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The foundation of the price of housing is simply how much housing there is, and how many households (not people, since more than one person can live together in a home), are looking for what is available.
To begin understanding this issue, AHA began tracking the Office of Financial Management’s (OFM) April 1 population and housing unit figures. Housing unit and population change are assumed to represent the net change, including new construction, demolition, births, migration, and deaths. Snohomish County’s average population size is 2.7, based on Census Bureau data.
July 30, 2022 Review of Data:
2021s data release from OFM shows increasing housing unit creation in Snohomish County, and household creation not immediately increasing to occupy that space. This adds to our annual surplus of housing units created, leading to a total surplus of housing units of 2,955. The message behind this is twofold: First, population increase has slowed from 2018 to present for a variety of reasons (pandemic, price, availability, and other factors are likely), while housing production has continued a slow upward trend.
Nuance in the creation of units is important, however. Particularly, this data reflects both rental and ownership units. Looking at city-specific permitting data, it is easy to see where many of these units OFM is counting come from: a steady pace of apartment development in urban centers (Lynnwood and Everett).
In any case, as much as an increasing surplus, regardless of unit type, is a good thing,what stands out is that this surplus is still the smallest of almost any time in Snohomish County’s last 30 years of data. Production and creation of households also tend to track closely together – reviewing the chart data back to 1990, it is rare, almost never seen, that the two measures act in opposition to one another at all, let alone for any length of time like observed between 2014 and 2019.
Separation emerges primarily where one exceeds the other (usually with new household creation leading the changes). Housing production has historically always followed household creation, and indeed the norm is for unit production to exceed household creation. This is what sets today, and the post-Recession world apart from what came before. Since 2014, household creation was in considerable excess of unit creation, and only recently did the norm return in 2020 (over which the pandemic’s impacts loom large). What is yet to come does not appear to be a return to the norm – between the lingering impacts of the pandemic (and telework) and current economic headwinds, the future is in considerable question.
Household creation is on a slight positive trend (from 2020 to 2021), and with increasing unit availability it stands to reason household creation will increase as pent-up demand for independent living leaves mom and dad’s home, living with a roommate, or other circumstances. Meanwhile, the confounding element of teleworking will emerge in 2022’s data in perhaps unpredictable ways. While the cost of living will likely incentivize younger, and lower paid, workers to leave the Pacific Northwest, many of those occupations (like the service sector) require a physical presence, while higher paid occupations that could telework, can afford not to and enjoy the region’s intrinsic benefits of climate, geography and culture. This section will be updated immediately to reflect 2022’s data release from OFM.
Contextualizing the Data:
The purpose of this data is to approach the question “How many housing units do we have available?” or “How many dwelling units are in surplus in our (county/city). There is no perfect count of this information – the Census Bureau’s American Communities Survey and Decennial Census are years behind and come with margins of error. Cities do not maintain perfect counts of units. The Buildable Lands Report is an estimate of current and future capacity. OFM’s data, a derivation of Census information, with an eye towards local accuracy. It is still an estimate. Therefore, this data is intended to illustrate trends, not provide exact figures.
Furthermore, a question immediately encountered was “When do you start counting”? Should surplus housing really ‘count’ if it was built 25 years ago? The decision was made to start at the year 2000 (started by taking 2000’s difference in units and households from 1999), and move forward from there. Starting the count from different years, as far back as 1990, is possible, and provided below for context.
In this context, the region is desperately short of housing, in spite of surpluses of the last two years. This chart is provided to illustrate the point that the truth likely lies somewhere between these two charts. It validates the core thesis of this data set: Housing stock became seriously constrained since 2014, approaching near or below zero, and was largely driven by explosive growth in household creation, and an inability (studied in other pieces), of the home construction market to match.