Improving Markets Index: Miami, FL MSA

August 8, 2012

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 Miami-Fort Lauderdale-Miami Beach, Florida metropolitan statistical area (MSA).

The turnaround in the Miami economy and its housing market is due to many factors including a steady rise in traffic at the Port of Miami, the world’s largest cruise ship port, and its position as a major television production center and the most important city in the US for Spanish language media.  Miami also benefits from its proximity to South America, and the relative affordability of housing in Miami compared to many of the major cities in South America and Europe.  The recent up-tick in tourism and cruise ship activity along with the presence of the University of Miami, the largest private employer in the MSA, the growing bio-tech sector and its position as a large international and regional healthcare center are also part of why Miami is recovering.  In addition Miami is home to the National Hurricane Center and the US Southern Command, responsible for all military operations in Central and South America.     

According to home builder Ray Puzzitiello, President of Puzzitiello Builders, LLC, “there’s a lot of pent-up demand among buyers in their 50s, 60s and 70s.  These buyers are not getting any younger and have now put their plans on hold for years and are tired of waiting.  In addition, many of these buyers want a new home or condo and are not prepared to deal with all the problems and delays that inevitably come with a short-sale.  As a matter of fact, interest in buying new is so strong that as you move progressively closer to the water we are witnessing short-sale-tear-downs where older smaller houses are being removed to make way for new larger ones.  Similarly, many buyers are now willing to wait for a house to be built rather than buy from the existing stock.”  He concluded by saying “another reason why things are doing well here is because house prices in the northeast are stabilizing and even rising so snowbirds are now more confident about selling their homes in CT, NJ, NY and PA, and are also more willing to borrow given historically low interest rates.”              

According to Richard Burton, Partner at the Burton Firm and the driving force behind The Foreclosure Project, “prices in Miami, Fort Lauderdale and Palm Beach are a bargain to the many Brazilians, Canadians, German and Russians who are now buying.  In some cases they are buying with an eye to living here part of the year while others simply want to park their money in a safe location and take advantage of the rapidly strengthening rental market.  The key is to find the right price-point in the right location and this is just as true for luxury buyers of waterfront condos as it is for first-time homebuyers.”  Whatever the cause, house prices are definitely firming.  They are up 0.4% since the trough in November 2011 and look to continue rising through the end of this year and into 2013 and beyond.    

Improving economic conditions have resulted in payroll employment being down less than 8% from its peak in August 2007 and up by 2.7% since the trough in January 2010.  Single family permitting activity is up a strong 4.1% on a seasonally adjusted monthly average basis from the trough set in April 2009.  While new homes are being built in many parts of the tri-county Miami MSA, activity has been primarily centered in Boynton Beach in Palm Beach County, the Parkland area and downtown Fort Lauderdale in Broward County and in downtown Miami, the Design District and in Aventura in Miami-Dade County.


Improving Markets Index: Ames, IA MSA

August 2, 2012

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 tenth release , 84 markets are classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Ames, Iowa metropolitan statistical area (MSA).

The health and steady growth of the Ames economy and its housing market is primarily due to the presence of Iowa State University and all the associated contracts it wins and federal agencies that deliberately locate in the university.  These include one of two national sites for the USDA’s Plant Health Inspection Service and the USDA’s National Centers for Animal Health which focuses on research on diseases of economic importance to the U.S. livestock and poultry industries as well as three other smaller USDA agriculture related research units.  Ames also benefits from its position as a growing regional healthcare center, exemplified by the current $150 million expansion of the Mary Greely Medical Center, as well being home to the main offices of the Iowa Department of Transportation.  Other large employers include a 3M manufacturing facility, Sauer-Danfoss a hydraulics manufacturer, Ball, a manufacturer of jars and canning supplies and Barilla, a pasta manufacturer.   

