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 Evansville, Indiana-Kentucky metropolitan statistical area (MSA).
The health of the Evansville housing market is due to its diversified economy and its being the healthcare, industrial, retail, and transportation center for the tri-state region of Indiana, Illinois and Kentucky. In addition, Evansville also benefits substantially from the presence of the University of Southern Indiana and the University of Evansville. Finally, Evansville is also a major manufacturing center with large regional facilities of Toyota Motor Corporation, Bristol Myers Squibb, ALCOA and a number of plastics operations.
According to home builder Kenny Reinbrecht, Owner of Reinbrecht Homes, Inc. “the combination of a pick-up in manufacturing activity, the continued expansion of healthcare, and people generally feeling more secure in their jobs is causing people to buy a house rather than continuing to wait.” He went on to say that “there is activity both at the low end of the market and at the high end and that some retirees are now looking to move here and that is also helping the housing market.”
Comparing 2010 American Community Survey data for Evansville to the US offers strong evidence that Evansville is doing well and some insight into why. The unemployment rate is almost two percentage points lower in Evansville than in the rest of the country, and the percentages of persons employed in production, transportation and material moving occupations and in manufacturing are 39 percent and 88 percent higher respectively than the national average. Also, the percentage of government workers is about half 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 21 percent lower than what it is for the nation as a whole and the percentage of owner-occupied units stands at 71.5% versus 65.4% for the nation.
According to Sean Miller, Corporate Sales Manager of Benthall Brothers, Inc., “Evansville missed the real estate run-up and is thus not suffering the aftermath. As a result house prices have not fallen much and therefore few have lost money on their home. In part it is because inventories are low and banks did not lend.“ Whatever the cause, house prices have held up well over the past few years. Prices are up 2.1% since the trough in April 2011 and are just 5.4% off their high set in June 2007.
Improving economic conditions have resulted in payroll employment being down just 1.5% from where it was in January 2008, the start of the recession, and up by 4.6% since the trough in July 2009. Single family permitting activity is up 1.9% 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 Evansville MSA, activity is now primarily centered in Vanderburgh County with some construction also taking place in Warrick County.