Idaho Housing Market Fundamentals

Idaho Housing Market Fundamentals Brian Greber, Director Center for Business Research & Economic Development College of Business & Economics Boise State University 6/2/2011 © Brian J. Greber 20116/2/2011 1

Objective• Summarize the extent of the Idaho housing “overbuild” in the 2000-2010 period.• Use commonly available data to relate the housing build to growth in Idaho households.• All data are available through US Bureau of the Census at www.census.gov and US Department of Housing and Urban Development at www.huduser.gov © Brian J. Greber 20116/2/2011 2

Key Definitions (www.census.gov)• A housing unit is a house, an apartment, a mobile home, a group of rooms, or a single room that is occupied (or if vacant, is intended for occupancy) as separate living quarters. Separate living quarters are those in which the occupants live and eat separately from any other persons in the building and which have direct access from the outside of the building or through a common hall.• A household includes all the persons who occupy a housing unit. A housing unit is a house, an apartment, a mobile home, a group of rooms, or a single room that is occupied (or if vacant, is intended for occupancy) as separate living quarters. Separate living quarters are those in which the occupants live and eat separately from any other persons in the building and which have direct access from the outside of the building or through a common hall. The occupants may be a single family, one person living alone, two or more families living together, or any other group of related or unrelated persons who share living arrangements. (People not living in households are classified as living in group quarters.) © Brian J. Greber 20116/2/2011 3

Key Definitions (www.census.gov)• Building permits represent the number of new housing units authorized by building permits in the United States. The building permits data relate to new private housing units intended for occupancy on a housekeeping basis. They exclude mobile homes (trailers), hotels, motels, and group residential structures, such as nursing homes and college dormitories. They also exclude conversions of and alterations to existing buildings. – These are typically referred to as “housing starts”• The homeowner vacancy rate is the proportion of the homeowner inventory that is vacant “for sale.” It is computed by dividing the total number of vacant units “for sale only” by the sum of owner-occupied units,vacant units that are “for sale only,” and vacant units that have been sold but not yet occupied; and then multiplying by 100. © Brian J. Greber 20116/2/2011 4

Housing Fundamentals• Growth in housing stock should equal growth in households within a region.• Second homes can support greater levels of growth in housing stock, but are always “at risk” of becoming future housing “supply” as economic circumstances and lifestyles change.• The “true housing overhang” is the rate of build in excess of growth in household formations. © Brian J. Greber 20116/2/2011 5

Idaho Housing Snapshot Idaho Housing Fundamentals 2010 2000 1990 1980 Totals Population 1,567,582 1,293,955 1,006,734 943,935 Households 579,408 469,315 360,718 324,107 Housing Units 667,796 527,825 413,322 375,200 Annual Change (Decade Prior) Population 27,363 28,722 6,280 Households 11,009 10,860 3,661 Housing Units 13,997 11,450 3,812 Annual Average (Decade Prior) Housing Permits 12,475 10,693 3,944 Annual "Gap" Change in Housing Units vs Households 2,988 591 151 Housing Permits vs Change in Households 1,466 (167) 283 Decade "Gap" Change in Housing Units vs Households 29,878 5,906 1,511 Housing Permits vs Change in Households 14,658 (1,669) 2,826 Source: US Census Bureau www.census.gov © Brian J. Greber 20116/2/2011 6

Implications• Between 2000 and 2010, Idaho added approximately 30 thousand more housing units than the growth in households indicated was required. – Housing permits (a.k.a. “starts”) also outstripped household growth by approximately 15 thousand units • Note that permits differ from units due to lags between starts and additions to housing stock, and the role that manufactured homes, apartment conversions, etc. play in adding to housing units.• Over the last 20 years, we have averaged household growth of 11 thousand households per year; this implies a housing overhang of 1.36 years on a permits basis and 2.72 years on a housing unit basis.• In 2009-2010, household growth in Idaho slowed to 8 thousand per year. If that rate continues, we have an overhang of 1.87 – 3.75 years!• These rates assume no new starts, in fact we have average 4.5 thousand starts over the past few years. At these rates it will take as much as 4 year to work off our inventory overhang. © Brian J. Greber 2011 6/2/2011 7

Another piece of the puzzle Home Owner Vacany Rate Trends 5.0 4.5 4.0 3.5 3.0 Percentage Vacancy 2.5 2.0 1.5 1.0 0.5 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 2009 2010 2011 Homeowner Vacancy Rate 4 qtr MA Data Source: US Department of Housing and Urban Development www.huduser.org © Brian J. Greber 20116/2/2011 8

Implications of Home OwnerVacancy Data• Homeowner vacancy has grown from approximately 1.5% of owned units to 3.3%.• The 2010 volume of homes that qualified as “homeowner vacancy) was 12,814 – This represent a step up of 1.8% from more “normal levels”.• This suggests a surplus of 7.5 thousand homes above “normal levels”• This is “the tip of the ice berg” © Brian J. Greber 20116/2/2011 9

Idaho Housing Market Fundamentals

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