In all six High-Growth Metros, recent construction was concentrated among a narrower range of housing types compared to older housing stock. Construction of large multifamily buildings increased, with smaller units making up a larger share of the apartments. On the ownership side, the size of new single-family homes continued to be larger, potentially limiting the availability of smaller, lower-cost homes. These trends illustrate a gap in new supply, where lower-income households—especially families with children—are likely left with fewer housing options that meet their needs.

As these higher-growth metropolitan areas added new supply, lower-income households without a rental subsidy faced larger rent increases than higher-income households in 5 of the 6 High-Growth Metros. …. Some housing experts argue that as areas add new market-rate supply, housing units will “filter down,” becoming more affordable to lower-income households over time. However, some evidence shows that this process has stalled or reversed.

realistic, economically-informed targets. Even more important, they need realistic, economically-informed tools with which they can quickly & easily gauge a rezoning plan’s sufficiency….It makes no sense to tell city planners to devise their own models, as the planners have neither the technical knowledge nor the political incentives to come up with something reasonable. End the guessing games. Please.

It is recognized that the total housing needs…may exceed available resources and the community’s ability to satisfy this need…. Under these circumstances, the quantified objectives need not be identical to the identified existing housing needs, but should establish the maximum number of housing units that can be constructed, rehabilitated, and conserved over a five-year time frame. [California Government Code, Section 65583(b)(2)]

It is the intent of the Legislature that cities, counties, and cities and counties should undertake all necessary actions to encourage, promote, and facilitate the development of housing to accommodate the entire regional housing need, and reasonable actions should be taken by local and regional governments to ensure that future housing production meet, at a minimum, the regional housing need established for planning purposes. [California Government Code, Section 65584(a)(2)]

When establishing realistic unit capacity calculations, the jurisdiction must consider existing development trends of existing or approved residential developments at a similar affordability level in that jurisdiction, as well as the cumulative impact of standards such as maximum lot coverage, height, open space, parking, and FARs. The capacity methodology must be adjusted to account for any limitation as a result of availability and accessibility of sufficient water, sewer, and dry utilities. For non-residential zoned sites (i.e. mixed-use areas or commercial sites that allow residential development), the capacity methodology must account for the likelihood of residential development on these sites.

magical thinking about [the] “pipeline” of entitled but mostly stalled, b/c infeasible or needing massive infrastructure) projects to whittle the 82,000-unit target down to 36,0900 units that would be accommodated w/upzoning….Their target was suspect & definitely not reviewed by economists.

[T]his model makes a number of key assumptions: that the economic environment looks like 2016, that statistical associations of the past will hold for hypothetical rezonings, and that projects will be built quite close to their maximum feasible capacity.

would be for states to base targets on a committee of economists’ rough judgment of economic feasibility. The feasibility determination could be grounded on rates of housing-stock growth achieved by fast-growing metros elsewhere in the nation, or estimates of the number of units that would have been built in the absence of local land-use restrictions, or estimates of the number of units that would be feasible to build today in the absence of local land-use restrictions, given prices, and construction costs.

[h]omebuilding is not a short-run production decision. It is an investment decision that responds positively to rising prices. In the ordinary course of events, rising demand and prices trigger new construction: higher prices and higher quantities are seen going hand in hand. In economic terms, of course, this is an increase not in supply but of the quantity supplied in response to an increase in demand.

As noted, we have decided to ignore the housing demand component of the housing prices. Two reasons underpin this decision. First, housing demand has been studied much more extensively than housing supply. A distinguished literature, including Alonso (1964), Muth (1969), Rosen (1979), and Roback (1982), has considered the determinants of housing demand. Labor market demand and consumption amenities, such as weather and schools, are both important causes of particular demand for some areas. We have little to add to these findings. Second, policy responses to housing prices are unlikely to change housing demand. Increasing supply is a much more natural policy response to high housing prices than is reducing demand.

In lightly regulated housing markets with growing population and economies, like Atlanta, the supply curve for housing is relatively flat. Thus, as demand for housing expands over time, the result is that competition in the home building industry holds the price of housing reasonably close to its minimum production cost. In heavily regulated housing markets with growing economies, like the San Francisco Bay area, the supply curve for housing slopes up. As a result, additional demand for housing translates into prices that are substantially above the minimum profitable production cost, with rising land values driving up total costs. Finally, in a housing market like Detroit where the demand for housing declined sharply over time, the supply curve for housing has a kink at the existing level of housing because housing is durable and does not diminish quickly when demand falls. As a result, a reduction in demand leads to lower prices for housing and minimal new construction. (4)