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 eighth release 100 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Cumberland, Maryland–West Virginia metropolitan statistical area (MSA).
The health of the Cumberland housing market is due to its position as a very large regional healthcare center, the presence of Frostburg State University and Allegany College of Maryland, the CSX Locomotive Maintenance Facility and the presence of several prisons including a new maximum security prison. Cumberland also benefits from several large call centers and the very large Hunter-Douglas fabrication plant where custom energy efficient window treatments are made.
According to home builder Steve MacGray, General Manager of Foxcraft Homes, Inc., “the continued growth of healthcare, the fact that Cumberland is; a safe place to raise kids, somewhere where you can easily enjoy small-town living, has a lively and growing arts scene, and is where you can enjoy the great outdoors, through the many parks and great fishing opportunities, continues to draw people here.” He went on to say that “about 50% of purchasers are move-up buyers while another 25% are retirees, and that both groups are also drawn here because of our affordability and close proximity to Baltimore, Pittsburgh, Philadelphia and Washington, D.C. As a result of these different buyers, construction activity is slowly and steadily picking up steam.”
Comparing 2010 American Community Survey data for Cumberland to the US offers strong evidence that Cumberland is doing well and some insight into why. The unemployment rate is almost 10 percent lower in Cumberland than in the rest of the country. In addition, the percentages of persons employed in natural resources, construction and maintenance occupations and in production, transportation and material moving occupations are 50% and 33% higher respectively than the national average. Lastly, the percentage of owner-occupied units stands at 73.4% versus 65.4% for the nation and the number of homeowners with a mortgage is just 58.8% in Cumberland, compared to 67.2% elsewhere.
According to Mike Hershberger, Outside Salesman for 84 Lumber, “Cumberland is doing better than many places because of the presence of credit unions. While we have big banks, most construction loans are being made by the local credit unions. Because the credit unions know the borrowers well and have more discretion, they can confidently make loans that banks would not. In addition, the presence of the ATK Allegany Ballistics Laboratory in Rocket Center, WV is very important to our community as it brings people here.” Whatever the cause, house prices are definitely on the mend. Prices are up 1.8% since the trough in January 2011 and down just 12.8% from their peak set in December 2007.
Improving economic conditions have resulted in payroll employment being down less than 1% from its peak in December 2011, and up by 5.6% since the trough in February 2010. Single family permitting activity is up 1.6 % on a seasonally adjusted monthly average basis from the trough set in May 2010. While new homes are being built in many parts of the Cumberland MSA, activity is now primarily centered in Mineral County, WV because buyers can get the same house there as in Allegany County, MD but for $5,000 to $10,000 less due to simpler building codes and lower taxes.