice and livibility. The opposite needs to be asked. If folks want mixed use, dense developments, and can pay for them, then why should NIMBYs be allowed to stop them?

  • vnm

    Lots more people would live in dense urban areas (what you derisively call “like rats in a cage”) if they could, i.e., if it didn’t cost so much. Unfortunately, our current system gives them no say in the matter, but does give a loud megaphone to NIMBYists who oppose their ability to live where they want to.

  • vnm

    My takeaway from this is that nobody wants to live in the farthest exurbs as a first choice, but they move there because it’s cheapest. Development happens there because of the lack of NIMBYism (only because squirrels and deer can’t attend town planning meetings) and therefore a favorable regulatory environment. Thus, most of the interesting action happens in urban neighborhoods, where housing developers, who act on behalf of the desires of future generations to live a walkable, environmentally friendly community, are pitted against NIMBYists who scream and yell to prevent those future generations from having that ability. Yes, urban developers are held as odious by most of the people in the debate (even the environmentally friendly liberals) because they are not perceived of as acting out of altruism but rather a profit motive. But the fact is that they ultimately have a big overall beneficial impact by developing walkable housing. If they profit financially from doing a good thing for the earth, that doesn’t bother me very much.

  • True Freedom

    Certainly there is demand for suburban housing. What these graphs do not show us is why. I would be curious to see a survey of current suburbanites (and urbanites) to see the breakdown of their true living desires.

    Anecdotally, I work with many millenials in tech that can afford urban living here in Pasadena and DTLA. One after another, they move up to Santa Clarita (about a dozen so far). Why? They want a house with a yard for their children, and houses with yards are crazy expensive here in Pasadena. They don’t want to raise their children in a condo.

    My good buddy moved to the east bay, and says the same is happening there. Many of the young ones want to live in the city (SF), but there’s a ton of folks moving from SF to east bay in order to raise their family. They want space. East Bay has space at reasonable prices.

    Of course, these are anecdotes. I’d like to see some real surveys. Anyone have any links? Simple statistics can’t capture the complexity of preference, and causal reasoning is missing.

  • Jeff Horne

    We are working on a revision of our comp plan and it is going to include infill as a major goal. Granted, we are just a small town but we have several poor old houses which could be replaced and rather than building on the edge of town, why not re-use lots where we already have the infrastructure in place?

    I hope other, bigger cities will follow as time goes on.

    The post WWII cycle has run its course. We are entering into a new paradigm and now our policy needs to reflect it.

  • andrelot

    I think space is part of the equation, but child facilities and future schools also factor in.

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