Single Family Housing Shortage?

Is there a Single-Family housing shortage in Clark County? 

New single Family Home prices are rising and homes are selling about as fast as they can be built.  This apparent demand is driving up lot prices and land costs.  We have been through this before.  Single Family home construction peaked in 2005 and the development and construction frenzy continued until 2007, when the bottom fell out and we discovered that the market was over-built and over-priced.

Is that the case now?  Or are prices going up in response to classical supply and demand economics?  What is driving the rapid price increase?  In this post, we will attempt to determine if there is a significant under-supply of single-family homes.

As I charted in the last post, the population is growing rapidly.  According to the State OFM and the US Census, the number of homes is also increasing.

 















Here you see that single-family home construction accelerated in 2013 and 2014, and is continuing to increase in 2015.

However, it appears that population growth is outpacing single family home construction.


















The ratio of housing units per person is dropping rapidly.

Nevertheless, there do seem to be a reasonable number of homes relative to population. 

















Now there are more single-family homes pre capita, than were counted during all recent census years except for 2010 (a year in which there was an apparent housing glut).

So how many single family homes do we need?  This chart compares the housing level in 2015, with the population-adjusted levels measured in the past 3 census years.  This shows us that we would need about 2000 new homes to reach the 2010 level.  However, we have about 3600 extra homes relative to 1990.  The natural balance is probably somewhere in between those 2 numbers.


 Census Baseline
1990
2000
2010
SF Homes in 2015
124,474
124,474
124,474
Required SF Housing
120,865
123,889
126,529
New SF Homes Needed
-3,609
-585
2,055


Based on that alone, it would not appear that we have a significant under-supply of single-family houses.  However, these numbers are based on the April 2015 estimates. 

As you can see below, we need to build between 2000 and 2500 SF homes per year to keep up with population growth.  As it is, we only built about 1500 per year.
Population Growth
Baseline Year/
SF Housing Units Needed
SF Units Created
Year

1990
2000
2010

13-'14
7300
1953
2002
2044
1,557
14-'15
9000
2408
2468
2520
1,483


According to the Census, we are not keeping up.  Over the past 2 years, we under-built by about 1500 homes. 

So we do not appear to have a shortage of single-family homes yet – at least compared to historic levels – but we are rapidly approaching a shortage.



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