Chart of the Day: Median Asking Price vs. Growth in Housing Units

Via an Oregon media outlet, here’s an interesting chart of different US metro areas showing the correlation between “median asking price” and “% growth in housing units.” It comes from an op-ed by an Oregon economist named Timothy Duy.

Here you go:chart housing price v housing growth chart housing price v housing growth

 

In typical supply-and-demand fashion, Duy argues that places that build more housing have lower prices. He’s talking about Portland, but here’s his main point:

The genesis of today’s problems lie in the aftermath of the housing bubble. We believe the region experienced a near-term price bubble in the mid-2000s but not an extended period of overbuilding. Relative to population growth, new construction a decade ago was not substantially higher than during the previous 20 years. The Great Recession slowed household formation, easing demand and increasing affordability. However, the bust has been disproportionate to the boom. Back in 2011 we became worried about the possibility of underbuilding relative to population growth. Such a scenario has become painfully obvious in recent years in the form of low vacancies, rising rents and higher prices.

[…] To be sure, there are cities that have jointly lower growth in housing supply and prices. This is generally the result of lower economic or population growth. Of the 20 cities adding fewer units annually than Portland and prices less than $150 a square foot, only one, Chicago, has added substantially more jobs than Portland since 1990. But recent trends are no longer in Chicago’s favor; since 2000, Chicago has added 25,000 fewer jobs than Portland.

I wonder where the Twin Cities would fit on this chart?


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3 Responses to Chart of the Day: Median Asking Price vs. Growth in Housing Units

  1. Daniel Herriges July 22, 2015 at 3:24 pm #

    “I wonder where the Twin Cities would fit on this chart?”

    The Twin Cities are presumably on the chart, since they’re easily one of the 50 most populous MSAs (I think 15th or 16th?). Not labeled, unfortunately, and the original article doesn’t seem to provide a link to the data itself. But we’re clearly in that cluster of unlabeled dots somewhere between Seattle and Detroit / Cleveland.

  2. Nick Hannula July 22, 2015 at 4:25 pm #

    My back-of-the-napkin math tells me that, in order to prevent a spike in prices, a city needs to have annual housing growth of at least 1.7-2.5%.

    • Walker Angell
      Walker Angell July 23, 2015 at 1:00 pm #

      How did you calculate that? Wouldn’t it vary quite a bit by city/MSA depending on population growth/shrinkage?