This month, we feature two Southern markets that rank among the 13 largest in the country.
Giant Market: OrlandoIn January, the home building industry descended upon an Orlando market that had changed quite a bit since the last year's International Builders' Show. Some of those changes included:
- Prices: Prices had accelerated 30 percent, from $179,000 in January 2005 to $232,500 in October 2005 (the most recent data as of this article).
- Permits: Permit activity had increased as well with 34,907 total permits issued over the 12 months ending in October. The 26,416 single-family permits issued during that time were the 9th most of any market.
- Jobs: More than 41,000 jobs had been added, and unemployment stood at a paltry 3.2 percent. The Employment Growth/Building Permit ratio was at a healthy 1.2.
- Foreign Investment: Significant changes in the exchange rates and several non-stop flights per day from London contributed to a surge in investor activity in early 2005 that had subsided by the time of the conference. A July study by the Florida Association of Realtors and the National Association of Realtors showed that international buyers accounted for 15 percent of all home sales in Florida, and Orlando accounted for 23 percent of the state's sales to these buyers, second only to Miami. The substantial number of resale homes for sale in January were partially the result of investor selling
- Domestic Investment: Meritage Homes purchased Orlando-based Greater Homes, which meant that 12 of the 16 largest home building Giants in the country have operations in Orlando (MDC, Shea, Weyerhaueser and NVR are the four who do not).
Many builders and analysts tend to dismiss Charlotte as a small market, but they should think twice. Consider the following:
- With almost 22,000 permits in the last 12 months, Charlotte is the 13th largest housing market in the country
- The 6.9 million people within a 100-mile radius of the city compares quite favorably to the 7.5 million people within the same radius of Atlanta
- After three tough years, including a drop in employment levels in 2002 and 2003, the Queen City has added 22,700 jobs in the last 12 months
- According to the Charlotte Chamber of Commerce, during the last 10 years, nearly 8,500 new firms have invested $9.6 billion in Charlotte facilities
- Fortune 500 companies like Bank of America, Lowe's and Wachovia count the Charlotte MSA as their corporate headquarters
If that is not enough to get your attention, consider that Charlotte ranked third among large cities in the rate of increase in the number of young people, according to the Census Bureau.
According to local market expert Chuck Graham of Newton-Graham, "Charlotte continues to grow nicely. Lot sales, permits, new and resale closings are all expanding at rates in excess of 15 percent year over year." The 2002 and 2003 recessionary years in Charlotte took their toll on home prices, resulting in modest and even negative periods of price appreciation. Today's median home price of $158,000 is at the same level as one year ago. Our Housing Cycle Barometer rates Charlotte at 1.5, making it highly affordable now in relation to its historical levels.
If you are searching for a market with a positive long-term outlook and some economic diversity from your current market, consider Charlotte. However, do your due diligence first. According to Graham, "The dark side of such growth is the ease of entry and production. There are just too many builder/neighborhood positions to produce many remarkable community successes."
| 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 | 30,500 | 1.34% | 5.4% | $163,636 | 26.8% | 5.3 | 59,826 | 2.6% | 75,194 | 100% |
| 2 | Phoenix | B | 75,700 | 4.45% | 4.4% | $260,000 | 40.2% | 6.3 | 54,551 | -4.3% | 63,743 | 97% |
| 3 | Houston | B+ | 40,800 | 1.78% | 5.5% | $141,100 | 23.9% | 2.1 | 50,039 | 6.8% | 60,970 | 93% |
| 4 | Riverside-SB | C | 20,900 | 1.80% | 5.3% | $370,000 | 64.8% | 7.3 | 45,918 | 8.8% | 52,503 | 91% |
| 5 | Dallas | B+ | 21,300 | 1.11% | 4.8% | $155,900 | 24.6% | 1.1 | 30,408 | 1.5% | 36,992 | 50% |
| 6 | Las Vegas | A+ | 61,700 | 7.39% | 3.9% | $300,000 | 49.1% | 5.4 | 29,847 | -8.2% | 36,242 | 88% |
| 7 | Chicago | B | 41,900 | 1.11% | 5.3% | $246,500 | 40.3% | 6.7 | 28,207 | 1.9% | 41,829 | 98% |
| 8 | Tampa | B+ | 31,000 | 2.41% | 3.4% | $182,500 | 35.3% | 6.0 | 27,098 | 20.7% | 34,339 | 91% |
| 9 | Orlando | B+ | 41,200 | 4.18% | 3.2% | $232,500 | 40.7% | 6.4 | 26,416 | -3.4% | 34,907 | 98% |
| 10 | Fort Myers | C+ | 10,200 | 5.00% | 2.7% | $206,823 | 36.5% | 6.9 | 22,798 | 66.0% | 29,366 | 100% |
| 11 | Washington D.C. | C+ | 67,700 | 2.92% | 3.2% | $465,000 | 56.5% | 9.0 | 22,634 | -0.6% | 29,548 | 78% |
| 12 | Jacksonville | B+ | 15,500 | 2.63% | 3.4% | $172,000 | 29.0% | 5.6 | 18,781 | 32.9% | 25,481 | 100% |
| 13 | Charlotte | A | 22,700 | 2.88% | 5.0% | $158,000 | 25.6% | 1.5 | 18,711 | 7.3% | 21,955 | 96% |
| 14 | Minneapolis | C+ | 22,400 | 1.27% | 3.1% | $243,000 | 31.5% | 6.1 | 17,612 | -13.3% | 22,677 | 80% |
| 15 | Denver | B | 15,500 | 1.31% | 4.8% | $239,900 | 36.6% | 5.9 | 17,313 | 5.2% | 20,788 | 72% |
| 16 | Fort Worth | B+ | 11,300 | 1.42% | 4.6% | $114,200 | 19.4% | 2.8 | 16,993 | 13.6% | 20,132 | 52% |
| 17 | Sacramento | C | 12,600 | 1.46% | 4.7% | $385,000 | 62.1% | 7.1 | 16,407 | -12.9% | 20,117 | 84% |
| 18 | Austin | B | 13,600 | 2.02% | 4.0% | $158,600 | 27.1% | 3.1 | 15,906 | -10.4% | 20,792 | 78% |
| 19 | San Antonio | B+ | 13,200 | 1.73% | 4.5% | $130,700 | 25.4% | 1.8 | 14,087 | 2.9% | 21,860 | 99% |
| 20 | Nashville | B | 11,400 | 1.58% | 4.4% | $147,000 | 26.2% | 5.0 | 13,892 | 8.5% | 17,140 | 93% |
| Sources: Bureau of Labor Statistics; Census Bureau through the month ending October 2005; John Burns Real Estate Consulting | ||||||||||||
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