I used to be in the habit of religiously checking the monthly updates on housing permit data, but with the onset of the recession these observations got too depressing, so I stopped. I looked in this month, however, and the data is really remarkable. Even last year, as the housing bust was well under way, the largest metropolitan areas would have approved at least 10,000 or so units through April. No longer.
What really interested me was the change in the distribution. Here’s the top five metro areas:
1) Houston – 8,507
2) Dallas – 7,379
3) New York – 5,400
4) Washington – 4,040
5) Austin – 3,118
Several interesting things stand out to me. Last year, Washington was basically tied for ninth on this list with Austin. Atlanta, Chicago, Los Angeles, Phoenix, and Seattle all had more permit approvals. Most of those cities have been hammered. By any standard, Washington has outperformed most metropolitan areas. Practically everyone experienced a 50% decline in permits compared to the same period last year (including the Texan juggernauts). Washington’s numbers are off just 28%.
Austin’s strength is pretty remarkable, as well, though I shouldn’t be surprised given the way Texan metropolitan areas have held up, in terms of home construction and prices at least, throughout this crisis. Interstate migration doesn’t necessarily imply anything about preferences; as I’ve mentioned many times before, housing supply restrictions in high demand markets make housing there unaffordable, diverting people to places with loose supply and low home prices (Texas!). But agglomerations are powerful, and whatever advantages a growing place began with, it will eventually develop a serious attractive force when it reaches a large size.
It’s surely a coincidence, but California’s population loss in 2008 due to domestic migration was almost exactly the same as Texas’ gain due to same — about 140,000. With economies in California, Arizona, and Nevada withering, it’s not difficult to imagine a shift in population taking on its own momentum. There are of course other places which stand to benefit in a similar fashion, most notably North Carolina. And both North Carolina and Texas lack some of the natural amenities which make California such an appealing place, economics aside.
But just as Chicago and the Midwest saw their place in the domestic hierarchy usurped, once upon a time, California might give way to the Texas Triangle. Every so often these things happen, and now could be one of those times.