According to home builder Jon Hunziker, President of Jon Hunziker Construction, “things are turning up.  In part it’s because people are tired of being cautious and feel more confident in the local economy and thus are more willing to spend, and in part it’s because of all the construction activity going on. Enrollment growth at Iowa State is resulting in a boom in multifamily activity and the hospital is expanding.  And this growth is critical because as the single family market improves we will have a skilled labor force from which to draw on.  Otherwise, we would face a shortage of skilled workmen and that would be a big problem.”  He concluded by saying “another reason why things are doing well here is because agriculture has been doing well and as a result farmers have been spending and that has put more money in the hands of local businessmen and they have been buying houses.”              

According to Kurt Friedrich, President of Friedrich Iowa Realty, “retirees are another key part of our economy.  Ames is a top 10 retirement community due to the low cost of living, the wonderful parks and recreational opportunities and fine arts not to mention college sports and much more.  In addition, our proximity to Des Moines makes it that much easier for one spouse to find employment there yet live here.”  Whatever the cause, house prices have held up very well during the downturn.  They are up 1.8% since the trough in February 2011 and are less than 5% off their all-time high set in July 2007.  

Improving economic conditions have resulted in payroll employment setting a new high of 48,600 bettering the previous high of 48,200 set in August 2007 and is up by 4.3% since the trough in January 2010.  Single family permitting activity is up a strong 4.1% on a seasonally adjusted monthly average basis from the trough set in July 2010.  While new homes are being built in many parts of the Ames MSA, multifamily construction has been focused around the campus while single family activity has been primarily centered to the north, south and west around the fringe of the city and in the City of Nevada to the east.


Improving Markets Index: Tuscaloosa, AL MSA

July 25, 2012

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 tenth release 84 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Tuscaloosa, Alabama metropolitan statistical area (MSA).

The health of the Tuscaloosa economy, and housing market, is due to Tuscaloosa being the regional center of commerce, healthcare, industry and education for all of West Alabama.  With over 8,000 employees and 30,000 students, the University of Alabama serves as the cornerstone of the economy.  Healthcare is also a key part of the landscape with DCH Regional Medical Center, Bryce Hospital, the William Partlow Developmental Center and the Tuscaloosa VA Medical Center employing thousands more.  Tuscaloosa also has a vibrant manufacturing sector anchored by the Mercedez-Benz automotive assembly plant, a BF Goodrich tire plant, a large Phifer Wire facility, Johnson Controls and many other manufacturers.  In addition, coal mining plays an important part in the economic health of the community as do the large number of local, state and federal government agency jobs. 

According to home builder Phillip Kinard, Managing Partner of Eagle Properties LLC, “our economy is one that is experiencing consistent mild improvement.  Following the tornado of April 27th 2011, there has been a tremendous amount of repair work going on, as well as new construction to replace the thousands of units that were damaged and destroyed.  The biggest problem we face is buyers being simply unable to obtain credit.  As a result more multifamily rental units are going up, and entry level construction activity is much slower that you would expect. As a matter of fact, we have had to totally reinvent our business model to adapt to the severe credit crisis.  He went on to say that “despite the ongoing drag, the economy is improving due to expansion at the University, the Merdeces-Benz plant the local oil refinery, the coal industry and elsewhere.”  

Jay Wells, the Western Division Marketing Manager at Alabama Power thinks that people are simply starting to feel more confident about the economy and are thus more willing to spend.  “This is probably because a while back we saw local industry start to improve and that lead to a round of hiring and that increase in employment has resulted in increased demand for residential units.”  He also feels that the rise in the number of game-day homes being built as investments for fans of the Crimson Tide who want to watch home games live along with substantial construction of multifamily rental units to accommodate the growing student population has also helped.  He went on to say “Collectively this construction activity is rippling through the economy and doing a world of good.”  Whatever the causes, house prices have held up well over the past few years.  Prices are up 1.1% since the trough in February 2011 and are off less than 10% from their all-time high set in July 2008.      

