|By Steven Spinola
President, Real Estate Board of New York.
The Real Estate Board of New York recently analyzed new housing permit data for all types of housing (multi-family housing and single family homes) from the U.S. Census over the last several decades (1960-2000).
Based on our analysis of these housing permit numbers, New York City new residential construction is moving at a pace that would make (2010-2019) one of the worst decades for new housing over the last 60 years.
The first two years in the current decade, the city issued new housing permits for only 15,663 units. At this pace, the decade total will be 78,315 new housing units, the lowest decade total since the 1990s.
From 2000-2009, we saw a boom in new housing construction and NYC issued permits for 231,228 new housing units. This is the second highest total in the last 50 years.
The 1960’s saw NYC issue permits for 368,700 new housing units, 60 percent more than the total for the 2000s. While from the 1970s through the 1990s, permits for new housing units declined steadily and dramatically to a decade low in the 1990s of 70,204 units.
There is a lot of risk in estimating what will happen to new housing production based on just two years of actual data. However, there is nothing on the horizon--such as easy access to capital for new projects--that suggests a bump up in housing creation any time soon. In addition, high construction costs and the dramatic curtailment of tax exemption programs are likely to constrain new housing development.
There are some factors that could produce a more favorable future for housing construction than suggested by the low number of new housing permits. New York continues to see its population grow; we are continuing to produce new jobs at a pace that is better than most of major cities around the country.
The pick-up in sales activity at the very high end of the market suggests that New York is a safe and attractive investment for high-income households. Also, the steady increase in rent for market rate units and the lack of inventory in the residential sales market should be a catalyst for new housing starts at a pace greater than what we have witnessed so far.