By One Measure, San Francisco Out-Builds All Other U.S. Markets

If you’ve been to San Francisco, you know that just about every buildable space is already occupied. More than 850,000 people live in the City by the Bay, compressed in just under 47 square miles.

But by one measure, San Francisco out-built every other city in the U.S. last year. According to Trulia, San Francisco nearly doubled its historic average number of housing permits in 2017. Although it added just 6,270 units, that represented an increase of nearly 95 percent above its average for the previous 36 years.

And the good news about that, Trulia said in a recent blog post (https://www.trulia.com/blog/trends/homebuilding-race-2/), , is that nearly 92 percent of those permits represented 5+ housing units. “It’s a shift that signals that the city is becoming more aggressive in its efforts to combat its affordability crisis, Trulia said. “What’s more, a large share of its new units are multifamily units, which should help rents continue to cool this year.”

Dallas approved the largest total of the year among the largest metros, more than 47,000 homes in 2017. Houston and New York finished second and third, building 42,673 and 40,687 homes, respectively.

“Surprisingly, markets building more than their historic average are doing so by building up, rather than out,” Trulia said. “The correlation between relative-to-average home building activity and share of that activity that is high density is moderate and statistically significant.”

Trulia warned, however, that persistent housing inventory shortages persist, not only with existing homes but in new construction, as home builders struggle with labor shortages to catch up to previous new construction levels.

“While building more than their historic average helps keep prices from rising as much as they are, they still aren’t building a huge amount of housing,” Trulia noted. “For example, at 23,257 units, the pricey markets of San Francisco, Boston and San Jose combined still built fewer units than Austin alone, which finished with 25,803 units.”

On the flip side, markets that are building a large sum of homes, such as Dallas, Houston, and New York, are playing their part in helping the country inch upwards towards its 50-year home building average, Trulia said. “But there’s a long way to go: at the end of 2017, the U.S. was just 64.9% of the way there,” it said.