Improving economic conditions have resulted in payroll employment being down just 8.9% from its high set in January 2008 and up by 0.9% since the trough in June 2009.  Single family permitting activity is up 3.3% on a seasonally adjusted monthly average basis from the trough set in January 2011.  While new homes are being built in many parts of the Tuscaloosa, MSA, activity has been primarily centered in the Towns of North River which is situated across the river and north of downtown.


Improving Markets Index: Austin, TX MSA

July 18, 2012

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 tenth release 84 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Austin-Round Rock, Texas metropolitan statistical area (MSA).

The health of the Austin housing market is in many ways a result of its two greatest assets; it’s a state capital and home to the University of Texas, a major research university.  In addition, Austin has a number of large and very large healthcare providers and as such is the major healthcare center for all of Central Texas.  Austin is also a hotbed for hi-tech industries and has been dubbed the “Silicon Hills” for good reason.  Dell Computer is headquartered in Austin and IBM, Freescale Semiconductor, AT&T, Apple, AMD, Applied Materials, National Instruments and many other hi-tech firms have a large presence in the area.  Austin also benefits from a very active live music scene and is the headquarters for Whole Foods Market which specializes in natural and organic food.     

According to home builder Tom Grant of Centerra Homes, LLC, “there was never much of a house price run-up here because the Texas Constitution limits HELOCs to no more than 80% of house value.  On top of that, because of the presence of many national builders margins were always tight, and builders had little if any pricing power. As a result there have been no price declines of substance.  What has been happening is that builders have been continually adjusting and redesigning their firms and product offerings to remain competitive given the current level of activity, which while down is stronger than in many other parts of the nation.”  He went on to say that “because of continued robust job growth, our unemployment rate is only 5%, and as a result people continue to move here from all over the country and that, along with improved access to credit has helped the home building industry.”   

According to Eldon Rude, Director of the Austin Market for Metrostudy, “because Texas is a low tax, low regulation state with a strong pro-business tilt, with the exception of 2009, we have experienced positive growth every single year.  And because new construction activity has been weak, there is almost no inventory.  As a result, builders are all quite busy.  Activity is especially pronounced in the multifamily space, as many would-be buyers can’t qualify for a loan, and in the move-up market.”  Whatever the causes, house prices have held up well over the past few years.  Prices are up 3.9% since the trough in January 2011 and are off just 2.2% from their all-time high set in July 2008.      

Improving economic conditions have resulted in payroll employment setting a new high of 812,600, bettering the previous high of 778,500 set in September 2008 and is up by 7.7% since the trough in September 2009.  Single family permitting activity is up 3.5% on a seasonally adjusted monthly average basis from the trough set in July 2011.  While new homes are being built in many parts of the Austin MSA, activity has been primarily centered northwest of the city in Cedar Park / Leander, northeast of the city in Round Rock and west of Austin in the Lake Travis School District.


Improving Markets Index: Clarksville, TN-KY MSA

July 10, 2012

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 tenth release 84 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Clarksville, Tennessee-Kentucky metropolitan statistical area (MSA).

The health of the Clarksville housing market is in large part due to growth at Fort Campbell, its proximity to Nashville, and of late, the opportunities afforded by the growth of new industries such as the joint venture of Hemlock Semiconductor and Dow Corning to produce polisilicon for solar panels as well as the expansion of existing industries including Bridgestone.  In addition, Clarksville is also rapidly becoming a regional healthcare center with the reopening of the Gateway Medical Center in an entirely new and larger facility.  Lastly, the presence of fast growing Austin Peay State University and the synergies between it and the areas large employers has helped boost local employment considerably.  

