Improving Markets Index: Rochester, NY MSA

April 11, 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 seventh release 101 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Rochester, NY metropolitan statistical area (MSA).

The health of the Rochester housing market is due to its highly skilled workforce and diversified economy.  Rochester is not only a large regional healthcare center but also benefits substantially from the presence of the University of Rochester and the Rochester Institute of technology.  Moreover, because of the substantial amount of local imaging and optical research, many start-up firms in those areas deliberately choose to locate here.  Finally, Rochester is the headquarters of expanding regional and national firms like Wegman’s Food Markets and Paychex. 

According to home builder David Riedman, President of Riedman Development Corporation, “new high-tech firms are what makes Rochester special.  High paying jobs in lasers, lenses, wireless communications, nanoparticles and more is what has allowed us to do surprisingly well.”  He went on to say that “executives and senior managers are moving their families here and more often than not these households not only want nice housing but because of the dearth of inventory that means new housing.”        

Comparing 2010 American Community Survey data for Rochester to the US offers strong evidence that Rochester is doing well and some insight into why.  The unemployment rate is about 2.5 percentage point lower in Rochester than in the rest of the country, and the percentage of persons employed in manufacturing and in educational and healthcare services are 35 percent and 33 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 30 percent lower than what it is for the nation as a whole and the percentage of owner-occupied units stands at 68.5% versus 65.4% for the entire country.  Lastly, the percentage of persons with a bachelor’s degree or higher is about 20 percent higher in Rochester 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 almost 40% higher in Rochester than it is nationally.      

According to Scott Fields, President of Matthews and Fields Lumber Company, “our house prices never rose like they did in many places and thus have not fallen either and as a result, few have lost money on their home.   In part it is because there was little if any increase in spec building back on ’04, ’05 and ’06 and in part it’s due to Yankee frugality.“  Whatever the cause, house prices have held up well over the past few years.  Prices are up 4.7% since the trough in March 2011 and have now surpassed the previous high set in August 2009.      

Improving economic conditions have resulted in payroll employment being down just 0.5% from its 10-year high in July 2008 and up by 3.3% since the trough in September 2009.  Single family permitting activity is up 2.7% on a seasonally adjusted monthly average basis from the trough set in March 2011.  While new homes are being built in many parts of the Rochester MSA, activity has been primarily centered in the towns of Greece, Henrietta, and Penfield in Monroe County as well as southeast of Rochester in the Town of Farmington and the Town of Victor, both of which are in Ontario County.  There has also been a small but noticeable pick-up in multifamily activity in downtown Rochester.

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Improving Markets Index: Athens, GA MSA

December 21, 2011

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 fourth release, 41 markets are classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Athens, Georgia metropolitan statistical area (MSA).

The health of the Athens housing market is due to its position as a fast growing regional healthcare center, the large number of post-secondary educational institutions anchored by the University of Georgia, and retiree relocations.  According to home builder Brad Stephens, the current President of the Athens Area Home Builders Association and co-owner of Manor Holdings, “Between the growing student population at the University of Georgia, and the presence of two award-winning hospitals, our housing market is doing pretty well.”  He went on to say that, “we also have some world-class bio-tech firms such as Noramco and Merial that transfer employees to Athens from all over the world. Athens has also been featured in numerous publications as one of the best places to retire in the country.  These factors all provide an environment in Athens that is better insulated from the booms and busts of the real estate market.”

Comparing educational attainment and employment data from the 2000 Census to the 2009 American Community Survey confirms this.  The number of people with some college jumped from 15,177 to 22,859, and those with an associate degree rose from 3,668 to 5,377.  The number of those with a B.A. increased from 16,597 to 18,901 and those with graduate degrees climbed too, from 13,759 to 17,402. Finally, employment growth in the professional occupations outpaced all other sectors growing by 48% from 5,960 to 8,838.  This is clearly an area that is increasingly focused on higher education coupled with employers eager to hire newly minted graduates.   

According to Susan Bogardus of First American Bank of Athens, “retirees continue to be drawn here due to our proximity to Atlanta, the resources of the University of Georgia, the top-notch medical care, the sports and the affordable housing. ”  She went on to say that “continued construction activity at the University and the building of the new hospital have been a boon to the local economy.”  As a result house prices have held up well during the downturn.  They are up 2.5% since the trough in January 2011 and are about 15% off their all-time high set in September 2007. 

Improving economic conditions have resulted in payroll employment being down just 5,500 from its peak in March 2008 and up by 2.3% since the trough in January 2010.  Single family permitting activity is up a strong 9.1% on a seasonally adjusted monthly average basis from the trough set in March 2011.  While new homes are being built in many parts of the Athens MSA, activity has been primarily centered in Oconee County, due to its outstanding public schools, and in an around the University of Georgia to accommodate the growing student population.


