Some witnessed big permit increases last year, even though their economic metrics are poor. It's as if builders there called the bottom and are preparing for an upturn.
Others are bracing for a double-dip. New foreclosure tremors, the outgrowth of the economic recession this time and not the housing bust, have shaken their metrics, raising questions about when they will recover.
Still others stand out for their continued, obstinate weakness. It's hard to mount much of a housing recovery when people are still abandoning a metro market, unemployment is rising, or incomes are dropping.
That said, economic conditions have improved in most of the markets profiled here. The markets were selected based on what they say about current housing conditions, rather than their relative health.
All the markets appear on our Builder Market Health Index, which scores the top 100 housing markets (based on building permits pulled). The index, computed by Hanley Wood Market Intelligence, weighs housing conditions based on the 2011 outlook for six key variables correlated most closely to strong home sales: unemployment rate, change in unemployment, home price appreciation, household growth, median income growth, and job growth.The 2011 forecasts come from Moody’s Economy.com.
Let's take a digital road trip around the country and see how the housing industry's recovery is unfolding.
45. Atlanta-Sandy Springs-Marietta, GA
Market Health Indicator: 53.0
2011 Building Permit Forecast: 18,024
Percent Change in Building Permits: 135%
Eyes are focused on Atlanta because for years it has been one of the biggest housing markets in the country--THE biggest in some years. That’s a testament to its large geographic footprint, its status as one of the major business centers of the South, and a business-friendly environment that encourages new-home construction.
Atlanta is only the seventh largest housing market today, but it’s rising again on the strength of recent gains in employment and income, which had trended downward in 2009. Also, median housing prices here, which only peaked at $171,000 during 2006-2007, appear to have corrected, having fallen by 34 percent to $113,000 last year.
They may fall again slightly this year, thanks to rising foreclosures, which are more the result of the last economic recession than the housing bubble. Foreclosure activity rose 21% last year. But the negative pressure is unlikely to stanch a big upward rise in permit activity. Moody's expects permit levels to more than double this year and next.
Visit our Local Markets page for Atlanta to see more data and analysis.
71. Baltimore-Towson, MD
Market Health Indicator: 42.4
2011 Building Permit Forecast: 9,718
Percent Change in Building Permits: 73%
Current housing fundamentals in Charm City aren’t that great, but forward-looking builders don’t seem to care. Even though growth in income and household formations are slow, Moody’s expects building permit activity to pick up considerably this year.
Baltimore enjoys a strong base of government and military employers that have helped keep unemployment below the national average. The rate was only 7.84% in December 2010, and companies are hiring again. The big employers are Fort Meade, Johns Hopkins, and Medstar Health.
Baltimore definitelybenefits from the health of the Washington, D.C. economy. Many residents commute into the Nation’s Capital for work, but housing in Baltimore is much more affordable than it is in Washington. Incomes have recovered to 2006 levels and are expected to grow 1.63% this year.
Visit our Local Markets page for Baltimore to see more data and analysis.
65. Chicago-Naperville-Joliet, IL-IN-WI
Market Health Indicator: 44.2
2011 Building Permit Forecast: 22,039
Percent Change in Building Permits: 210%
It’s been a long time coming, but the Chicago market appears to be on the upswing, despite continued weakness in housing fundamentals. Or at least builders think it’s ready to ride back up, because they have dramatically increased the pace of permit activity. Moody’s is calling for a very large increase in permit pulling this year.
With a population of more than 9.6 million people, Chicagoused to be one of the biggest housing markets in the country. In 2005, builders here pulled 54,000 permits. Last year, they took down about 11,400, making the Windy City only the 23rd largest housing market.
After declining three of the last four years, incomes are rising again in Chicago; they are expected to increase a robust 3% this year. Moody's is also projecting improved job formation for this metro area that has labored under above-average unemployment and slow household formation. Though household formations are rising, more people leave Chicago than move there each year.