According to home builder John Crabbe, President of Crabbe Construction located in Clarksville, TN, “we never experienced a run-up in house prices like other communities did and as a result we are not suffering much of a price decline.  A key reason for this is Veterans Affairs (VA) appraisers are very conservative. And since 56% of homes are sold to the military, those appraisers dictate house prices.  As a result, we have restructured our firm in an effort to keep costs down in the face of rising input prices.  Something else that has been helping is the steady stream of retirees who move here attracted by affordable housing, the Base and the VA hospital in Nashville.”  He went on to say that “because of all this, the city population has grown and it has created a virtuous cycle where more retail establishments come because the population is growing, and more people move here because of all the new amenities.”   

Just to the north of Clarksville, in Hopkinsville, KY, Brent Gilkey the 2012 President of the Home Builders Association of Hopkinsville says that “the local economy is doing well for a variety of reasons.  First the food industry has held up very well despite the economic downturn, (unlike the auto industry) and Fort Campbell has been a profoundly positive influence.  In addition, our industrial parks are expanding and Commonwealth Agri-Energy, which converts corn to ethanol, has been a boon to the community. Lastly, we have witnessed a steady increase in the number of retirees who move here for the many recreational opportunities and low cost of living.       

According to Todd Harvey, Vice President of Byers & Harvey, Inc located in Clarksville, TN, “growth at Fort Campbell has been critical to the local economy.  Since 1990 the number of troops stationed there has grown from 19,000 to 35,000.  And, if you add in families it exceeded 50,000 people.  On top of that a new 500 person call center will soon be opening and the Sanderson Pipe Corporation is expanding here and Trane Co. and Jostens Printing & Publishing are both doing well, all of which makes the city more prosperous and more desirable than ever before.”  Whatever the causes, house prices have held up well over the past few years.  Prices are up 2.0% since the trough in February 2011 and are off less than 4% from their all-time high set in October 2008.      

Improving economic conditions have resulted in payroll employment setting a new high of 86,400, bettering the previous high of 85,700 set in August 2007 and up by 6.5% since the trough in March 2009.  Single family permitting activity is up 1.5% on a seasonally adjusted monthly average basis from the trough set in May 2008.  While new homes are being built in many parts of the Clarksville MSA, activity has been primarily centered north of the City of Clarksville near Fort Campbell and east of town going towards Nashville.


Improving Markets Index: Greenville, SC MSA

July 5, 2012

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 ninth release 80 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Greenville-Mauldin-Easley, South Carolina metropolitan statistical area (MSA).

The health of the Greenville housing market has been due Greenville’s ability to reinvent itself from a large textile town to a growing automotive, logistics and healthcare center.  Being half way between Atlanta, GA and Charlotte, NC and located on the busy I-85 corridor has made Greenville a transportation hub with trucking firms and distribution centers all choosing to locate there.  In addition, Greenville is also a large regional healthcare center with two major health systems both of which are growing and highly regarded.  Lastly, the Greenville area is a major automotive center with not only the Clemson University International Center for Automotive Research but is also North American headquarters for BMW and Michelin.   

According to home builder Rick Quinn, President of Quinn Satterfield Homes, Inc., “the combination of low property taxes, business friendly policies, affordable housing, our location at the foothills of the Blue Ridge Mountains, along with a large, growing and diverse employment base makes us an increasingly desirable place to live.  On top of that, our conservative nature prevented us from seeing house prices go way up or come way down.”  He went on to say that “the steady flow of retirees moving here to take advantage of the good weather, and many recreational opportunities such as fishing and hiking has also materially helped our housing market as has the limited supply of existing houses.”          

According to Matt Vaughn, Branch Manager and Associate Vice President at Brand Mortgage “great amenities and healthcare along with lots of jobs and low taxes have been causing northerners to relocate here after first moving to Florida as they can enjoy a lower cost of living and find good employment opportunities.  And that has been augmented with the newly opened Center for Emerging Technologies and the presence of a Lockheed Martin Aircraft and Logistics Center as well as 3M and Honeywell locating at the former Donaldson Air Force Base.  What’s scary is that unless there is some quick large-scale development I’m afraid we will run out of finished lots by the end of 2013.”  Whatever the causes, house prices have held up well over the past few years.  Prices are up 0.7% since the trough in January 2011 and are off less than 6% from their all-time high set in August 2008.      

