NAHB recently unveiled an index that tracks housing markets on the mend: the NAHB/First American Improving Markets Index (IMI). The IMI is intended to draw attention to the fact that housing markets are local and that there are metropolitan areas where economic recovery is underway. The index measures three readily available monthly data series that are independently collected and are indicative of improving economic health. The three indicators are employment, house price and single family housing permit growth.
For the second release, 23 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Fayetteville, NC metropolitan statistical area (MSA).
The improving housing market in Fayetteville is primarily due to growth at Fort Bragg, a major U.S. Army installation home to the U.S Airborne and Special Operations units. According to Lynne Green, the owner of Highland Lumber “Fort Bragg is always a big player in our economy but it’s now bigger and more important than ever before and that’s due to BRAC.” The Base Realignment and Closure process has resulted in more than 20,000 military and civilian employees relocating to Fort Bragg over the past few years.
The relocation of Forces Command, led by a four-star general and the Army Reserve Command led by a three-star general have collectively brought about 3,000 new employees to Fort Bragg, many of them with higher pay grades than the typical new recruit. This impact is already being felt with personal income in Fayetteville growing by 5.5% in 2010. According to the Census Bureau, military earnings in the metro area grew by $466 million, from $5.9 billion to $6.4 billion and that represents more than half of Fayetteville’s overall increase of $787 million last year. The added employment is a significant boost for the metropolitan area, which has 131,000 workers, according to the Bureau of Labor of Statistics and a population of slightly more than 366,000, up from almost 337,000 in 2000, an increase of 8.8% according to the Census Bureau.
Another factor in the success of the market according to Home Builder Greg West is that “builders were quick to adapt to the economic downturn by reducing supply, which has kept new home inventories normal, and by lowering the price of new homes by simplifying product offerings and shrinking their size.” As a result of that and the steadying influence of Fort Bragg, home prices remained stable during the downturn. House prices have moved up 3.2% since the trough of December 2009 and are within 1.5% of their all–time high set in July 2008.
Mr. West went on to say that now that the influx from BRAC is over, the city is looking forward to an influx of defense contractors and related personnel that should continue to help Fayetteville perform well.
Improving economic conditions have resulted in payroll employment returning to its all-time high, set in January of 2009, and is up by 4,000 since the trough in October of last year. Single family permitting activity is up to an annual average rate of 1,425 per year from a pace of just 1,057 at its trough set in December 2008. While new homes are being built in many parts of Fayetteville, it appears that starter homes are primarily being built in Hoke County due to its affordability and proximity to Fort Bragg while Harnett County (which is not technically part of the MSA) is where higher end houses and transferees may be found.