Improving Markets Index: Burlington, VT MSA

December 14, 2011

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 fourth release 41 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Burlington, Vermont metropolitan statistical area (MSA).

The health of the Burlington housing market is in part due to its position as a regional healthcare center, the large number of post-secondary educational institutions including the University of Vermont and St. Michael’s College and the steady stream of retirees who continue to find Burlington appealing.  However, local growth is primarily due to a the rise in software development, anchored by IBM and now Dealer.com, the increasing popularity of telecommuting, and the growing appeal of the local culture, which promotes energy efficiency, eating locally produced food, and generally being “green.”  According to home builder Chris Snyder of Snyder Homes, “new home buyers frequently want energy efficient features including solar panels, geothermal heating systems, passive solar designs and so on.  And it’s cheaper to build that way than retrofit an existing house. ” He went on to say that “many of these buyers pay cash or make large down payments and telecommute to jobs in New York City or Boston.”   As a result, education levels are rising in the area.    

Comparing educational and occupational data from the 2000 Census to the 2009 American Community Survey confirms these impacts.  Today there are 5,125 (or 37%) more service jobs than in 2000 and 3,213 (or 58%) more management jobs.  Reinforcing these findings, the number of people with a high school diploma increased from 35,529 to 36,716, individuals with some college rose from 21,251 to 22,006 and the number of people with an associate degree climbed from 11,338 to 13,119.  However, the number of individuals with a B.A skyrocketed from 27,512 to 32,418 and the number with professional degrees jumped from 16,713 to 18,711. -Emblematic of the changing workforce dynamics, employment in professional services grew by 28%, followed by employment in education which grew by 13%.   

According to Jose Leavitt of Otter Creek Awnings, Sunrooms and Custom Closets, “our house prices never rose like they did in many places and thus have not fallen either.  In part it is because the local economy is good and unemployment is low, and in part it it’s due to Yankee frugality and the fact that builders here are all very small and were able to quickly cut back on production.“  As a result, house prices have held up well over the past few years.  Prices are up 1.9% since the trough in January 2010 and are less than 5% off their high set in September 2007.     

Improving economic conditions have resulted in payroll employment being just 1,200 down from its peak in August 2011 and up by 5.1% since the trough in September 2009.  Single family permitting activity is up a robust 5.3% on a seasonally adjusted monthly average basis from the trough set in March 2011.  While new homes are being built in many parts of the Burlington MSA, activity has been primarily centered in the towns and villages surrounding Burlington including Hinesburg, Sherlock, Shelburne, South Burlington, Williston and Winooski.


Improving Markets Index: Monroe, LA MSA

December 8, 2011

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 fourth release  41 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Monroe, Louisiana metropolitan statistical area (MSA).

The health of the Monroe housing market is in part due to its position as a regional healthcare center and low tax rates.  These factors have induced retirees to move to Monroe, but local growth is primarily due to the growth of CenturyLink, two excellent colleges, and the Haynesville-Bossier Shale.  While the Shale is about 100 miles away, the effects of it are being felt in many ways.  According to home builder Conrad Blanchard of Casual Concepts, “oil and gas service companies are setting up shop here as are pipeline and oil drilling firms.”  He went on to say that “keeping CenturyLink’s headquarters in town even after the takeover of Denver-based Quest has been a boon to the community.  Many executives are relocating here and these new households not only need housing but often want new houses.”   As a result, education levels are rising in the area.    

Comparing educational and occupational data from the 2000 Census to the 2009 American Community Survey confirms these impacts.  Today there are 4,107 (or 19%) more management jobs than in 2000 and 564 (or 5%) more service jobs.  Reinforcing these findings, the number of people with a high school diploma increased from 32,451 to 38,100 and individuals with some college jumped from 23,010 to 25,701.  The number of people with an associate degree climbed from 2,825 to 4,832, those with a B.A grew from 14,278 to 18,297 and the number of professional degrees increased from 7,575 to 7,968.  Emblematic of the changing workforce dynamics, employment in the information industry grew by 41% followed closely by employment in professional servicers which increased by 38%. 

According to Jonathan Hill, President of Hill Construction, “our house prices never rose like they did in many places and thus have not fallen either.  In part it is because we are a small place and that has insulated us from the ups and downs of the economy.“  As a result, house prices have held up well over the past few years.  Prices are up 4.1% since the trough in June 2010 and have now surpassed the previous high set in August 2008.    

Improving economic conditions have resulted in payroll employment being just 3,900 down from its peak in September 2007 and up by almost 1% since the trough in March 2011.  Single family permitting activity is up a robust 3.8% 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 Monroe MSA, activity has been primarily centered in the Town of Sterlington due to its proximity to CenturyLink as well as areas in and around the City of West Monroe, which is known for its excellent schools.