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 eleventh release , 80 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Canton-Masillion, Ohio metropolitan statistical area (MSA).
The health of the Canton housing market is in part due to its business friendly environment and low state and local taxes, and the presence of four growing colleges and universities including Stark State College with a student population of over 15,000, and Walsh University with an enrollment of about 3,000. Canton also benefits from being a growing regional healthcare center with Aultman Hospital and its 5,000 employees as well as Mercy Medical. However of late, Canton’s growth is primarily, due to the all important Utica shale, a rock layer several thousand feet below the Marcellus shale, and which lies directly below Canton. As a result Chesapeake Energy, Exxon, Anadarko, Chevron and others are starting to drill and other energy related firms including Slumberger, Baker Hughes, Michael Baker Corporation, and J-W Wireline are all setting up shop. Canton also benefits from the presence of national firms like Belden Brick, Marathon Petroleum and GE Capital and is the Global headquarters of The Timkin Company and Diebold Incorporated.
According to home builder James Rudo, President of VictoryGate Custom Homes, “drilling companies as well as oil and gas service companies are setting up operations. While the Utica shale is just starting to be exploited through fracking and horizontal drilling, the effects of it are being felt in many ways. For example field managers and executives are beginning to relocate here and these new households not only need housing but often want new houses.” He went on to say that, “there is not much standing inventory and what little exists is in poor shape. As a result it is often cheaper to build a new home than buy an existing house and remodel it. As a result holding a spec is hard as everything sells. As a matter of fact, things are so good we just hired a new supervisor.” He closed by saying “referrals are a huge part of our business and we augment it with some light advertising.
According to Barbara Bennett, President, a managing partner at the engineering firm Hammontree & Associated, Limited, “because of the Utica shale our hotels are full, are restaurants are all busy, there are no vacant storage facilities or warehouses, and there is a constant shortage of truck drivers. In addition, there is a dramatic up-tick in industrial development and infrastructure improvements. As a result of this added activity, not to mention the cashing of royalty checks by landowners, the local economy is more vigorous than ever. As a matter of fact, we are currently working with developers on two brand new subdivisions.” As a result, house prices have held up well over the past few years. Prices are up 1.6% since the trough in January 2011 and are off less than 19% from their all-time high set in June 2006.
Improving economic conditions have resulted in payroll employment being off just 6.2% from the high of the past decade set in July 2002 and up by 7.8% since the trough in October 2009. Single family permitting activity is up a robust 9.7% on a seasonally adjusted monthly average basis from the trough set in November 2011. While new homes are being built in many parts of the Canton MSA, activity has been primarily centered in northern Stark County including the City of Green and Jackson Township.