By Adam Pagnucco.
Last summer, I revealed that the U.S. Census Bureau had been publishing inaccurate data on Montgomery County building permits for years. That caused concern in parts of county government, the real estate industry and beyond. The county council has now assigned its in-house think tank to investigate the issue. That’s a great move and it could generate some interesting results on how we measure MoCo’s economy.
First, a bit of history. On June 13, I published a post using data on building permits from the U.S. Census Bureau that showed MoCo had hit a 30-year low in housing units permitted. Two days later, the county government disputed Census’s numbers and claimed its number of housing units permitted in 2022 was near its highest level since at least 2000.
On June 29, I summarized the problem in a post titled “This Mess Must be Fixed.” The reason why Census’s data did not match the county’s is because the county’s Department of Permitting Services (DPS) had not been reporting its data to Census since 2012. Deprived of county government numbers, Census had been estimating permits in MoCo and those estimates had apparently been terrible. The county’s failure to report was serious not only because of faulty permit data alone, but also because building permits are used as an input to other federal data series such as population and gross domestic product. If the federal government had bad data on MoCo’s building permits, was it also calculating faulty data about other parts of our economy too?
An inability to measure our economy is unacceptable. Furthermore, the county promulgates policies that are directly relevant to the building sector, such as land use ordinances, impact taxes and rent control. Building permits are necessary for measuring the impact of all these policies. If we can’t measure permits, how can we be sure if our policies are working?
The county council has gotten the message. Yesterday, the council moved to include a project on measuring housing starts in the work plan of the Office of Legislative Oversight (OLO), which studies policy issues for the council. OLO intends to examine and compare the methodologies used by Census and DPS in estimating building permits over the last two decades. Hopefully OLO can get to the bottom of the problems with this data series and help the county accurately measure and report data on building permits.
Thank you to the county council for recognizing the need for this project.
The project description is reprinted below.
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OLO Work Program Supplement
Project #32
Data on Housing Starts in Montgomery County
Principal agencies: Montgomery County Government
The term “housing starts” refers to the number of new housing units that builders have begun to construct.
The number of housing starts in a community is a helpful metric for understanding trends in the supply of housing. The U.S. Census Bureau’s Building Permits Survey (BPS) collects data on newly-permitted housing units from “permit-issuing places,” meaning jurisdictions that issue building or zoning permits for residential construction.
Concerns have been raised that historical BPS data for Montgomery County are not accurate because the County was not reporting data to the U.S. Census Bureau. The Council is interested in obtaining accurate data on housing starts for Montgomery County. OLO will provide a report that examines and compares available data on newly-permitted housing units from 2000 to 2023 from BPS and from Department of Permitting Services. For each dataset, OLO will review the methodologies and sources and assess the accuracy of the data.