Even so, home prices seem to have stabilized. After peaking at $274,000 in 2006, they stood at $190,000 as 2010 ended. Moody's is calling for another 3% decline this year before prices start to rise again in 2012. The problem is that foreclosures rose another 16% last year, according to RealtyTrac. One in 27 households received a foreclosure notice.
Visit our Local Markets page for Chicago to see more data and analysis.
100. Cleveland-Elyria-Mentor, OH
Market Health Indicator: 11.2
2011 Building Permit Forecast: 2,611
Percent Change in Building Permits: 29%
Cleveland’s chief problem is that people continue to leave town. The exodus translates into a decline of 23,000 households since 2004, which has taken the steam out of the new home market. The situation is bad enough to make Cleveland the last-place finisher on our list.
Even so, the news coming from the shores of Lake Erie isn’t all bad. Moody’s is calling for a break-out year in permits as builders, figuring the market has nowhere to go but up, lay the groundwork for recovery.In 2004, the recent high-water mark, builders pulled only 7,400 permits in Cleveland, a metro area of more than 2 million people.
Surprisingly, median home prices rose 5% last year, and they are only 15% below 2008 levels. But Moody’s is calling for a double dip--an 8% drop, even though foreclosures appear to have stabilized. The metro area may have added 10,000 jobs last year, but it has netted a loss of 80,000 since 2007. The hope for the future is in the metro area's health care, bio-tech, and high-tech businesses.
Visit our Local Markets page for Cleveland to see more data and analysis.
61. Columbus, OH
Market Health Indicator: 46.5
2011 Building Permit Forecast: 6,026
Percent Change in Building Permits: 45%
Unlike its big brother to the north, Columbus continues to add population, at a slow but steady rate--a modest 1% increase in households is expected this year in this metro area of 1.8 million. Household incomes should also continue an upward climb that began last year.
Columbus--whose big employers include Ohio State University (22,000 jobs), JP Morgan Chase (15,800 jobs), and Nationwide (11,373 jobs)--benefits from a below-average unemployment rate that stood at 8.86% in December. The region is projected to add jobs this year after three years of decline.
Improving economic conditions should be enough to jump-start permit activity; Moody's is calling for a 45% increase. Columbus was the 27th largest housing market last year with nearly 4,500 total permits, about 60% of them multifamily. It produced around 13,000 permits in 2004.
Visit our Local Markets page for Columbus to see more data and analysis.
40. Denver-Aurora-Broomfield, CO
Market Health Indicator: 55.3
2011 Building Permit Forecast: 8,178
Percent Change in Building Permits: 64%
With most of its metrics now positive, Denver has moved into a recovery stage, though a slower one than might be expected. The housing recession hit early here. Foreclosures are down 9% since 2008, though they rose slightly last year, as the impact from the economic recession rolled through.
Denver, the 24th largest housing market last year, has a lot going for it, including a growing population drawn by beautiful scenery and recreational opportunities. Strong household formation, expected to rise another 1.66% in 2006, has helped prop up median home prices. They peaked at $249,000 in 2006 and remained at $230,000 at the end of last year, only an 8% drop.
Unemployment is well below the national average, though it rose in the fourth quarter, a trend that may continue into this year. Despite a burgeoning high-tech sector, the metro area isn't producing enough jobs to satisfy its growing population. Income growth should rise a healthy 2.56% this year.
Building permit activity rose strongly, 22%, last year, especially among single-family permits, which were up 37%. Permits are expected to rise at an even faster rate in 2011, with national builders leading the way. There’s still a lot of room for growth in a market that produced 21,000 permits in 2004.
Visit our Local Markets page for Denver to see more data and analysis.
98. Detroit-Warren-Livonia, MI
Market Health Indicator: 15.5
2011 Building Permit Forecast: 5,736
Percent Change in Building Permits: 88%
The Super Bowl ad for the new Chrysler 300 was intended to create the impression that the Motor City was back. If so, it is coming back from a much lower base. The metro area has lost a staggering 332,000 jobs since 2006 and its population has been declining since at least 2004.
