LaFayette Illustrates Dire Housing Situation in Central Ohio

March 30, 2022 - From Regionomics, LLC Facebook Post by Bill LaFayette, Ph.D.

This chart illustrates one of my biggest concerns for the well-being of Central Ohio, especially with the looming Intel development: the shortfall in housing unit construction. This explains our tight housing market and the big increases in house prices and rents in the last few years.

The chart compares the number of building permits in the Columbus MSA each year beginning in 2011 (the blue bars) to the change in households for that year (the tan bars). By definition, each household occupies a housing unit, so construction must keep pace with household growth over the long run.

The household change is calculated from Census Bureau estimates, with my projections for 2020 and 2021 based on the Census Bureau’s population estimates. There was a deficit in permits before 2020 when the pace of permitting quickened and the growth in households experienced a pandemic-influenced deceleration.

For the nine years ended in 2019, building permits totaled less than 70,000, while the number of households increased 84,000. The deficit was made up by subdividing larger units, repurposing office and other commercial space, and rehabilitating abandoned units. But the supply of space that can be repurposed is limited.

The deficit would seem to have been made up in 2020 and 2021, but the situation is not this positive. For one thing, not all permitted units are built. Moreover, some new units replace those that are lost from the stock for whatever reason. The number of lost units is uncertain but may be at least 2,500 units per year. If this is correct, the deficit between 2011 and 2019 is not 14,000, but rather 34,000 and the surplus in 2020 and 2021 is not 16,000, but rather 11,000. We remain significantly behind.

Layer onto this Intel whose workforce will account for around 2,500 to 3,000 households. As argued in my January 31 post, most of these workers are likely to be moving here from outside the region within the next few years. Add to this the employment of suppliers and businesses providing goods and services to the new households, and we could wind up with a housing crunch that would make the current situation look tame.

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