NAHB recently unveiled an index that tracks housing 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 are employment, house prices and single family housing permit growth.
For the third release, 30 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Tyler, Texas metropolitan statistical area (MSA).
The health of the Tyler housing market is due to a well diversified economy based on higher education, healthcare, the oil and gas industry and interestingly enough, retirees. According to home builder Kevin Humphrey, “unlike in the mid-80s when our economy was badly hurt because of overreliance on the oil and gas industry, this time diversification has been the difference.” He went on to say that, “with three hospitals, including a teaching hospital, and three colleges Tyler is more of a service based economy and is better educated than ever and thus insulated from booms and busts.”
Comparing educational attainment data from the 2000 Census to the 2009 American Community Survey confirms this. The number of people with a high school diploma jumped from 27,578 to 39,004, and those with an associate degree rose from 8,219 to 12,032. The number of those with a B.A. increased from 17,008 to 21,606 and those with graduate degrees climbed too, from 8,025 to 8,742. This is clearly an area that is strongly focused on higher education coupled with many employers eager to hire newly minted graduates.
The Texas constitution has also played a part in the health of the Tyler economy and the housing sector in particular. According to Ben Robertson of the Central Title Company, “because the Constitution limits HELOCS to no more than 80% of house value, excessive borrowing was never an issue. As a result, we avoided many of the problems and pitfalls other places experienced. Moreover, our position as a growing regional retail hub along with the steady influx of retirees, which began in the mid-1990s, can’t be overemphasized.” He went on to say that “the retirees have continued to come even during the past few years and have, along with the growing healthcare sector, been a boon to housing.” As a result house prices have held up well during the downturn. They are up 5.9% since the trough in December 2010 and are less than 1% off their all-time high set in June 2007.
Improving economic conditions have resulted in payroll employment being just 2,200 down from its peak in November 2008 and up by 3.5% since the trough in July 2010. Single family permitting activity is up 0.3% on a seasonally adjusted monthly average basis from the trough set in March 2009. While new homes are being built in many parts of the Tyler MSA, for the past few decades, activity has been primarily centered in the southern part of both Smith County and the City of Tyler. Recently, however, a noticeable uptick in building activity has been in evidence in the northern part of the county too.