Housing Market Holding Back the Economy?

The New York Times has a piece exploring the impact that the housing market is having on the economy:

Investment in residential property remains a smaller share of the overall economy than at any time since World War II, contributing less to growth than it did even in previous steep downturns in the early 1980s, when mortgage rates hit 20 percent, or the early 1990s, when hundreds of mortgage lenders failed.

If building activity returned merely to its postwar average proportion of the economy, growth would jump this year to a booming, 1990s-like level of 4 percent, from today’s mediocre 2-plus percent. The additional building, renovating and selling of homes would add about 1.5 million jobs and knock about a percentage point off the unemployment rate, now 6.7 percent. That activity would close nearly 40 percent of the gap between America’s current weak economic state and full economic health.

But what about the burgeoning apartment market?

So there is something of a boom underway in the nation’s housing market. It just isn’t for single-family homes.

Building of rental multifamily properties, as the industry calls them — buildings with five or more housing units as part of one construction — was higher last year than it was even at the peak of the housing boom. Some 34 percent of all housing permits issued nationwide were for multifamily properties in 2012 and 2013, the highest since 1984…

On average, it cost $102,000 to build each of those new apartment units last year, according to census data, compared with $224,000 for each single-family home. Moody’s Analytics estimates that every single-family home that is started creates 3.7 jobs over the ensuing year, compared with 1.8 jobs for a unit in each multifamily home.

That’s a pretty common refrain when discussing the economic impact of housing – that apartments don’t generate the same number of jobs as houses – but that doesn’t take into account the ongoing management jobs those apartment communities generate.

A more fundamental question prompted by the article is this: Is a housing model based on the suburban, single family home subdivision what’s best for the country? Sure there are more construction jobs generated per “door” with single family houses than multifamily units, but in the long run do they cost more in delivery of utility service, traffic/sprawl impact and demand placed on municipal services?