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 seventh release 101 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Boise, Idaho metropolitan statistical area (MSA).
The health of the Boise housing market is due to its position as a large regional healthcare center, the presence of Boise State University, the large Federal government presence and its role as the state capital and thus the large number of state government workers. Boise is also the headquarters for Boise Cascade, Albertsons, J.R. Simplot and several other major companies. Finally, there is a large high-tech presence in Boise anchored by the headquarters of Micron Technologies with other firms like Hewlett-Packard, Sybase, Microsoft, having sizable facilities in town.
According to home builder Bobbie Schultz, Owner of Jordan Homes LLC, “the combination of a pick-up in manufacturing activity, the continued growth of healthcare, and people generally feeling that the worst is over is causing people to buy rather than continuing to wait.” She went on to say that “because inventory is very low and there is little to choose from, when retirees move here or when a local family wants more space more often than not they wind up building a new house. As a result of these different buyers, construction activity is picking up both at the low end of the market and at the high end.”
Comparing 2010 American Community Survey data for Boise to the US offers strong evidence that Boise is doing well and some insight into why. The unemployment rate is almost 10 percent lower in Boise than in the rest of the country, while the labor-force participation rate is slightly higher and the average age of the population is almost 10 percent younger. In addition, the percentages of persons employed in professional, scientific and management and administrative occupations and in public administration are both about 13 percent higher than the national average. Because the local economy is doing well, the number of vacant housing units, be they owner-occupied units or rental units, is 33 percent lower than what it is for the nation as a whole and the percentage of owner-occupied units stands at 68.2% versus 65.4% for the nation.
According to Pat Minegar, President of A-1 Heating and Air Conditioning, “Boise is doing better because residents from high tax states like California, Oregon and Washington are moving here to save money and because this is a great place to raise kids. In addition, existing homeowners are again investing in their homes and that helping put a floor under prices.“ Whatever the cause, house prices are definitely on the mend. Prices are up 2.4% since the trough in May 2011 and are expected to continue rising going forward.
Improving economic conditions have resulted in payroll employment being down just 6.8% from its peak in March 2007, and up by 2.5% since the trough in June 2010. Single family permitting activity is up 3.7% 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 Boise MSA, activity is now primarily centered in the Cities of Eagle, East Boise and Meridian all of which are in Ada County.