Housing construction statistics can provide a complex and confusing snapshot of a city — but they also can be informative. Construction both reflects and drives a local economy, possibly affecting everything from employment numbers to homelessness.
And so it is interesting to see a recent article in The Columbian about a sharp increase in the number of permits for housing construction in Vancouver. In September 2018, the city issued 10 permits for single-family or duplex home construction projects; in September 2019, 53 permits were issued.
On many levels, that is promising news. Developers have enough confidence in the economy to build new structures; the housing stock will increase without adding sprawl; and construction jobs will be created.
There also are some interesting details in the fine print of the issue. As reporter Anthony Macuk noted, while the number of permits increased more than fivefold, the valuation of those projects were nearly 12 times the 2018 value. Part of that is because the city previously calculated value based on a 1986 table of typical home values; this past summer, officials switched to a valuation table from 2017. Permit fees are calculated based on the typical value for the type of construction being done.
“We have consistently had among the lowest building permit fees in the Portland Metro region for a number of years,” Chad Eiken, the city’s economic development director, wrote in an email to The Columbian. “After 30 years, it was time to update the valuation table as our costs to deliver responsive and high-quality service continue to increase.”
That would appear to be an understatement. According to Standard & Poor’s Case-Shiller Home Price Index, national housing prices have more than tripled since 1986; if Vancouver has been basing permit fees on archaic data, it long has been providing an unnecessary windfall for developers.
But that is just a sidebar to the story about a boost in permits. The part that most directly affects residents is an increase in the housing stock at a time when a tight market has led to a sharp increase in home values and a market that is ill-equipped to handle a growing population. The approval of 53 new permits in one month will not generate a sea change in the market, but it is reflective of continuing trends.
In 2016, there were 209 new residential lots proposed in the city; by 2018, that number was 535. Those proposals and a desire for infill and new subdivisions, driven by a strong economy, are starting to trickle down to the building-permit stage. The number of permits issued in September might prove to be a one-month blip, but it is preferable to seeing a downturn in the construction industry.
Meanwhile, housing development has an impact on every facet of the economy. City officials must ensure that new development is joined with adequate infrastructure — particularly parking and traffic in the immediate area. And an increase in housing availability is one of several factors necessary for easing the region’s homelessness crisis.
Often overlooked is the need for a variety of housing that caters to residents covering a wide economic range. Many large cities have seen rampant gentrification that has priced low-income residents out of long-standing neighborhoods, altering the character of a city and eventually pricing out even young, upwardly mobile professionals.
All of that merely touches upon the complexities of housing construction and the economy. The simple view: An increase in building is beneficial.
