Fall Real Estate Outlook
Real Estate Outlook: Key Metro Markets Improve
Despite mixed reports about housing in the past few weeks, there do seem to be some cities showing marked improvement as of late. The National Association of Home Builders' First American Improving Markets Index (IMI) shows that 23 markets, up from last month's 12, now qualify for their list.How does a city make the cut? If the metro area has seen improvement in housing permits, employment, and housing prices for at least 6 months it is then considered an improving market. "While Pittsburgh and New Orleans remain the two largest improving markets, the October IMI is heavily weighted by smaller cities in which energy and agriculture are the primary economic drivers and where the effects of the recession have been less pronounced," said NAHB Chief Economist David Crowe. "In particular, Texas stands out for its seven entries on the improving markets list." Bangor, Maine, was the only area to drop off of the improving markets list in October, due to a decline in local building permits."Both the number and geographic diversity of improving housing markets expanded this month, with Iowa, Illinois and South Carolina all newly represented by one entry or more on the list," said National Association of Home Builders (NAHB) Chairman Bob Nielsen, a home builder from Reno, Nev. "This is further evidence that, despite the tough conditions that persist in many cities, pockets of improvement are emerging in local housing markets across the country."
Jobs may be improving in these metro areas, but according to the Bureau of Labor Statistics(BLS), unemployment on a national level remains unchanged at 9.1 percent. The rate has been above the 9.0 percent mark every month in the last year except for February and March, which dipped only slightly.The National Association of Home Builders' Assistant Vice President, Robert Dietz, testified before the Senate Finance Committee last week that the decline in home construction has been historic and unprecedented.
He noted that when it comes to single-family housing production, we've had an 80 percent decline since the peak seen in 2006. The rate is now 353,000 homes per year as opposed to 1.8 million.
His testimony highlighted the overwhelming benefits of homeownership and the need for strong housing tax policy, which includes keeping the mortgage interest deduction, the deduction for local property taxes, the principal residence capital gains exclusion, and mortgage revenue bonds."We are seeing now what an economic recovery looks like without housing, and the picture is hardly encouraging," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "We need to address anti-housing impediments to home builders creating jobs in countless communities across the land."
According to Nielsen, the inventory of new for sales is at a record low and many cities could soon see a housing shortage. In addition to reduced builder confidence and buyer trepidation is the reality of tightened lending standards, keeping many builders from getting back to work."Leaders in Washington must stop scaring consumers by talking about eliminating the mortgage interest deduction, ending a federal backstop for housing and calling for a minimum 20 percent downpayment on home loans," said Nielsen. "This is counterproductive and harms consumer confidence, the housing market and the nation's economy." Carla Hill/Copyright © 2011 Realty Times.
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