Improving economic conditions have resulted in payroll employment being down just 5.2% from its high set in February 2008 and up by 4.0% since the trough in September 2009.  Single family permitting activity is up 3.2% on a seasonally adjusted monthly average basis from the trough set in September 2010.  While new homes are being built in many parts of the Greenville MSA, activity has been primarily centered in the City of Greenville, in the northern end of the county near the mountains around Travelers Rest and south of Greenville towards Columbia in Simpsonville. 


Improving Markets Index: Grand Junction, CO MSA

June 15, 2012

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 ninth release 80 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Grand Junction, Colorado metropolitan statistical area (MSA).

The health of the Grand Junction housing market is due to its diversification away from just oil and gas following the oil shale bust of 1982, strong growth at Mesa State University, a large number of state employees, and, being the largest city between Salt Lake City and Denver, its position as a very large regional healthcare center.  The rise of the healthcare industry can be seen by the recent additions at both St. Mary’s Hospital and Community Hospital.  Grand Junction also offers abundant outdoor activities, spectacular scenery, top-notch recreational opportunities and is a major mountain biking destination and also has a number of nearby ski resorts and vineyards.  As such, tourism and retirees are also fueling the local economy.      

According to home builder Nate Porter, President and owner of Porter Homes LLC, the continued expansion of the healthcare industry, and the growing importance of tourism have collectively shielded the community from the worst of the recession and the recent decline in gas prices.  As for the building industry, we have been holding our own due to an influx of retirees and Gen X-ers attracted to Grand Junction for its high quality healthcare, abundant and well paying healthcare jobs, and quality of life (biking, hiking, fishing and skiing).”  Mr. Porter went on to say that “many home buyers realize that it is cheaper to buy an energy efficient green home rather than a foreclosure and that attitude translates into demand for new homes as there are only a limited number such houses available.  Collectively because of all these diverse forces, construction activity is slowly rebounding.”          

Comparing 2010 American Community Survey data for Grand Junction to the US offers strong evidence that Grand Junction is doing well and insight into why.  The percentage of persons with some college but no degree is 23.0% higher than in the rest of the country and the percentage with a bachelor’s degree is 18.4% higher than it is everywhere else.  In addition, the percentages of persons employed in educational services, healthcare and social assistance and in the arts, entertainment and recreation industries are 17.2% and 10.9% higher respectively than the national average.  Lastly, the percentage of owner-occupied units stands at 72.5% versus 65.4% for the nation and the number of vacant housing units, be they owner-occupied units or rental units, is just 8.6% in Grand Junction compared to 13.1% elsewhere.          

According to Rich Buffington, an associate board member of the Home Builders Association of Northwestern Colorado, “Grand Junction is perking up because things always improve and we are more accustomed to cycles because of the role energy plays in our economy.  In addition, many folks who used to work in the oil and gas industry here, now work in the Bakken shale in North Dakota but continue to live here with the same being true for many subcontractors.  As such, the local economy is much healthier than would otherwise be the case.  In addition, education, healthcare and the continued influx of retirees are also part of the reason for the turnaround in our economy local economy.”  Whatever the cause, house prices are definitely on the mend.  Prices are up 0.7% since the trough in July 2011 and appear on track to continue to increase in the days ahead.        

Improving economic conditions have resulted in payroll employment being down less than 10% from its peak in August 2008, and up by 3.4% since the trough in January 2010.  Single family permitting activity is up 6.2% on a seasonally adjusted monthly average basis from the trough set in June 2011.  While new homes are being built in many parts of the Grand Junction MSA, activity is currently centered northwest of Grand Junction in the City of Fruita, west of Grand Junction, in the Redlands, and in the “northwest.” 


