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 Grand Junction, Colorado metropolitan statistical area (MSA).
The health of the Grand Junction housing market is due to its diversification away from just oil and gas following the oil shale bust of 1982, strong growth at Mesa State University, a large number of state employees, and, being the largest city between Salt Lake City and Denver, its position as a very large regional healthcare center. The rise of the healthcare industry can be seen by the recent additions at both St. Mary’s Hospital and Community Hospital. Grand Junction also offers abundant outdoor activities, spectacular scenery, top-notch recreational opportunities and is a major mountain biking destination and also has a number of nearby ski resorts and vineyards. As such, tourism and retirees are also fueling the local economy.
According to home builder Nate Porter, President and owner of Porter Homes LLC, “the continued expansion of the healthcare industry, and the growing importance of tourism have collectively shielded the community from the worst of the recession and the recent decline in gas prices. As for the building industry, we have been holding our own due to an influx of retirees and Gen X-ers attracted to Grand Junction for its high quality healthcare, abundant and well paying healthcare jobs, and quality of life (biking, hiking, fishing and skiing).” Mr. Porter went on to say that “many home buyers realize that it is cheaper to buy an energy efficient green home rather than a foreclosure and that attitude translates into demand for new homes as there are only a limited number such houses available. Collectively because of all these diverse forces, construction activity is slowly rebounding.”
Comparing 2010 American Community Survey data for Grand Junction to the US offers strong evidence that Grand Junction is doing well and insight into why. The percentage of persons with some college but no degree is 23.0% higher than in the rest of the country and the percentage with a bachelor’s degree is 18.4% higher than it is everywhere else. In addition, the percentages of persons employed in educational services, healthcare and social assistance and in the arts, entertainment and recreation industries are 17.2% and 10.9% higher respectively than the national average. Lastly, the percentage of owner-occupied units stands at 72.5% versus 65.4% for the nation and the number of vacant housing units, be they owner-occupied units or rental units, is just 8.6% in Grand Junction compared to 13.1% elsewhere.
According to Rich Buffington, an associate board member of the Home Builders Association of Northwestern Colorado, “Grand Junction is perking up because things always improve and we are more accustomed to cycles because of the role energy plays in our economy. In addition, many folks who used to work in the oil and gas industry here, now work in the Bakken shale in North Dakota but continue to live here with the same being true for many subcontractors. As such, the local economy is much healthier than would otherwise be the case. In addition, education, healthcare and the continued influx of retirees are also part of the reason for the turnaround in our economy local economy.” Whatever the cause, house prices are definitely on the mend. Prices are up 0.7% since the trough in July 2011 and appear on track to continue to increase in the days ahead.
Improving economic conditions have resulted in payroll employment being down less than 10% from its peak in August 2008, and up by 3.4% since the trough in January 2010. Single family permitting activity is up 6.2% on a seasonally adjusted monthly average basis from the trough set in June 2011. While new homes are being built in many parts of the Grand Junction MSA, activity is currently centered northwest of Grand Junction in the City of Fruita, west of Grand Junction, in the Redlands, and in the “northwest.”