Broadband Communities

OCT 2018

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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O C T O B E R 2 0 1 8 | w w w. b r o a d b a n d c o m m u n i t i e s . c o m | B R O A D B A N D C O M M U N I T I E S | 2 5 DATA UNCERTAINTIES Large builders and deployers are well aware that local markets do not always – or even usually – exactly mirror national and regional trends. They are also aware that local radio, TV and newspapers tend to report only aggregate national numbers for all housing starts. These days, the aggregate number is about 1.2 million housing starts a year. Two of every three new units are single-family homes, many of which replace old housing that has fallen into disrepair. The data are collected by private contractors hired by the Census Bureau. But there are 40,000 communities in the United States, and not all require construction permits. So in its national reports, the Census Bureau inflates the numbers it collects by 3.3 percent. In many states, large developments are built outside city or town borders in unincorporated areas and then folded into those communities once construction is finished. Thus, although the number of units completed nationally tends to be about 7 percent less than the number started, the number of dwelling units completed can be larger for a given location. That has not been the case for the past few years, however. Overall, MDU completions have tended to be successful at a higher rate in the past few years – closer to a 3 or 4 percent drop from starts. For clarity, the charts do not include the small number of housing units in buildings with two, three or four apartments – 10,000 to 12,000 units a year for the past decade. The annual rate of five-plus-unit MDUs started in 2017 ranged from 277,000 to 416,000, as stated in the monthly reports. Exceptional weather – good or bad – tends to account for much of this variation. The year ended up with 343,000, revised down from 352,000. The average annual rate of MDU starts this year, 395,000 through July, is up 13 percent from 2017. As noted earlier, the final number could be as low as 365,000 – still a record. There are also regional variations, and those are reported about a year late by the Census Bureau. The Bureau does not break out number of units in very small MDUs – those of four units or fewer – in the regional data, but it does in the MSA-level data. The second chart shows how much of the MDU market is driven by regional housing patterns, however. MDUs, as one might expect, tend to be small in rural areas, but in rural population centers of fewer than 50,000 people, garden and dwelling-above- store apartments are not uncommon and are easy to provide broadband for, as long as the community itself is well connected to the outside world. MDUs that are nonresidential – hotels, hospitals and dormitories – are more common in the South, as are retirement communities in rural areas, even though rural populations have declined more in the South than elsewhere since 2010. Indeed, in the aggregate, rural areas have been losing population since 2010. The loss – more than 1 percent of the 42 million living in rural counties that year – produced a surplus of more than 200,000 dwelling units in those counties. Small regional and local broadband carriers move quickly to take advantage of opportunities presented by new residential construction. Local carriers do not usually need the census to tell them what is going on in their own communities. To take advantage of local opportunities, national property owners and managers need to strengthen connections to local carriers. 500 750 1,000 1,250 1,500 1,750 2,000 2,250 sing Starts by Year Privately Owned Housing Starts 2004-2018 Total 1 unit 5+ units 0 250 500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Hous (2018 data estimated, Jan-July seasonally adjusted) 50 100 150 200 ing Starts by Region MDU Housing Starts by Region 2008-2017 Northeast Midwest South West 0 50 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 MDU Housi All MDUs, 2+ Units Chart 2: There are significant regional variations in annual MDU construction. Most MDU growth has been in the South and West since the recession started in 2008. In this chart, MDUs of all sizes are aggregated; the Census Bureau does not fully report MDU data by size in this data series. Chart 1: Red line shows construction of MDU buildings with at least five units. Most new units are in buildings of 20 units or more; the average building size this year in MSAs is 34. In this chart, the roughly 12,000 annual construction totals for MDUs of two, three or four units is omitted to keep 2018 data compatible with earlier years.

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