Improving Markets Index: Bloomington, IN MSA

June 7, 2012

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.  


Improving Markets Index: Portland-Vancouver-Beaverton, OR-WA MSA

May 16, 2012

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 Portland-Vancouver-Beaverton, OR-WA metropolitan statistical area (MSA).

The health of the Portland housing market is due to the diversified nature of the Portland economy.  Portland is a very large regional healthcare center, possesses the third largest port on the West Coast, and is an important distribution center.  In addition, Portland also benefits substantially from the presence of the Portland State University, University of Portland, Oregon Health and Sciences University, and a large number of other post secondary educational institutions.  Portland is also a major high-tech manufacturing center with its largest single employer being Intel .  Because of that, there are hundreds of technology companies located in and around Portland.  Lastly, U.S. Bancorp, Wells Fargo and many other firms have large regional facilities in town, and Portland is headquarters for Nike, Inc. and Adidas America, Inc.    

According to home builder Tom Liesy, owner of T.A. Liesy Homes Northwest, Portland is picking up because the number of homes for sale are very low, prices are starting to rise, and many are realizing that we will very soon run out of finished lots — as soon as this summer .  All of this is causing pent-up demand to finally manifest itself.”  He went on to say that “of late, move-up buyers with good incomes, good credit scores and good down-payments are looking to buy and if they can’t sell their existing house, they rent it.”        

Comparing 2010 American Community Survey data for Portland to the US, offers strong evidence that Portland is doing well and some insight into why.  The labor-force participation rate is almost four percentage points higher in Portland than in the rest of the country, and the percentages of persons employed in production, management, business, science and the arts are 10 percent higher than the national average.  In addition, the number of persons with a bachelor’s degree is about 20 percent above the national rate, and the percentage employed in manufacturing is also about 20 percent higher than the national average.  Lastly, because the local economy is doing well, the number of vacant housing units, be they owner-occupied units or rental units, is 44 percent lower than what it is for the nation as a whole.          

According to Nate Bond, Vice President of Sales for ProBuild in the northwest, “the market is picking up because people are once again moving to Portland by choice from elsewhere.  They come for the fresh water, because of the lifestyle, because of climate change issues, and also because many of the new homes being built here are energy efficient and green certified.”  Whatever the cause, house prices are definitely recovering.  Prices are up 3.8% since the trough in March 2011 and appear to be on track to continue to increase.       

Improving economic conditions have resulted in payroll employment being down just 4.8% from its peak in April 2008 and up by 3.4% since the bottom in December 2009.  Single family permitting activity is up 2.8% 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 Portland MSA, activity is now primarily centered in the northeast part of the City, the west side suburbs like Beaverton, and the City of Happy Valley in Clackamas County.


Housing Starts in April – A Positive Signal

May 16, 2012

New residential construction posted promising gains in April according to today’s joint release from the Census Bureau and Department of Housing and Urban Development. Preliminary estimates for housing starts show a seasonally adjusted annual rate of 717 thousand units, split between 492 thousand single family units and 225 thousand multifamily units, gains for both sectors. This is the sixth consecutive month with starts near or above 700 thousand.

There was some concern that the slower pace in March was an indication that a warm winter had pulled activity forward and the spring months could be weak as a result, but the strength of the April figures suggests momentum, rather than payback, will be the trend in coming months.

Building permit issuance did slow in April, but the decline was concentrated in the multifamily sector and brought April multifamily permitting more in line with the earlier trend.

Today’s starts numbers were consistent with yesterday’s release of the NAHB/Wells Fargo Housing Market Index (HMI) which showed improving builder sentiment. In particular, builders’ comments referred to increasing traffic in model homes, but also increasing commitment from buyers, in the form of deposits for sales.

This continuing upward trajectory in housing starts and builder sentiment suggests that consumers are regaining their confidence, and bodes well for a strengthening housing recovery.


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