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 are employment, house prices and single family housing permit growth.
For the sixth release 98 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Longview, Texas metropolitan statistical area (MSA).
The health of the Longview housing market is due to its position as a regional healthcare center, the presence of the East Texas Oil Field and Haynesville-Bossier Shale, a large number of oil service companies that have benefited from the high price of oil and a significant specialty chemicals industry. According to home builder Scott Hamilton, President of Scott Hamilton Custom Homes, “the natural gas industry has also been quite active and that and other things have increased the demand for high-tech blue-collar workers such as certified welders. Moreover, since the last oil patch bust there has also been a strong push to diversify the economy away from hydrocarbons and that has also helped.” He went on to say that “the low regulatory burden across the state has made us more competitive and the stream of retirees moving here has also helped keep home builders active and the economy growing”
Comparing 2010 American Community Survey data for Longview to the US offers strong evidence that Longview is doing well, and insight into why. The unemployment rate is about 2.5 percentage points lower in Longview than in the rest of the country, with the percentage of persons employed in natural resources, construction and maintenance about double the national average. Also, the percentage in production and transportation is almost 20% higher than for the US, while the percentage in finance, insurance and real estate is less than one-fifth the national average. Because the local economy is doing well, the number of vacant housing units is about 10% below what it is for the nation as a whole and the percentage of owner-occupied units stands at 70.1% versus 65.4% for the entire country. Lastly, the percentage of owners with a mortgage is just 49% versus 67.2% for all of the US.
According to Tim Holland, General Manager of Home Plus Floors, Inc., “Longview missed the real estate bubble and thus is not suffering from a bust. This is because construction here proceeded at a steady pace and supply kept up with demand. As a result no one has lost money on their house and there was little if any increase in spec building back in ’05, ’06 and ‘07.“ As a result, house prices have held up well over the past few years. Prices are up 5.9% since the trough in March 2011 and are just half-of-one-percent off their high set in November 2009.
Improving economic conditions have resulted in payroll employment being down by just 400 or four-tenths-of-one percent from its peak in October 2008 and up by 7.9% since the trough in October 2009. Single family permitting activity is up 3.2% on a seasonally adjusted monthly average basis from the trough set in April 2009. While new homes are being built in many parts of the Longview MSA, activity has been primarily centered in the Springhill area and elsewhere north of Longview, and in several subdivisions that are in the Hallsville Independent School District.