Housing supply constraints compound wealth divergence and immobility

Multiple supply-constrained metros have passed upzoning measures in 2023-2025 (LA citywide ADU, SF state-mandated rezonings, Boston regional MBTA Communities Act). But permit response lags policy by 2-3 years on average; 2027 is on the optimistic side. Base rate: in jurisdictions with comparable reforms (Auckland 2016, Minneapolis 2018) permits-per-capita rose 20-40% within 3-5 years. Weighting toward partial response given regulatory friction and rate environment.

Historical data on housing permit growth in US metros suggests that supply-constrained areas often struggle to increase housing production, but occasional policy changes or economic shifts can lead to temporary growth spurts, making a 10% increase in permits per capita plausible but not highly likely.

Recent permit-per-capita trends in the five metros have been flat or declining, and historically only a small fraction of constrained metros achieve >10% annual growth, making a positive jump by 2027 unlikely but not impossible.

A 10% increase over three years is a modest threshold (~3.2% CAGR) that most major metros historically clear during cyclical rebounds or policy-driven upturns. While high construction costs and strict zoning suppress absolute volumes, covering five large metros significantly raises the probability that at least one will exceed the 2024 baseline by 2027, especially if 2024 serves as a rate-sensitive trough.

IM2 claims supply constraints are structural, and a 1% national increase is a low bar that a genuine supply response would clear easily, so this is close to a direct test of whether reform has begun to bite at national scale. The reasons to doubt it are mostly financing rather than zoning. Permit volumes have been soft under a sustained high-rate environment, and national totals are dominated by the large Sun Belt markets where the binding constraint is cost of capital, not entitlement. The upzoning measures that would move the number act on a 2 to 3 year lag and are concentrated in exactly the constrained metros that contribute least to the national count. A 1% threshold is small enough that a modest rate move could carry it, which is why this sits well above negligible rather than near zero.

Historical trends in US housing units authorized by building permits show variability, but a slight increase is possible given the current demand for housing and potential policy responses to address supply constraints.

Historically, only about 4 of the last 10 years saw a ≥1% rise in annual building permits, and recent data show a slowdown and occasional declines, making a modest increase less likely than a flat or lower outcome.

Historical year-over-year changes in US building permits are highly volatile, with positive growth occurring in roughly half of years over the past three decades. The modest 1% threshold slightly favors YES, but elevated construction financing costs and near-term demand uncertainty keep the probability close to a coin flip.