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Tightest Housing Markets in the U.S.

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Tightest Housing Markets in the U.S.

March 8, 2012
A simple measure of tightness in a market for owner-occupied housing is the homeowner vacancy rate (number of homes for sale divided by the number either for sale or owner-occupied). Builders are often interested in markets that are tight by this measure, because it indicates prospective buyers will have difficulty finding a suitable home among the available existing units. Several federal government surveys provide homeowner vacancy rates, but the one with the greatest geographic detail by far is the Census Bureau’s American Community Survey (ACS).  In a recent study, NAHB tabulated the most recent (2010) ACS this data for all metropolitan areas in the country. Overall, the tightest markets tend to be relatively small: Corvallis, Oregon (with a homeowner vacancy rate of 0.23%), Lebanon, Pennsylvania (0.49%), Billings, Montana (0.54%), San Angelo, Texas (0.61%), and Eau Claire, Wisconsin (also 0.61%). Because it may seem difficult to compare these areas to larger markets, NAHB also looked separately at the 27 metropolitan areas that have at least 500,000 owner-occupied homes.  Homeowner vacancy rates for these 27 areas range from 1.43 percent to 4.65 percent.  The ten tightest large markets are shown below. The two tightest large markets in 2010—Nassau-Suffolk, NY and Santa Ana-Anaheim-Irvine, CA—were also the two tightest large markets the last time NAHB looked at the ACS data in 2008. The NAHB study provides a rundown of the top-10 metros according to nine key measures, including: owner-occupied housing units; homeownership rate; home owner vacancy rate; share of single-family detached homes; value of homes owned; home owner incomes; growth in stock of single-family detached homes; and share of homes built recently. It also has a spreadsheet that shows how more than 350 other metro areas stack up in each category.

Improving Markets Index: Longview, TX MSA

March 6, 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 sixth release 98 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Longview, Texas metropolitan statistical area (MSA). The health of the Longview housing market is due to its position as a regional healthcare center, the presence of the East Texas Oil Field and Haynesville-Bossier Shale, a large number of oil service companies that have benefited from the high price of oil and a significant specialty chemicals industry.  According to home builder Scott Hamilton, President of Scott Hamilton Custom Homes, “the natural gas industry has also been quite active and that and other things have increased the demand for high-tech blue-collar workers such as certified welders.  Moreover, since the last oil patch bust there has also been a strong push to diversify the economy away from hydrocarbons and that has also helped.”  He went on to say that “the low regulatory burden across the state has made us more competitive and the stream of retirees moving here has also helped keep home builders active and the economy growing” Comparing 2010 American Community Survey data for Longview to the US offers strong evidence that Longview is doing well, and insight into why.  The unemployment rate is about 2.5 percentage points lower in Longview than in the rest of the country, with the percentage of persons employed in natural resources, construction and maintenance about double the national average.  Also, the percentage in production and transportation is almost 20% higher than for the US, while the percentage in finance, insurance and real estate is less than one-fifth the national average.   Because the local economy is doing well, the number of vacant housing units is about 10% below what it is for the nation as a whole and the percentage of owner-occupied units stands at 70.1% versus 65.4% for the entire country.  Lastly, the percentage of owners with a mortgage is just 49% versus 67.2% for all of the US. According to Tim Holland, General Manager of Home Plus Floors, Inc., “Longview missed the real estate bubble and thus is not suffering from a bust.  This is because construction here proceeded at a steady pace and supply kept up with demand.  As a result no one has lost money on their house and there was little if any increase in spec building back in ’05, ’06 and ‘07.“   As a result, house prices have held up well over the past few years.  Prices are up 5.9% since the trough in March 2011 and are just half-of-one-percent off their high set in November 2009. Improving economic conditions have resulted in payroll employment being down by just 400 or four-tenths-of-one percent from its peak in October 2008 and up by 7.9% since the trough in October 2009.  Single family permitting activity is up 3.2% 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 Longview MSA, activity has been primarily centered in the Springhill area and elsewhere north of Longview, and in several subdivisions that are in the Hallsville Independent School District. 

Private Residential Construction Spending Hits a Two-Year High

March 2, 2012
The Census Bureau reported that private residential construction spending activity increased 1.8% during January. The preliminary estimate for December was boosted higher to show a 1.5% gain, versus the originally reported increase of 0.8%. After falling in July 2010 to its lowest reading since mid-1995, spending on private residential construction projects has increased in each of the last six months—rising to its highest dollar value since January 2010. Spending on new single-family home construction climbed 2.5% versus December 2011. In addition, the level of spending activity has increased in each of the last eight months and on a year-over-year basis this category has registered a gain of 5.5%. Although this improvement is modest, the sustained period of growth corroborates the mounting evidence from indicators such as the Wells Fargo/NAHB HMI, new construction starts and home sales that the housing market might have found that elusive recovery. The recent quickening in the pace of new job growth and still-high levels of housing affordability should only bode well for additional growth in single-family construction activity over the near term; however, tight mortgage lending standards and competition from distressed property sales will remain a limiting factor going forward. Multifamily construction spending ticked higher by 0.7% in January. While month-to-month fluctuations for this category have been more volatile, the level of spending has certainly trended higher during the past year with a 20% increase versus January 2011. Authorized multifamily (5+ units) building permits remained above 200,000 annualized units for the third consecutive month in January 2012, pointing to likely gains in spending over the near term. The home improvement component of construction spending increased for the sixth consecutive month during January, gaining 1.3% on a month-to-month basis. Overall, remodeling did not endure the same degree of decline in activity when compared to new construction for single-family and multifamily projects. In fact, during 15 of the last 16 months, the level of home improvement spending has exceeded that of new single-family homes. A combination of tax credits for retrofitting homes with energy efficiency equipment and rehabilitation/repair work on distressed properties has likely bolstered demand for home improvement spending.
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  • Joanne Loftus
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