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 indicators are employment, house price and single family housing permit growth.
For the second release, 23 markets are currently classified as improving under a conservative examination of local economic and housing market conditions. Among these areas is the Iowa City, IA metropolitan statistical area (MSA).
The improving housing market in Iowa City is primarily due to the steadying presence and increasing appeal of the University of Iowa (UI), growth across the entire healthcare complex including the UI hospitals, the VA hospital, Mercy Hospital and the many clinics, and the diversified nature of the economy. According to Craig Schroeder the current President of the Greater Iowa City Home Builders Association “with the University of Iowa, Proctor & Gamble, Rockwell Collins, American College Testing (ACT) and many other employers, our economy has a wide variety of well paying jobs across many sectors and that has protected us from a decline in any one in particular.”
Comparing occupational data from the 2000 Census to the 2009 American Community Survey confirms this. Today there are 8,859 (or 32%) more management jobs than in 2000, 5,011(or 50%) more service jobs, 3,989 (or 24%) more sales jobs, 1,529 (or 39%) more construction jobs, 2,425 (or 42%) more production jobs and 338 (or 187%) more farming jobs. Moreover, except for small declines in the number of workers in information and in finance insurance and real estate, there have been increases in every industry paced by 7,287 (or 28%) more jobs in the educational, healthcare and social services industries and 3,453 (or 63%) more jobs in the arts, entertainment, recreation and accommodation and food services industries.
According to home builder Aaron Klosterman, another factor contributing to the success of the local market includes “house prices that never really declined thus limiting the number of foreclosures.” He went on to say that “the move up market has been healthy, and along with the continued influx of well paid medical professionals and solid population growth, we have done well.” As a result of all these trends home prices have remained stable during the downturn. House prices have moved up 0.8% since the trough in November 2010 and are just 2.8% off their all–time high set in July 2009.
Improving economic conditions have resulted in payroll employment being just 2% down from its peak in January 2009, and up by 600 since the trough in September of last year. Single family permitting activity is up to an annual average rate of 391 per year from a pace of just 255 at its trough set in February 2011. While new homes are being built across all of the MSA, activity is most pronounced in Johnson County and in particular the incorporated cities of Coralville, Iowa City North Liberty, and Tiffin. Construction activity is so strong in Coralville that builders are beginning to worry about running out of lots.