Detroit finishes third from last on our list of "healthiest" markets because it's projected to lose more jobs this year, though far fewer than in recent years. Median home prices--$114,000 in 2010--are projected to decline again this year as well, then rise in 2012. They have fallen 42 percent from a 2005 peak of $162,000.
But the market is beginning to show small signs of improvement. Median income is projected to climb to $48,000 this year, after hitting bottom at $46,000 last year. It peaked at $53,000 in 2007. The Motor City is expected to add some jobs this year, even if its unemployment rate remains above 14%.
Builders think the market is poised to turn. They effectively called the bottom last year, more than doubling permit volume, a pace that may continue this year. With a current population of 4.4 million, Detroit produced as many as 13,358 building permits in 2005.
Visit our Local Markets page for Detroit to see more data and analysis.
97. Fayetteville, NC
Market Health Indicator: 17.9
2011 Building Permit Forecast: 2,527
Percent Change in Building Permits: -28%
What happened in formerly stable Fayetteville, which used to finish relatively high on our list of the healthiest housing markets? A left jab from rising unemployment, followed by a right uppercut from slowing household formations, appears to have dropped its housing market to the mat.
Fayetteville, home to Ft. Bragg, is one of the few markets in the country where prices, as measured by the National Association of Realtors’ index, rose last year. And, at a median of $105,000, they haven't fallen much from their peak of $112,000 in 2006. The stable conditions last year helped fuel a 42% increase in building permits, which reached 2004 levels.
Moody’s is calling for a decline this year, after builders discover weaker home buyer demand brought on by job losses and flattened household growth.
Visit our Local Markets page for Fayetteville to see more data and analysis.
87. Las Vegas-Paradise, NV
Market Health Indicator: 32.4
2011 Building Permit Forecast: 6,673
Percent Change in Building Permits: 8%
Las Vegasis the epicenter of the foreclosure earthquake, leading the nation in foreclosures on a per household basis. Last year, one out of every nine households (88,198 households) received notice of a foreclosure, down slightly from the year before but still 31 percent above 2008 levels.
As a result, Moody's is forecasting another 14% decline in home prices this year. The median price of a home has fallen from a high of $304,000 in 2005, when news reports focused on a lack of land suitable for development. By last year, prices had dropped to $138,000, a 55% decline. Bank-owned homes accounted for nearly half of all home sales in Las Vegas last year.
Las Vegas, the 18th largest housing market last year, seems to be nearing stabilization, based on its level of building permits, which were down only 4% last year. Despite its well-documented travails, Sin City continues to add people, some no doubt drawn by newly affordable home prices, others by a lack of state income taxes. Household formations are expected to increase by another 1.7% this year as the metro area adds back 20,000 jobs. Eight of the top 10 employers here are in gaming.
Visit our Local Markets page for Las Vegas to see more data and analysis.
52. Los Angeles-Long Beach-Santa Ana, CA
Market Health Indicator: 50.0
2011 Building Permit Forecast: 10,300
Percent Change in Building Permits: -7%
Like many of the markets we have investigated, Los Angeles is a tale of two cities. The metro area of nearly 10 million continues to suffer from stubbornly high unemployment, which stood at 11.79% at the end of last year. Yet builders think good times must be right around the corner--they posted a 45% increase in permit activity last year.
Moody's thinks they will go into reverse this year, as buyers find more existing homes to choose from. A huge number of households, 147,715, were served with a notice of foreclosure last year, even though the situation improved somewhat. Only one city, FL" target="_blank">Miami, had a larger total. Moody's forecasts another 13% drop this year in median home prices to $308,000, nearly half of 2006's level($577,000).
Even so, most economic forces that underpin housing have turned positive. The region is adding jobs again, though it will be several years before it replaces the 363,000 lost from 2008 to 2010. Household formations and income levels are also expected to rise.
Visit our Local Markets page for Los Angeles to see more data and analysis.
