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Are Americans Detached When Buying Homes?

by Chicago Agent

Detached homes, like the one pictured here, are an increasing fixture of new construction, but what implications does that have for housing on a whole?

Seeking to debunk the conventional wisdom on detached homes, a new piece by Wendell Cox of New Geography, citing data from the 2010 American Community Survey, throws down the gauntlet on detached housing, claiming the housing type is not only preferred by buyers, but by an overwhelming margin.

“In defiance of the conventional wisdom in the national media and among most planning professionals, Americans continue not only to prefer, but to move into single family detached houses,” Cox, a professor at the Conservatoire National des Arts et Metiers, Paris and author, wrote.

And the data would seem to support Cox’s claims. Over the past decade, 79.2 percent of new households in the 51 major metropolitan areas were detached homes, with multi-unit buildings and attached only comprising 11.8 and 11.3 percent, respectively.

“A total of 4 million net new occupied detached houses were added in the largest metropolitan areas, while there were 590,000 additional apartments and condominiums and 570,000 attached houses,” Cox writes, using graphs to support his argument.

Statistics were particularly dramatic in Chicago. According to Cox’s data, a whopping 95.9 percent of new housing in Chicago from 2000 to 2010 was detached, with the housing style now making up 52.5 percent of the property types. In Los Angeles, 96 percent of new housing was detached, and in Dallas, 84.3 percent was detached.

Interestingly, the American Community Survey data also shows that vacancy rates are lower in detached properties than in multi-units.

“In 2010 detached housing enjoyed a 92.4 percent occupancy rate in 2010 which is higher than the 89.4 percent occupancy rate in attached housing and 84.2 percent occupancy rate in multi-unit buildings,” Cox wrote. “Because a more of the multi-unit housing is rental, it is to be expected that the vacancies would be the highest in this category.”

Additionally, vacancies rose at a slower rate in detached properties than multi-units, increasing from 7.3 percent in 2000 to 10.7 percent in 2010, compared with an increase of 10.7 percent to 17.1 percent for multi-units.

The data would seem to be pretty clear cut – new homebuyers prefer, by a wide margin, detached homes to multi-unit or attached properties. There is, however, a substantial caveat to Cox’ analysis that hampers his argument: he is only referring to new construction, a sector of housing that, as Bill McBride of Calculated Risk has exhaustively covered, is substantially lower than its historical levels.

Indeed, homeownership in general has been lagging in recent data. According to the latest Economic Outlook report from Freddie Mac, 1.4 million households have moved to rental properties in 2011 alone (compared to the 4 million new homes in the 10 years of data cited by Cox), while the homeownership rate fell by 1.5 percent in 2011’s second quarter. And the data may be projective of the next few years – ownership rates fell by 4.4 percent for Americans 25 and younger, and by 7 percent for those aged 25 to 29.

Furthermore, as home values continue to struggle, the newfound demand for rentals has pushed renting fees up for the first time in years, and multifamily starts have increased in 2011. In fact, Fannie Mae even unveiled a new multifamily mortgage-backed security earlier this year, further evidence of the property’s growing eminence.

Though new homebuyers continue to pursue detached housing in greater numbers, it appears that they comprise less and less of the U.S. housing market going forward.

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