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Is Asheville Metro Experiencing A Housing Construction Boom?

Johnson Price Sprinkle PA (JPS) accounting firm provides housing construction data for the Asheville Metropolitan Area. In 2017 permits were issued to build 2,704 new housing units in the four-county Asheville metro (Buncombe, Henderson, Haywood, and Madison). This is 727 more housing units than were permitted in 2016; a 37 percent increase. The value of those permits in 2017 totaled $557.5 million; $103.7 million or 23 percent above the total for 2016. Clearly, 2017 saw a surge in permits for new housing compared to 2016, so is Asheville experiencing a housing construction boom?

Looking back at the previous 13 years shows that while 2017 exceeded the number and value of housing permits issued in every year since 2008, it was still below the permit totals in 2004, 2005 and 2007 (see chart below). However, what was notably unique about 2017 was the number of permits issued for Multi-Family housing units (apartments, duplexes, and townhouses). In 2017 one-third of all permits were for Multi-Family housing units; a total of 891 units. This is the largest number and percent of permits for Multi-Family housing in at least the last 14 years.

Annual Housing Permits – Asheville Metro

Source: U.S. Census Bureau

Was the number of housing permits issued in 2017 too many or too few? Predicting the correct number of new housing units to expected demand is a very difficult task, as any developer will tell you. However, a rough guess can be made by comparing the number of new permits issued each year to the additional number of homes that new residents to Asheville will likely demand. According to this calculation, there were too many housing units permitted 2005 to 2007, followed by too few over the last ten years: 2008 to 2017 (see chart below). From this view, the current surge in new housing permits might simply be catching-up, following a long period where demand exceeded supply.

Number of Housing Permits & Estimated Housing Demand
Asheville Metro

Number of Housing Permits & Estimated Housing Demand - Asheville Metro
*2017 Population gain estimated.
** Additional Resident Households is the net number of new residents divided by 2.3 (the average household size).
Source: U.S. Census Bureau, U.S. Bureau of Economic Analysis

So, is Asheville experiencing a housing construction boom? Depending on your time frame 2017 was a boom if compared to the previous nine years but is still below the permit activity of years 2005 to 2007. In terms of Multi-Family housing, 2017 does appear to represent a significant boost in activity.
A more important question is to ask if there were too many permits issued in 2017? A rough examination of the estimated demand for housing in Asheville shows that the new housing being built is in part a response to the housing shortage of the previous decade.

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About JPS:
Johnson Price Sprinkle PA is a 60+ year old accounting firm providing small to middle market businesses with tax, business consulting, audit, fraud, and technology solution services. With offices in Asheville, Boone, and Marion, NC, our CPAs and JPS team strive to provide personal service alongside technical expertise resulting in our clients’ long-term financial success. We also invest time and energy in our community, taking pride in doing what we can to make Western North Carolina a better place.
JPS Mission: To Be Greater by positively impacting our Clients, People, Community and Profession.