66. FL" target="_blank">Miami, Fl
Market Health Indicator: 43.6
2011 Building Permit Forecast: 10,786
Percent Change in Building Permits: 72%
Miami, the poster child for the overheated condo market during the housing boom, is still trying to dig out from under a collapse caused by over-zealous production and loose underwriting. More households, 172,000, received foreclosure notices here last year than any other market in the country. They remain at a highly elevated rate, 43% above 2008 levels.
For that reason, median home prices are expected to continue falling this year, 20% by Moody’s estimates. Median home prices had dropped to $202,000 last year, compared to $371,000 in 2005, when the huge number of cranes on the skyline drew comparisons to Dubai. Unemployment here is well above average at 11.74% last year.
But there are two Miamis. Those who have jobs will see a strong rise in income, one of the highest rates on the list. Prices of new attached homes actually rose last year, according to data compiled by Hanley Wood Market Intelligence, even though volume remained far off boom levels.
Miami rebounded to become the 5th largest housing market last year, with more than 8,000 building permits, a trend that's expected to continue this year. In 2006, Miami produced more nearly 46,000 building permits.
Visit our Local Markets page for Miami to see more data and analysis.
24. Mobile, AL
Market Health Indicator: 61.7
2011 Building Permit Forecast: 1,143
Percent Change in Building Permits: -4%
On paper, Mobile has some of the best housing metrics in the country. Strong household growth--it's expected to rise another 2.2% this year--had kept home prices stable from 2007 through 2009. Likewise, permit activity kept at an even keel, in the 2,400 range, during the economic and housing recession.
Last year, builders lost confidence--housing permits fell 46%. This happened as unemployment rose to 10.8%. Some of the increase may have been due to formerly discouraged people renewing the search for work. Though the market is expected to add back some jobs this year, it will be another year before permit activity recovers.
The economic dip sapped housing demand and brought down median home prices by $7,000; they finished at $121,000 last year. Moody's expects them to fall another $3,000 this year but then recover all the lost value in 2012. Incomes in Mobile, very low to begin with at $36,000, also fell last year, though Moody's forecasts that they will rise to new highs over the next two years.
Visit our Local Markets page for Mobile to see more data and analysis.
77. New Orleans-Metairie-Kenner, LA
Market Health Indicator: 38.7
2011 Building Permit Forecast: 3,993
Percent Change in Building Permits: 79%
This could be a breakout year for the New Orleans housing market, which is still trying to recover from Hurricane Katrina. Population has been growing steadily in the Big Easy since it lost roughly 120,000 of its 496,000 households after the storm. The number of households is now back to 447,000.
Meanwhile, prices remained pretty stable, despite the out-migration. The median price of a home, $157,000, remains within $3,500 of where it was in 2007, a testament to the region's strong cultural allure. Moody's projects only a small decline this year.
Unemployment is very low, 7.31% last year, in part because so much of the population has left town. It may worsen this year, according to Moody's, thanks in part to the closure of Northrop Grumman's shipyard in New Orleans, but it will remain well below the national average. Though permit activity sank to a new low last year, 2,229, Moody's is calling for a major reversal this year. Single-family traditionally accounts for 90% or more of permit activity in New Orleans.
Visit our Local Markets page for New Orleans to see more data and analysis.
54. New York-Northern New Jersey-Long Island, NY, NJ, PA
Market Health Indicator: 48.2
2011 Building Permit Forecast: 29,215
Percent Change in Building Permits: 61%
Big things have been happening in the Big Apple in the last year and a half. The in-town condo market recovered earlier than most markets, no doubt thanks to renewed stability on Wall Street and the financial markets. Now that prosperity appears to be spreading to the suburbs. Permit activity in Edison, N.J., rose 41% last year. Nassau-Suffolk, NY, witnessed an 11% increase.
All told, permits rose 11% in the region last year and are expected to accelerate in 2011, even as home prices fall 10%, according to Moody's projections. New York was the fourth largest housing market in the country last year. Median home prices ($415,000 last year) are down only 12% from the peak of the housing boom. Population growth has accelerated over the last two years.
