Builder Magazine, in conjunction with Hanley Wood Market Intelligence, debuts its metric for determining markets with the best and least potential.
By:
Boyce ThompsonWith most economists and builders expecting a national market decline this year, this may not seem like the best time to be selecting the "healthiest" markets in the country. Virtually every market was down last year. But a close look at the numbers reveals that some markets have way outperformed others during the last four years and are likely to continue to do so this year.
When the housing market stages its official recovery, the markets listed on the following pages are likely to lead the parade. It may take a year or more for the weakest markets--where burgeoning foreclosure sales are still pounding new home values, making building and selling new homes an exercise in futility-- to finally stage a turnaround. We’ll present that list next week.
The healthiest markets have many things in common. Most of them are great places to live, either close to the ocean, mountains, or major universities. Most of them didn’t have a huge run-up in prices during the boom and aren’t experiencing rampant deflation during the bust.
To compile these lists, we analyzed the top 75 housing markets in the country. We ranked them based on population trends and job growth, perennial drivers of housing demand. We also examined what’s happened with home prices; many of the healthiest markets have managed to hold the line on home values. And finally, we considered the rate building permits, which may be the single best ongoing indicator of builder confidence in a market. We combined all these metrics to produce a score for each market. Here are the top 15, in reverse order.
The Healthiest Markets for 2009
15. Myrtle Beach, S.C.
2008 total building permits: 3,211
Though permit activity dropped sharply last year, Myrtle Beach remains one of the hottest markets in the country, especially when you analyze the number of permits pulled per resident. Only 266,000 people live in the Myrtle Beach metro area, which until recently had been growing its population by nearly 5 percent a year. That means builders pulled one permit for every 82 residents. A steady influx of people, many of them retirees, are drawn by close proximity to the ocean and 117 golf courses at last count. That has helped keep home prices steady; they fell only 4 percent last year to an affordable $189,400. Most of the home building is split between Brunswick and New Hanover counties. Jobs are dependent on the tourist industry, though, and the metro area was rocked last year when a $400 million rock-and-roll themed amusement park, Hard Rock Park, opened and then filed for bankruptcy. Myrtle Beach added jobs last year, but as of December employment was decreasing at a 4.2 percent rate compared to a year earlier.
Busiest builders: Centex Homes, D.R. Horton, Beazer Homes, Bill Clark Homes, Pasquinelli/Portrait Homes
14. Wilmington, N.C.
2008 total building permits: 3,551
Wilmington has the second highest ratio of permits pulled per resident, behind only Myrtle Beach. The population here, 355,700 by Census estimates, has been growing at a better than 3 percent annual rate for the last five years, well above the national average. Primary residents are drawn by a four-season climate, close proximity to Atlantic beaches, and affordable housing. Median home prices, at $203,100 last year, are just about the national average. The area gave back 1,100 jobs in December of last year, after gaining 20,000 the previous three years. Wilmington has had a 60 percent decline in permit activity since 2005, around the national average, but its track record for population growth helps it make this list.
13. Charlotte, N.C.
2008 total building permits: 12,231
People and businesses must love Charlotte, because they are moving there at a high rate. The metro area of 1.76 million has grown its residents by 4 percent annually over the last five years, one of the highest rates in the country. They are drawn by relatively affordable housing for the East Coast—median home prices are only $197,800, and they’ve "corrected" downward by only 3.2 percent in the last year. A strong fourth quarter helped Charlotte record 12,231 permits last year, a 44 percent decline since 2005. Charlotte’s strength relative to other markets led the investment banking firm UBS to predict last year that it would be
one of the first markets to recover from the housing downturn. Charlotte is still a single-family market, with 62 percent of the residential activity in stand-alone homes. The job market in this banking hub contracted last year, after growing 3 to 5 percent annually the previous three years.
