Meeting Raleigh’s Housing Needs

Based on data below, an average of 13,000 housing units have been approved per year over the last five years. Population projections suggest that Raleigh’s population will grow to about 683,000 by the year 2040. Thus the annual number of units needed is about 4500. Over the last five years, Raleigh City Council has approved zoning requests for up to 64,981 units – a rate that is 2.9 times the rate needed to accommodate our population growth.

Recently, I posed some questions to the City of Raleigh Planning Director, Patrick Young, to get some real data on how well the City is meeting our housing needs. Here are the results:

Over the past five years there have been several rezoning cases that intended to add housing in the City of Raleigh. If we analyze these rezoning cases, how many units would we have if they were all built out?

The table below summarizes the total number of units that would be added if all approved zoning cases were built out to their maximum residential entitlement. Note that it includes unit data for approved rezoning cases between 2016 and 2020. The “Total Proposed Units” is the maximum potential number of units that were approved through rezoning. The “Units Added Through Rezoning” is the change in the number of units between the previous zoning and the approved zoning.

Note, although Council has approved 190 rezoning requests for nearly 65,000 units over the last 5 years, there is a lag before construction actually begins. Over the last 5 years, 14,262 have been permitted (important: the data for 2020 is not yet complete). Obviously this leaves many more in the pipeline to be permitted and built.

3 Replies to “Meeting Raleigh’s Housing Needs”

  1. Pricing is only partly related to supply. Demand curves are also influenced by income and other factors. One can argue that higher prices in Raleigh are not due to lack of supply but to the relatively high incomes in Raleigh. People moving to the city tend to have high incomes or disposable money from the sale of previous homes. Raleigh also has a higher level of education and are generally paid more. And when a family has two high paying jobs, then there can be great pressure on prices.

    In particular, see information about inferior goods. As incomes rise, demand goes down for inferior goods. For example, as incomes go up, the demand for more expensive housing goes up and the demand for less expensive housing goes down! It is similar with automobiles. When incomes go up, the demand for more expensive models goes up while the demand for cheaper models goes down.

    Bottom line is that increasing the housing supply will not necessarily result in lower prices. Rather the question should be how is the supply meeting the need? For those who can afford local prices, the need is being met based on the number of housing units approved over the past five years and the number being permitted. What is not being met is the need for lower priced housing. The demand for lower priced housing is superseded by the demand for higher priced housing. But that is more a function of income than supply.

    For more information about the Law of Demand and how demand is influenced by various factors, I recommend the following.

    https://www.khanacademy.org/economics-finance-domain/ap-macroeconomics/basic-economics-concepts-macro/demand/v/changes-in-income-population-or-preferences

  2. Councilor Cox – thank you for this information. As you know, there can be a very large difference between a rezoning’s “maximum residential entitlement” number and the number of housing units that are actually built. Does the “Total Proposed Units” number include developer conditions that typically limit what is built to far less than what is technically allowed? As you know, to get approval, developers regularly cap the number of units in response to neighborhood or political opposition. Also, like 40 story zoning for high rises, what the math says you can build does not mean you will actually build that much. To build a 21 story building, you need to rezone for 40 stories. If you are simply doing math, you would assume that in that case the city was to have a 40 story building yet one with only 21 stories is actually built.

    The same holds for townhomes. The lowest level of zoning in Raleigh that allows townhomes is R10 though I know of very few townhomes developments that actually build to that density.

    So for his information to have value, you’d need to go into those 190 re zonings and look for conditions and other factors such as townhome zoning that artificially inflate the “maximum residential entitlement” number.

    What may be more instructive is to look at the number of housing units and what type (fee simple vs. rental) have actually been built in the City over the past several years. With pricing increasing strongly it would reason that the supply is not keeping up with the demand.

    Thank you

  3. I have accumulated multifamily data from 2017 -2020 of new units in zip codes 27604 and 27616 plus new projects that in various stages by City ,approved and those coming out of ground
    For completion in 2021-2022.

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