Some four years ago, people were talking about the possibility of New York City being dead. But of course that was nonsense. Last week, New York City published the initial findings of its housing and vacancy survey and the key takeaway is that the city's vacancy rate dropped to 1.41% last year (2023). This is a drop from 4.54% just two years ago and the lowest measurement since 1968. It's also even worse at more affordable rent levels:

The problem, as described by the city, is a supply-demand imbalance. Over the last two years, the city's net housing stock grew by about 60,000 homes (~2%). This is, apparently, pretty good compared to recent years/decades; but it wasn't nearly enough given that the city added 275,000 new households. This is the opposite of dead, and it's not going to be addressed by just doing things like restricting short-term rentals.

We have a structural delivery problem and New York City is not alone in facing it.

At the beginning of this month, between Sep 2 and Sep 4, the research company Nanos conducted a random survey asking Canadians about their views on housing. The survey reached 1,044 adults and you may find the results interesting:

• Nationally, three in five Canadians "support" or "somewhat support" decreasing the number of immigrants coming into Canada until housing becomes more affordable. (The feds plan to welcome 500,000 immigrants per year by 2025.)

• The provinces that are the most in support of reduced immigration are the Prairies (65%), and the province with the lowest support is BC (52%).

• 82% of Canadians are "opposed" or "somewhat opposed" to building new housing on land currently set aside as green space. Of this group, 64% responded with "opposed".

• 55% of Canadians "support" or "somewhat support" giving tax incentives to private developers to build new rental housing. The highest support for this is in BC (61%), Quebec (60%), and among Canadians 55 or older (55%).

• However, this support flips when Canadians are asked about giving tax incentives to private developers to build for-sale housing. 58% of Canadians are "opposed" or "somewhat opposed" to doing this.

These last two points took me a second to decipher, because the wording in the article is "new rental units" and "new homes." Naturally, I initially read these two things as being the same thing. New rentals are new homes. So what are they trying to say here?

My assumption (in the above) is that it's a housing bias coming through and that a "new home" equals a for-sale low-rise house. Hmm. We really need to be more mindful of the semantics in our housing vocabulary.

Well this is interesting, yet not surprising: According to RBC's annual "Home Ownership Poll", three out of every five respondents (so nearly 60%) said that location is more important than buying a larger home. Now, there's only so much you can glean from a single survey question, but the overarching sense is that people's home-buying attitudes are now starting to revert back to pre-pandemic levels.

Other evidence includes how quickly urban residential rents/prices have bounced back and, in many cases, now exceed their pre-pandemic levels. Below is a chart from the WSJ showing residential net-effective median rent prices in Manhattan. The low came in November 2020 when the median rent price hit $2,743 per month. But today it is well over $3,500, which is the highest it has been in a decade.

Certain aspects of how we will continue to live and work in our cities is admittedly still evolving (see my recent post on office utilization). But part of our pandemic narrative was that location was no longer going to matter, or at least not matter nearly as much. New York City, to give just one example, had died forever. But that was obviously bullshit. And what we are seeing in the residential space is an important leading indicator. Location always matters.