Improving Markets Index: Evansville, IN-KY MSA

April 20, 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 Evansville, Indiana-Kentucky metropolitan statistical area (MSA).

The health of the Evansville housing market is due to its diversified economy and its being the healthcare, industrial, retail, and transportation center for the tri-state region of Indiana, Illinois and Kentucky.   In addition, Evansville also benefits substantially from the presence of the University of Southern Indiana and the University of Evansville.  Finally, Evansville is also a major manufacturing center with large regional facilities of Toyota Motor Corporation, Bristol Myers Squibb, ALCOA and a number of plastics operations.   

According to home builder Kenny Reinbrecht, Owner of Reinbrecht Homes, Inc. the combination of a pick-up in manufacturing activity, the continued expansion of healthcare, and people generally feeling more secure in their jobs is causing people to buy a house rather than continuing to wait.”  He went on to say that “there is activity both at the low end of the market and at the high end and that some retirees are now looking to move here and that is also helping the housing market.”        

Comparing 2010 American Community Survey data for Evansville to the US offers strong evidence that Evansville is doing well and some insight into why.  The unemployment rate is almost two percentage points lower in Evansville than in the rest of the country, and the percentages of persons employed in production, transportation and material moving occupations and in manufacturing are 39 percent and 88 percent higher respectively than the national average.  Also, the percentage of government workers is about half 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 21 percent lower than what it is for the nation as a whole and the percentage of owner-occupied units stands at 71.5% versus 65.4% for the nation.         

According to Sean Miller, Corporate Sales Manager of Benthall Brothers, Inc., “Evansville missed the real estate run-up and is thus not suffering the aftermath.  As a result house prices have not fallen much and therefore few have lost money on their home.  In part it is because inventories are low and banks did not lend.“  Whatever the cause, house prices have held up well over the past few years.  Prices are up 2.1% since the trough in April 2011 and are just 5.4% off their high set in June 2007.      

Improving economic conditions have resulted in payroll employment being down just 1.5% from where it was in January 2008, the start of the recession, and up by 4.6% since the trough in July 2009.  Single family permitting activity is up 1.9% 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 Evansville MSA, activity is now primarily centered in Vanderburgh County with some construction also taking place in Warrick County.

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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. 


Improving Markets Index: Lincoln, NE MSA

February 24, 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 Lincoln, Nebraska metropolitan statistical area (MSA).

The health of the Lincoln housing market is due to its position as a large regional healthcare center, the presence of the University of Nebraska, the booming agricultural sector, and the large Federal Government and state government presence because of its role as the state capital.  According to home builder Jim Christo, President of Christo Design Build, “in addition, the insurance sector is very large with Lincoln Benefit Life, Farmers Mutual and many other firms either headquartered here or with a large presence here.  Also, the steady stream of grandparents moving here to be close to family and to enjoy the many cultural amenities along with many twenty-somethings returning after being away for a several years, have also helped keep home builders active and the economy growing.”  He went on to say that “the Kawasaki plant is very busy and Duncan Aviation, which refurbishes and upgrades business aircraft is hiring and as a result workers are upgrading their skills and that too has caused an up-tick in employment.”     

Comparing educational data from the 2000 Census to the 2009 American Community Survey shows that Lincoln has experienced increasing education levels.  The number of people with a high school diploma or less actually fell from 57,518 to 56,025, a decline of 2.6%.  By contrast, the number of with some college rose by 3% from 38,873 to 40,129 and those individuals with an associate degree skyrocketed by 39% from 14,364 to 19,986.  Similarly, the number of persons with a B.A rose by 23% from 34,615 to 42,657.  Finally, the number with a professional degree jumped 12%, from 17,386 to 19,473. While the educational gains were across the board, the large rises in the number of persons with an associate degree and a B.A. respectively speaks to a workforce that is rapidly increasing its skills.          

According to Jo Lewis, a mortgage loan originator with Liberty First Credit Union and President of the Nebraska Mortgage Association, “Lincoln missed the real estate bubble and thus is not suffering from a bust.  This is because construction here proceeded at a steady pace as lenders refused to loosen lending standards and held true to Midwest values.“   As a result, house prices have held up well over the past few years.  Prices are up 4.2% since the trough in January 2011 and are just 5.0% off their high set in July 2007.      

Improving economic conditions have resulted in payroll employment being down less than 1.0% from its peak in October 2011 and up by 3.2% since the trough in July 2010.  Single family permitting activity is up 1.6% on a seasonally adjusted monthly average basis from the trough set in January 2009.  While new homes are being built in many parts of the Lincoln MSA, activity has been primarily centered in the city of Waverly northeast of Lincoln, in and around the city of Hickman south of Lincoln and the city of Wahoo northwest of Lincoln.