Housing production favoring multi-units
Single-family home building permits issued during the third quarter reached a 15-year low in Rhode Island, signaling a gap between supply and demand for housing, according to the R.I. Builders Association.
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Development experts, however, say new housing production in the state is trending more toward multi-unit home projects, such as condominium and apartment buildings, in urban areas.
Despite a surge in multi-family housing projects, “I think the (single-family) numbers point to a major problem facing the state, which is that the supply of housing in Rhode Island is not keeping up with demand for housing,” said Scott Wolf, executive director of Grow Smart Rhode Island, a nonprofit dedicated to improving development patterns in the state.
The builders association reported that only 479 single-family home building permits were issued during the third quarter, down 29.4 percent from the 10-year high of 678 permits issued in the third quarter of 1999.
In fact, Rhode Island ranked 50th in the nation in per capita single-family home production from 2000 to 2004, according to a U.S. Census Bureau report released in July.
Last year, however, the number of building permits issued for multi-family units was 483, the highest number since 555 were issued in 1999, according to the Census. Still, the state is producing less than one-third of the number of multi-family dwellings erected during the mid-1980s.
Wolf said the lag in home production has been due to “a perfect storm” of high land prices and large-lot zoning in the state.
“If communities zone much of their developable acreage in large lots and prices continue to go up, then that makes the price of developing housing daunting.”
In what some perceive as an effort to curtail development, some suburban communities in the state require minimum lot sizes of up to 5 acres for new homes. This makes single-family home construction too expensive for some in a state where land prices routinely exceed $150,000 per acre, according to real estate listings at RILiving.com.
High land prices and zoning limitations have prompted some developers to turn their focus away from the suburbs and toward urban areas, where opportunities abound to build condos or remodel underused industrial buildings into residences.
The state offers tax credits to builders who undertake rehabs of historic buildings, such as old mills and factories.
In East Providence, single-family home building has fallen behind the number of multi-family projects.
Jean M. Boyle, executive director of East Providence’s planning department, said the city has reached full build-out of its land. Single-family home building permits, therefore, are issued in limited instances to develop divided lots in existing neighborhoods.
More typical to East Providence, Boyle said, are condo projects such as the 54-unit Ross Commons development in the city’s Waterfront Special Development District. The waterfront district – a 300-acre former industrial area fronting the Seekonk River – has enough space for up to 3,000 housing units, she added.
Boyle also noted that local developer Peregrine Group LLC has plans to renovate the old Rumford Baking Powder complex into a blend of uses, which includes 133 residential units. The project will benefit from state and federal historic tax credits.
Roger R. Warren, executive director of the builders association, said slow single-family home production remains a threat to the state’s economy.
“Housing in (the U.S.) as well as in Rhode Island has carried the economy over the last several years,” Warren said.
Noting that annual home construction in Rhode Island has been decreasing during the state’s real estate boom in recent years, Warren said the only reason for the slowdown is the lengthy and expensive process of garnering building permits from municipal boards.
Interest rates during the construction lag were at all-time lows, Warren said, and demand for housing was very high. “So there’s no real reason for permits to be declining other than perhaps outside restrictions placed on (developers) by the permitting authorities in cities and towns,” he said.
According to the Census, 6,438 housing units were built in Rhode Island from April 2000 to July 2004, increasing the state’s housing stock by a scant 1.5 percent. This rate of home building was much slower than the national average of 5.8 percent.
Yet the slow rate of home construction appears to be common throughout southern New England, as Connecticut (2.1 percent) and Massachusetts (1.9 percent) also posted below-average home production from 2000 to 2004, according to the Census.
Edgar N. Ladouceur, president of the builders association, said declining levels of single-family home construction could jeopardize economic development in the state.
“Housing price inflations make it more difficult for companies to expand or relocate in the state as there is a lack of affordable housing for their workers,” he said.
