The Comeback Trail

Printer-friendly versionSend by email

This month, we feature two markets that have strong job growth and excellent affordability: Austin and Salt Lake. Both markets are experiencing job growth in almost every sector of the economy (see chart included) and both markets have experienced very little price appreciation this decade.

April 01, 2006

This month, we feature two markets that have strong job growth and excellent affordability: Austin and Salt Lake. Both markets are experiencing job growth in almost every sector of the economy (see chart below) and both markets have experienced very little price appreciation this decade.

Giant Market: Austin

 

In 2000, as Austin was completing the infrastructure necessary to open massive areas of land in the northeast for development, the technology downturn hit. The result was that from 2001 until 2003, Austin lost 20,000 jobs while builders completed more than 50,000 housing units. Certainly, the market suffered greatly during this time.

Job growth has returned, but price appreciation has been slow because there remains a hangover of foreclosure activity from the downturn. Home prices have risen only $20,000 in the last six years, while mortgage rates fell from 8.5 percent to 6.2 percent. Thus, Austin is one of the most affordable housing markets in the country.

We believe Austin has all that is needed for a bright future, including: 1) an excellent employment base of highly educated people (Dell Computers, University of Texas, etc.), 2) a 7- year-old, $581 million airport that has plenty of room for growth, 3) a great location in the center of the country, 4) fantastic infrastructure and 5) an outstanding climate.

Up and Coming Market: Salt Lake City

Salt Lake City is an anomaly. It is a market that frequently looks good on paper. Many have entered the market, only to exit it a few years later. Local builders and some large private builders, however, have had tremendous success in Salt Lake City.

This is a market where local knowledge appears to be a key advantage. Fractured land ownership, cost advantages based on a long history with the local subcontractors, and intimate knowledge of the consumers are just some of the reasons that the locals claim that outsiders have failed.

Top 25 Metro Areas
Employment Affordability Permits
Short-Term Outlook/Grade 1-Year Payroll Employment Growth 1-Year Growth Rate Unemployment Rate Median Resale Home Price Resale Housing Costs as % of Income* Housing Cycle Barometer** 12-Month Single-Family Permits 1-Year Single-Family Growth 12-Month Total Permits Total Permits as % of Peak Permits
1 Atlanta B 42,800 1.87% 4.9% $163,456 27.0% 5.3 60,952 5.6% 72,223 96%
2 Phoenix B+ 83,200 4.81% 3.8% $260,000 40.1% 6.3 53,964 -6.3% 62,375 95%
3 Houston B 42,500 1.84% 5.3% $146,500 25.0% 3.2 51,134 7.8% 62,217 95%
4 Riverside-SB C 21,600 1.84% 4.3% $374,000 66.0% 7.6 45,792 5.8% 51,295 89%
5 Dallas B+ 26,600 1.38% 4.7% $159,400 25.4% 1.9 31,435 3.4% 38,580 52%
6 Las Vegas A+ 59,200 7.04% 3.5% $300,000 49.9% 5.5 30,358 -4.5% 38,534 94%
7 Chicago C 40,800 1.08% 5.5% $247,500 40.8% 6.8 28,588 2.3% 43,427 100%
8 Tampa C+ 32,400 2.50% 2.9% $189,500 36.8% 6.3 27,420 19.2% 33,994 90%
9 Orlando B+ 42,100 4.21% 2.8% $230,000 40.5% 6.4 26,510 -3.4% 35,863 100%
10 Washington D.C. C+ 70,200 3.01% 3.0% $434,923 53.2% 8.3 22,214 -2.6% 30,164 79%
11 Fort Myers C+ 8,600 4.08% 2.3% $205,996 36.5% 6.9 22,211 46.0% 29,330 100%
12 Charlotte A 25,100 3.17% 4.6% $155,500 25.4% 1.2 19,348 10.0% 22,146 97%
13 Jacksonville B+ 19,900 3.37% 3.0% $170,000 28.8% 5.6 18,610 26.8% 25,090 98%
14 Minneapolis B+ 23,300 1.32% 3.7% $242,500 31.6% 6.1 17,972 -11.3% 22,787 81%
15 Fort Worth B+ 10,000 1.25% 4.5% $114,400 19.5% 2.9 17,887 15.0% 21,176 55%
16 Denver B 12,700 1.07% 4.6% $240,000 36.8% 6.0 17,586 5.1% 20,751 72%
17 Austin B+ 14,200 2.10% 3.9% $168,200 28.9% 4.7 17,076 -7.5% 22,986 87%
18 Sacramento B 18,900 2.18% 4.1% $380,000 61.5% 7.0 15,755 -14.7% 18,645 78%
19 San Antonio B+ 12,000 1.56% 4.3% $138,900 27.1% 2.7 14,622 3.4% 22,226 100%
20 Nashville B 10,000 1.37% 4.0% $145,000 26.0% 4.7 14,063 6.3% 16,779 91%
21 Raleigh A+ 15,700 3.50% 3.6% $171,500 26.1% 0.3 13,946 15.4% 14,571 91%
21 St. Louis B 6,200 0.46% 4.9% $149,000 27.9% 5.5 13,250 -4.7% 15,392 84%
23 Portland C 26,500 2.75% 5.1% $245,500 43.9% 8.8 12,728 11.5% 17,175 87%
24 Indianapolis C -500 -0.06% 4.8% $126,337 21.9% 2.0 12,382 -0.1% 15,448 90%
25 Los Angeles C 49,500 1.23% 5.1% $518,000 90.8% 8.8 12,235 0.8% 24,978 36%
* Annual mortgage costs +1/7 of the down payment divided by income.
**Proprietary affordability scale with 0 meaning most affordable time since 1983, 5 meaning median affordability and 10 meaning least affordable time.
Sources: Bureau of Labor Statistics; Census Bureau through the month ending December 2005; John Burns Real Estate Consulting



Author Information
John Burns helps with strategy and monitoring market conditions with many of the largest companies in the industry. He can be reached at [email protected].


Comments on: "The Comeback Trail"

January 2016

This Month in Professional Builder

Features

Homebuyers on the hunt are obsessed. Here’s how your website can capitalize on their drive and focus

Overlay Init