NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI). The IMI highlights the fact that housing markets are local and that there are metropolitan areas where an economic recovery is underway. The index measures three readily available monthly data series that are independently collected and indicative of improving economic conditions. The three series are employment, house prices and single family housing permit growth.
For the eleventh release , 80 markets are classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Terre Haute, Indiana metropolitan statistical area (MSA).
The resurgence of the Terre Haute economy, and its housing market, is due Terre Haute being a large regional healthcare center, the presence of Indiana State University, the Rose-Hulman Institute of Technology, Ivy Tech Community College and St. Mary-of-the-Woods College. Its location not far from Evansville, Indianapolis and St. Louis also helps. In combination, healthcare and post-secondary institutions employ over 7,000 persons and are three of the five largest employers in the area. In addition, there is a considerable amount of manufacturing in Terre Haute including the largest disc production facility in the United States, Sony DACD. Other manufacturers with a large presence in Terre Haute include Bemis, a supplier of flexible packaging and pressure sensitive materials, GE Aviation, which manufactures turbine engine components, ThyssenKrupp Presta, a manufacturer of automobile steering columns, and others. Terre Haute also benefits from the presence of a United States Federal Corrections Complex as well as the Indiana Air National Guard.
According to home builder Rick Jenkins, owner of Richard Jenkins Construction, “the combination of a mild winter and historically low interest rates have caused pent-up demand to finally materialize. In addition, our colleges are all expanding which results in more staff and that translates into increased demand for housing. Also, until recently agriculture was doing well putting more money into the hands of farmers who bought houses and whose increased spending caused others to buy houses too.” He went on to say that there is increased buyer confidence now that prices are on the upswing and because we got through the Pfizer plant closure and the loss of the fighter jets at the Air National Guard facility relatively unscathed; that is without a fall in house prices or employment levels.”
According to Tim Malooley, General Manager of Niehaus Home Centers, “it’s a combination of several things that’s causing our market to perk up. First, there never was never much overbuilding and as a result prices never had far to fall. Second, because of all the hospitals and universities there is always a good deal of turnover which helps the housing market and third, there is a small but steady flow of immigrants who move here for jobs and more often than not, those transferees want a new house. Were it not for the credit crunch, things would be much better.” In spite of a lack of credit, house prices are definitely firming. They are up 0.3% since the trough in August 2011 and are off less than 9.0% from their all-time high set in September 2006.
Improving economic conditions have resulted in payroll employment being just 8.9% from its peak in March 2000 and up by 2.5% since the trough in December 2011. Single family permitting activity is up 2.0% on a seasonally adjusted monthly average basis from the trough set in February 2011. While new homes are being built in many parts of the four-county Terre Haute MSA, activity has been primarily centered in the south and southeast parts of Vigo County close to the city. After Vigo County, Clay County has been most busy, but due it being rural, activity has been quite scattered.