Housing Growth

Where are we permitting new housing units?

Housing Growth

Definition: 
Housing growth is measured in terms of the number of units that local jurisdictions permit throughout a given year. A permitted unit is a unit that a city or county has authorized for construction.

In contrast to population statistics, which reveal past trends, information on housing permits acts as a leading indicator of likely growth in the near future. During the period of expansive growth across the Bay Area over the last half-century, most of the permitted units in the region were single-family homes. As growth returns to Big Three cities, permitting rates have shifted toward a prevalence of multi-family homes, which range from duplexes to apartment buildings. This trend is most noticeable in cities closest to the Bay. Most of the units permitted today will be constructed in the next few years.

Regional Performance
Permits for new housing remain well below levels seen in the 1970s and 1980s, despite an affordability crisis and a significantly larger population.

The Bay Area housing market has clearly rebounded from the Great Recession, as reflected by the nearly 20,000 permits issued in 2015. Still, permit levels remain 26 percent lower than just one decade ago and well below the peaks of the 1970s and 1980s. Over the long term, much of this decline is attributable to slowing development patterns in Contra Costa and Alameda counties – as the region’s mid- and late-20th century suburban communities were built out. North Bay counties saw similar slowdown in units permitted. In Sonoma County, for example, the total number of units permitted has dwindled as single-family residential development declined in Santa Rosa.

Unlike the East Bay, Santa Clara County has increased its already-robust permitting for new housing units in recent years. It has shifted from single-family housing development in the 20th century to multi-family developments in San Jose and nearby cities in early 21st century. At the same time, San Francisco County, which historically permitted among the lowest number units in the region, is permitting a greater share of the Bay Area’s units than any year on record.  This high rate of permitting reflects increased housing demand in the region’s primary urban center.

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Historical Trend for Housing Growth - Bay Area

 
 
Local Focus
Multi-family housing constitutes the majority of new units in the Bay Area, especially in cities encircling San Francisco Bay.

Since 2010, a whopping 95 percent of housing permits approved in the region’s three largest cities – San Jose, San Francisco and Oakland – were for multi-family development. This is a significant shift from just 25 years ago, when only 55 percent of approved units in San Jose and Oakland were multi-family. The shift towards multi-family development is not limited to the “Big Three” cities though. Other communities encircling San Francisco Bay increased their share of multi-family housing permits from 44 percent in the 1990s to 69 percent in the past five years.

The South Bay city of Milpitas is a prime example of this multi-family trend, with four in five permits approved since 2010 being for multi-family residential development. This shift seems to indicate that the region is focused more on densifying existing communities rather than developing new subdivisions, despite ongoing lower-density development in locations like Dublin, Brentwood and Morgan Hill.

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Housing Growth by City and Unincorporated Area by Decade

 
Top Cities and Unincorporated Areas for Permitted Units 1990 through 1999
  1. San Jose: 2,880 units/year
  2. San Francisco: 1,450 units/year
  3. Unincorporated Contra Costa County: 1,170 units/year
  4. Santa Rosa: 810 units/year
  5. Fremont: 740 units/year
Top Cities and Unincorporated Areas for Permitted Units 2000 through 2009
  1. San Jose: 2,830 units/year
  2. San Francisco: 2,180 units/year
  3. Unincorporated Contra Costa County: 1,460 units/year
  4. Oakland: 1,010 units/year
  5. Brentwood: 930 units/year
Top Cities and Unincorporated Areas for Permitted Units 2010 through 2013
  1. San Francisco: 2,800 units/year
  2. San Jose: 2,700 units/year
  3. Dublin: 700 units/year
  4. Unincorporated Contra Costa County: 560 units/year
  5. Sunnyvale: 540 units/year
Average number of units:
2,831
per year
Type of Permits
Majority Multi-Family
Majority Single-Family
Average Units Per Year
50 units
100 units
500 units
1,000 units
National Context
Houston, Dallas, Atlanta and Washington have permitted housing units at significantly higher rates than the Bay Area since 1990.

For the last two decades, Houston and Dallas have remained powerhouses for housing production, permitting double or triple the number of housing units per capita compared to our region. Atlanta, once the nation’s leader in housing permits, was hit hard by the Great Recession. While it has experienced a modest recovery since 2013, it remained well below its 1990s rate of housing production.

While our nation’s capital is in many ways more similar to our region than Sunbelt metros, Washington has continually approved more housing per capita than the Bay Area for every year on record. Despite similarly strong economic conditions and population growth in the recent period, the Bay Area continues to permit at slower rates, more akin to the older metro areas such as Philadelphia and New York.

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Sources: 

Construction Industry Research Board

Table 3: Residential Units and Valuation (1967-2010)

No link available

California Homebuilding Foundation/Construction Industry Research Board

California Construction Trends (2011-2015)

U.S. Census Bureau: Building Permit Survey – via Federal Reserve Bank of St. Louis

New Private Housing Units Authorized By Building Permit (1988-2015)

U.S Census Bureau: Decennial Census

No link available (1960-1990)

California Department of Finance

Table E-8: Historical Population and Housing Estimates (2001-2009)

Table E-5: Population and Housing Estimates (2011-2016)

U.S. Census Bureau: Intercensal Estimates

Intercensal Estimates of the Resident Population (1980-1989)

Population Estimates (1990-1999)

Annual Estimates of the Population (2000-2009)

Annual Estimates of the Population (2010-2015)

Image: Flickr (Creative Commons license), Photographer: Thomas Hawk, 3016243694_ddea307810_o.jpg

Methodology Notes: 

Single-family housing units include detached, semi-detached, row house and town house units. Row houses and town houses are included as single-family units when each unit is separated from the adjacent unit by an unbroken ground-to-roof party or fire wall. Condominiums are included as single-family units when they are of zero-lot-line or zero-property-line construction; when units are separated by an air space; or, when units are separated by an unbroken ground-to-roof party or fire wall. Multi-family housing includes duplexes, three-to-four-unit structures and apartment-type structures with five units or more. Multi-family also includes condominium units in structures of more than one living unit that do not meet the single-family housing definition.

Each multi-family unit is counted separately even though they may be in the same building. Total units is the sum of single-family and multi-family units. County data is available from 1967 whereas city data is available from 1990. City data is only available for incorporated cities and towns. All permits in unincorporated cities and towns are included under their respective county’s unincorporated total. Permit data is not available for years when the city or town was not incorporated.

Permit data is missing for the following cities and years:
Clayton, 1990-2007
Lafayette, 1990-2007
Moraga, 1990-2007
Orinda, 1990-2007
San Ramon, 1990

Building permit data for metropolitan areas for each year is the sum of non-seasonally adjusted monthly estimates from the Building Permit Survey. The Bay Area values are the sum of the San Francisco-Oakland-Hayward MSA and the San Jose-Sunnyvale-Santa Clara MSA. The counties included in these areas are: San Francisco, Marin, Contra Costa, Alameda, San Mateo, Santa Clara, and San Benito.

Permit values reflect the number of units permitted in each respective year.