Erdmann Housing Tracker · Housing & Cities
TIER 4 Mon, 13 Apr 2026 14:03:56 +0000
Figure 1 compares single-family (dashed) and multi-family (solid) completions per capita in the Midwest (blue) and the Northeast (red).
͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
| |
---|---|---
| | | Forwarded this email? Subscribe here for more
---
---
# Apartments in the Midwest
| | Kevin Erdmann
---
| Apr 13| | | ∙| | Preview
---|---|---
|
---
---
| | |
---
| |
---
| |
---
| |
---
| | READ IN APP
---
Figure 1 compares single-family (dashed) and multi-family (solid) completions per capita in the Midwest (blue) and the Northeast (red). I have made these sorts of comparisons before. The main point I make with these comparisons is that the Northeast is expensive because it doesn't build enough housing to maintain neutral rates of household formation. The idea that it is expensive because of high demand is not supported by the facts. Any amount of new housing that would reflect anywhere close to above-average demand is too far out of sample to justify an assertion.
| |
---|---|---
Population trends in the Midwest and the Northeast have been nearly identical for 80 years. And, for much of that time, the Northeast was permitting many fewer new homes. Presumably, growth in the Northeast would be higher than in the Midwest if there were more homes. Would it be higher than average? I don't think the evidence exists to assert that with confidence.
Upgrade to paid
After 2008, permitting in the Midwest fell to a lower level than it had been in the Northeast before 2008, but it's still more than the Northeast permits now. During that time, rent inflation in the Midwest has risen at a similar pace to rent inflation in the Northeast.
I think economists and pundits engage in essentialism here. The Midwest is a slow-growing place that people want to move away from. The Northeast is a "superstar" where millions would move to if they could afford it. These are not facts that require empirical evidence. They are inherent states of being.
So, even though the Midwest was the hardest hit region by the 2008 mortgage crackdown, nobody (except me) argues that the Midwest especially needs us to reverse those changes for the sake of its economy and the financial welfare of its residents. No, if new home construction is low in the Midwest, it's because it has lost a step economically. Incomes are low. It's an income problem. Not a zoning problem or a lending problem. They don't have a housing shortage. They are just poor and stagnant.
None of that follows from the facts. None of that can explain why excess rent inflation has accumulated to 40% or more in many poorer neighborhoods across the region. That would be a pretty weird outcome for a stagnant, poor region. Also, rental vacancy rates in the Midwest are as low today as they have been in the Northeast for most of the past 35 years - about 7%. The exact same evidence in the Northeast would produce a different set of assertions.
Anyway, the reason I am revisiting this topic is that I realized that, as much as I rail against it, I have been quietly doing the same thing.
You'll notice in Figure 1 that apartment permits have always been as low in the Midwest as they are in the Northeast. For some time, both regions have had enough local obstructions to apartments to put a very low cap on their production. What made the Midwest different from the Northeast before 2008 was that Midwest cities still had greenfield regions to build single-family neighborhoods in. In the Northeast, single-family construction around the major cities had developed binding local constraints that put a cap on it.
Now, it may be the case that before 2008, even without those local restrictions, building patterns in the Midwest would remained the same. The Midwest is full of smallish regional metropolitan areas - Toledo, Fort Wayne, Bloomington, etc. - that aren't any more than maybe 10 miles across, and the vast majority of families would probably choose single-family homes in those markets. Nobody is trading off against hour-long commutes in those cities.
But, since 2008, we know that, in the background, the constraints were tight enough to prevent growth in apartments when growth in apartments would have otherwise happened. Because, now the conditions for more completions have been in place for some time, and in most Midwest cities there has been no supply response whatsoever. Under current local conditions, new rentals will have to be some housing typology that can be presented as a form of detached or fee-simple single-family even though the investors that will now have to be the owners of those properties would prefer multi-family, and would offer them in a way that some renters would prefer over single-family homes.
Anyway, to double-check myself, I frequently will pick a random Midwest city and do a google search for local proposals to build new apartments. And, every time, the search finds 2 types of stories. One type of story is the standard story in every city across the country. Some proposal for an apartment project that requires some sort of variance or review, and it is "controversial" because of traffic, or the low status of who will live there, or the high status of who will live there ("These are luxury units, and what we need are affordable homes."). All the same garbage you see anywhere.
The second type of story is complaints about apartments in poor conditions. Residents are complaining that the landlord is letting the property devolve into inhumane state of disrepair.
And, I have to make a confession. I did the thing. Those stories caused me to doubt my thesis. I did the essentialist thing. I thought, "Well, this sounds like a place where incomes are too low, and so the conditions are poor."
But, if that story was in Brooklyn, that isn't what we would say. We would say, "Those slum lords know they can get away with it because the housing shortage in Brooklyn means that the tenants don't have any options."
Now, I think there is a bit of both. There are some small cities in the Midwest where population has been declining markedly. There truly isn't a shortage in those cities. They are in disrepair because they are declining.
But, that isn't the case, region-wide. There are many cities that aren't shrinking, and Northeast-levels of new home permits aren't high enough to meet a neutral demand for household formation. I can specifically measure the signal of a technical shortage - a premium on land that reflects temporary spending on housing above long-term norms that are strongly mean-reverting when there is not systematic pressure creating displacement. The Midwest cities don't have 6-figure premiums, but many of them now have 5-figure premiums.
There is a new paper out, detailing the legal ways that zoning and land use planning systems across the Midwest are dysfunctional and do create binding constraints on the production of infill housing. From the abstract, "Contemporary debates about land-use law treat restrictive zoning as a problem of expensive, high-demand markets. Economically stagnant or depopulated places are ignored, or assumed not to need regulatory reforms."
In addition to its effects on affordability and supply conditions, the authors note the importance of better land use processes in revitalizing existing portions of cities that have had ups and downs. They also note that reforms are happening in the Midwest, just as they are in other places.
Upgrade to paid
## Continue reading this post for free in the Substack app
Claim my free post
Or upgrade your subscription. **Upgrade to paid**
---
| | | Like
---
| | Comment
---
| | Restack
---
(C) 2026 Kevin Erdmann
548 Market Street PMB 72296, San Francisco, CA 94104
Unsubscribe