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 Syracuse, New York metropolitan statistical area (MSA).
The health of the Syracuse housing market is due to Syracuse being an extremely large regional healthcare center, the presence of Syracuse University and Le Moyne College and its geographic location that makes it a natural transportation center for the northeast. Heathcare is, by far, the largest single industry in the city with SUNY Upstate University Heath System, St. Josephs Hospital, Crouse Hospital, and the very large regional VA facility collectively employing close to 20,000 people. Syracuse also benefits from the large presence of national firms like Wegman’s Food Markets, Bristol-Myers Squibb, National Grid USA, and is the headquarters for the engineering firm O’Brien & Gere.
According to home builder Todd Loscombe, President of Loscombe Custom Homes, Inc., “Eds and Meds are what drives the local economy. On top of that, the area is very conservative and that has insulated us from the recent housing market booms and busts. Moreover, the builders here, because they are generally small, nimble and adaptive have adjusted to changes in buyer tastes and never had many spec houses for sale.” He went on to say that “because of the large number of well paying jobs at the hospitals and at SU, there is a steady stream of organic move-up buyers in the community along with a continuous supply of doctors and professors who move here with their families. And, because of the dearth of existing inventory, the demand for nice housing by these households means a demand for new housing.”
Comparing 2010 American Community Survey data for Syracuse to the US offers strong evidence that Syracuse is doing well and some insight into why. The unemployment rate is 2.1 percentage point lower in Syracuse than in the rest of the country, and the percentage of persons employed in transportation, warehousing and utilities and in educational and healthcare services are 18.4% percent and 25.0% percent higher respectively than the national average. Because the local economy is doing well, the number of vacant housing units, be they owner-occupied units or rental units, is 14.5% lower than what it is for the nation as a whole and the percentage of owner-occupied units stands at 67.3% versus 65.4% for the entire country. Lastly, the percentage of persons with an associate’s degree is 50% higher in Syracuse than it is for the rest of the US. Part of the reason for this is that the percentage of the population with a graduate or professional degree is 21.2% higher in Syracuse than it is nationally.
According to Chris Neumann, President of Erie Materials “while our single family market is up our multifamily market is doing very well due to the number of aging baby boomers eager to downsize and reduce their responsibilities. Remodeling activity is also very strong due to necessary remodeling activity as well delayed esthetic remodeling which is picking up due to improving confidence the local economy, which has helped put a floor on prices.” Whatever the causes, house prices have held up well over the past few years. Prices are up 1.2% since the trough in February 2011 and are off less than 6% from their all-time high set in June 2010.
Improving economic conditions have resulted in payroll employment being down just 2.1% from its 10-year high set in January 2008 and up by 2.3% since the trough in August 2010. Single family permitting activity is up 5.1% on a seasonally adjusted monthly average basis from the trough set in August 2011. While new homes are being built in many parts of the Syracuse MSA, activity has been primarily centered in the northern suburbs of Cicero and Clay with substantial rehabilitation and condominium construction taking place in downtown.