Housing Production

Where are we permitting new housing units?

Housing Production

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Definition: 
Housing production is measured by the change in the number of housing units in local jurisdictions in a given year. The total number of units produced captures housing units added by new construction and annexations and subtracts demolitions and units lost in natural disasters, adjusting for units lost or gained by conversions.

Housing production data is a reflection of demand for housing and the development climate. Like housing permit statistics, housing production numbers are an indicator of where a region is growing. However, since permitted units sometimes are not built or there can be a long lag time between permit approval and the start of construction, production data also reflects the effects of barriers to housing production. These range from a lack of builder confidence to high construction costs and limited financing.

Regional Performance
While housing construction is up from the depths of the Great Recession, the 2017 production rate is still well below that of past decades.

Demand for housing in the Bay Area has continued to grow due to our region’s high rates of job creation and new household formation. However, lethargic housing production has kept supply limited. In 2017, the Bay Area added just 14,900 housing units, a fraction of the peaks seen in the 1990s. The 2017 North Bay wildfires further exacerbated the housing crunch, destroying nearly 4,500 single-family homes in Napa and Sonoma counties.

Multi-family construction has driven growth since 2010, increasing nearly fivefold to 14,300 units in 2017. Meanwhile, single-family home production – once the majority of all Bay Area housing construction – has fallen to just 29 percent in the same period. Single-family production is still weak by historical standards and is 60 percent below the annual averages seen in the 1990s and 2000s.

Historical Trend for Housing Growth - Bay Area

 
 
Local Focus
Since the end of the Great Recession, the dominant share of the region’s housing production has been multi-family properties in San Francisco and San Jose.

San Jose and San Francisco, the two largest cities in the region, have produced around 40 percent of all new Bay Area housing units since 2010. Fueled by growing demand for rental housing near job centers, San Jose and San Francisco have added nearly 42,000 units to the region’s housing stock – over 90 percent of which are multi-family units. Cities in western Contra Costa County and northern Alameda County also have produced a large share of multi-family units.

Natural disasters have shaped the state of housing production at the local level. The 2017 Northern California wildfires affected communities throughout the North Bay, though Santa Rosa, as well as unincorporated Sonoma and Napa counties, were particularly hard hit.

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Housing Production by City and Unincorporated Area by Decade

1990s 2000s Today
 
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
The major metros in the South have produced housing at rates two and even three times faster than their peers.

Houston, Dallas and Atlanta have produced the most housing units per capita among the major metros since 2013. The Texas metros have been national leaders in housing production for nearly a decade, with per capita production rates well above that of our region. While housing production in Atlanta fell precipitously during the Great Recession, it has rebounded in recent years to nearly match the Texas metros. Housing production in these areas can be attributed to lower construction costs, simpler permitting processes, and skyrocketing job and population growth. In 2016, these three southern metros produced more housing units than the other seven major metros combined.

Metro Comparison for Housing Production

Total ProductionProduction Per 1,000 Capita
 
 
Sources: 

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Methodology Notes: 

Single-family housing units include single detached units and single attached units. Multi-family housing units include buildings with two or more units and apartment units. Each multi-family unit is counted separately even though they may be in the same building. Total units is the sum of single-family, multi-family units, and mobile home units. City data is only available for incorporated cities and towns. All units produced in unincorporated cities and towns are included under their respective county’s unincorporated total. Housing production data is not available for years when the city or town was not incorporated.

 

 

Housing production data for metropolitan areas for each year is the difference of annual housing unit estimates from the Census Bureau’s Population Estimates Program.  Housing production data for the region, counties, and cities for each year is the difference of annual housing unit estimates from the California Department of Finance. In the years new cities were incorporated, units that were annexed were removed from the unincorporated county total and are not counted as “produced” units for the new city. Housing units produced reflect the net change in the number of units present in each respective year.

 

 

Image: Ume-y [Flickr: https://www.flickr.com/photos/ume-y/]

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