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 Bloomington, Indiana metropolitan statistical area (MSA).
The health of the Bloomington housing market is due to its position as a very large regional healthcare center and the Indiana University and all of its research facilities and associated high-tech firms. Bloomington is also home to a large Baxter Pharmaceuticals facility and is headquarters to the Cook Group Incorporated, a company primarily involved in manufacturing of medical devices. As a result, Bloomington’s concentration of employment in the life sciences and medical devices is many times greater than the U.S. average and has been growing rapidly in recent years.
According to home builder Aaron Stolberg, President and Owner of WS Homes, Inc., “the continued expansion of the University and the growing importance of healthcare and medical devices have collectively shielded the community from the worst of the recession. As for the building industry, we have been doing better of later due to construction lending being extended by smaller local banks.” He went on to say that “another reason activity is up is because more than half of all buyers are retires and almost as many are from out of town. Lastly, pent-up demand from buyers who were on the fence just a few months ago is finally materializing because of an improving economy and a rise in exports. As a result of these different forces, construction activity is slowly and steadily improving.”
Comparing 2010 American Community Survey data for Bloomington to the US offers strong evidence that Bloomington is doing well and some insight into why. The percentage of persons with a graduate or professional degree is 43% higher than in the rest of the country and the median age is almost 16% lower in Bloomington than it is everywhere else. In addition, the percentages of persons employed in educational services, healthcare the social assistance industry and in the arts, entertainment and recreation industry are 48% and 35% 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 65.1% in Bloomington, compared to 67.2% elsewhere.
According to John Bethell, President of the John Bethell Title Company, “Bloomington is doing better than many places because retirees continue to move here, despite the poor economy, due to the close proximity to Indianapolis, the University and all it has to offer the generally low tax rates. In addition, the anticipated construction of I-69 is already an economic boon to the entire community and the Westside in particular. It is already transforming the area and residential and commercial construction activity is heating up.” Whatever the cause, house prices are definitely on the mend. Prices are up 9.1% since the trough in January 2011 and down just fourth-tenths-of-one-percent from their peak set in July 2007.
Improving economic conditions have resulted in payroll employment being down less than 8% from its peak in August 2008, and up by 1.3% since the trough in December 2008. Single family permitting activity is up 19.9% on a seasonally adjusted monthly average basis from the trough set in September 2011. While new homes are being built in many parts of the Bloomington MSA, activity is currently centered in preapproved subdivisions in the City of Bloomington, northwest of Bloomington in the Town of Ellettsville and the west side of town where I-69 is being built.