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Unrestricted Versus Restricted Growth

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Unrestricted Versus Restricted Growth

In this issue, we feature one of the hottest and fastest-growing housing markets in the country as well as one whose growth has been restricted by local planning agencies. Featured Major Market: Atlanta With 25,600 jobs added in the last year, Atlanta is quickly recovering from the downturn that occurred in 2002 and 2003.


By John Burns, John Burns Real Estate Consulting May 31, 2005

In this issue, we feature one of the hottest and fastest-growing housing markets in the country as well as one whose growth has been restricted by local planning agencies.

Featured Major Market: Atlanta

With 25,600 jobs added in the last year, Atlanta is quickly recovering from the downturn that occurred in 2002 and 2003. Atlanta's large economy is the "back office" headquarters of the eastern United States, where major corporations put their lower-cost operations. Atlanta is also the ideal location for large corporations with a need for a large number of employees and easy access to the rest of the East Coast. Major Atlanta corporations include UPS, Delta Airlines, Coca-Cola, Home Depot and BellSouth.

For years, strong employment growth, warm weather and plenty of developable land kept Atlanta at the top of the housing market nationally. Including multifamily permits, Atlanta is still the largest construction market in the country. However, in 2004, Phoenix surpassed Atlanta as the largest single-family housing market in the country. Phoenix is the "back office" of the West. At 56,031 single-family permits, Atlanta accounted for 3.5 percent of all single-family construction in the country in 2004.

Featured Up-and-Coming Market: Portland, Ore.

Despite the strong national housing market, builders in Portland haven't been able to grow the number of single-family homes constructed.

Additionally, Portland area builders have been forced to learn how to build higher density homes. In fact, in the Portland area, cities prefer more homes to the acre rather than less. According to local expert John Kennedy of Pacific Real Estate Investments LLC, builders considering expansion to Portland should anticipate two years to achieve land entitlements and zoning approvals for relatively small lots (2500 to 4000 square feet) and zero-lot-line site plans.

Top 20 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 Phoenix A 72,500 4.5% 4.0% $196,000 32% 5.2 58,135 22.1% 65,403 100%
2 Atlanta B 25,600 1.2% 4.9% $162,747 24% 4.9 55,997 4.3% 72,552 100%
3 Riverside-SB C 36,700 3.3% 5.5% $312,000 53% 6.1 42,372 19.8% 50,803 78%
4 Houston B 21,500 1.0% 6.1% $136,100 24% 2.5 39,510 7.7% 49,707 95%
5 Las Vegas A 57,100 7.3% 4.2% $278,000 50% 5.2 34,561 10.0% 39,465 88%
6 Chicago B 19,400 0.5% 5.9% $213,000 34% 4.3 31,606 0.3% 42,746 91%
7 Dallas A 42,600 2.3% 6.1% $146,800 25% 1.0 30,227 7.5% 36,920 50%
8 Washington D.C. A+ 67,200 3.0% 3.8% $329,900 38% 5.3 30,032 (2.1%) 39,555 83%
9 Orlando A 44,100 4.7% 4.3% $179,900 32% 5.1 27,719 20.2% 34,321 98%
10 Tampa A 37,000 3.0% 4.4% $151,550 30% 5.1 23,822 16.7% 30,971 82%
11 Minneapolis A 30,200 1.8% 4.6% $219,000 30% 5.8 19,887 (0.8%) 27,101 96%
12 Charlotte A 26,600 3.5% 5.4% $150,000 27% 0.8 19,217 11.9% 23,035 94%
13 Fort Myers B+ 11,400 5.8% 3.6% $101,868 18% 1.2 16,546 59.9% 21,899 100%
14 Detroit F (5,300) (0.6%) 9.0% $205,750 35% 5.8 16,422 4.9% 20,837 91%
15 Raleigh B+ 8,800 2.0% 4.3% $165,000 28% 0.3 16,161 11.7% 18,786 87%
16 Sacramento B 14,100 1.7% 5.4% $343,000 52% 5.9 16,161 (4.9%) 19,221 86%
17 Denver A 28,300 2.5% 5.5% $225,000 33% 5.1 15,577 20.3% 20,161 72%
18 Fort Worth B+ 15,800 2.0% 6.0% $98,200 17% 0.0 15,427 11.3% 19,044 49%
19 Jacksonville B 16,300 2.9% 4.5% $150,000 26% 5.0 15,005 17.8% 19,602 100%
20 Austin A 19,100 2.9% 5.1% $157,100 28% 3.9 14,467 10.6% 17,821 67%
Sources: Bureau of Labor Statistics; Census Bureau through the month ending February 2005; John Burns Real Estate Consulting

[email protected]

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