New York also has strong income growth on its side. The median income here, $70,000 last year, is expected to rise another 3.14% this year, one of the biggest increases in the country. Unemployment, already below the national average, is projected to fall to 8% this year.
Visit our Local Markets page for New York to see more data and analysis.
35. Oklahoma City, OK
Market Health Indicator: 55.9
2011 Building Permit Forecast: 5,340
Percent Change in Building Permits: 42%
Oklahoma City, the 32nd largest housing market last year, has one of the lowest unemployment rates in the country at 6.37%. The market's low jobless rate, though, may be a double-edged sword. It will be tough for the market to register further increases this year, especially given the region's relatively weak household growth rate of 1.28%.
Oklahoma City received a boost recently when Boeing announced plans to move two defense programs there that will produce 500 jobs. The other good news is that median income, $52,000 last year, is growing again. It is expected to increase by a hefty 3.63% this year.
While Oklahoma City is an affordable market, with a median home price of $138,000, prices declined in the last year and are expected to drop another 2% this year. To create more housing demand, themetro area of 1.24 million needs even stronger job and income growth to attract more households.
Visit our Local Markets page for Oklahoma City to see more data and analysis.
37. Orlando-Kissimmee, FL
Market Health Indicator: 55.6
2011 Building Permit Forecast: 9,914
Percent Change in Building Permits: 98%
Median home prices have yet to fully correct in Orlando. They fell to $134,000 last year and are expected to drop another 11% this year. By comparison, they rose as high as $272,000 in 2006.
But builders aren't waiting for prices to stabilize. Permit activity rebounded strongly last year, led by big gains in multifamily, and they are projected to nearly double again this year.
What's causing the optimism? The local economy is recovering strongly, despite a persistent problem with foreclosures. Moody's forecasts income gains of 3.84% this year, coupled with job growth of 3.23%, some of the biggest increases in those categories on our list. Walt Disney World is by far the biggest employer.
Orlando, the 21st largest housing market last year,ranks 9th on the list of markets hit hardest by foreclosure. Last year, one in 15 households received a notice, even though foreclosures fell 15%. They are still running 32% higher than they did in 2008.
Visit our Local Markets page for Orlando to see more data and analysis.
68. Phoenix-Mesa-Scottsdale, AZ
Market Health Indicator: 43.3
2011 Building Permit Forecast: 15,199
Percent Change in Building Permits: 82%
Lost in all the news about foreclosures and bankruptcies in Phoenix is the fact that the market remains the 5th largest housing market in the country, with more than 8,000 building permits pulled last year. Moody's expects permitting to accelerate rapidly this year, as builders start putting homes on land bought at rock-bottom prices during the last several years.
Even if builders pull 15,000 permits this year, as Moody's forecasts, that will still be a far cry from the nearly 70,000 permits this market produced in its heyday. An attractive place to live and do business, Phoenix still enjoys strong growth in household formations, which are expected to rise by another 3.24% this year. Unemployment is below average and expected to fall to 8.5% in 2011. Incomes have been holding steady at a median of about $53,000.
Phoenix has yet to work its way through one of the worst foreclosure problems in the country. It ranked fourth on RealtyTrac's list of foreclosure hot spots, with one in 14 households, 124,720 all told, receiving a notice last year. The situation has resulted in dramatic decline in median home prices, which have fallen from $267,000 in 2006 to $140,000 last year. They are expected to tumble another 11% this year.
Visit our Local Markets page for Phoenix to see more data and analysis.
27. Portland-Vancouver-Beaverton, OR-WA
Market Health Indicator: 58.7
2011 Building Permit Forecast: 7,513
The new home construction market in Portland never went crazy during the housing boom, partly due to the difficulty of permitting projects. Permits only got as high as 17,000 in this metro region of 2.3 million, even as population grew by nearly 2% annually from 2005 to 2008.
Portland continues to operate as a demographic magnet, adding roughly 40,000 people a year, many of them Californians seeking a more affordable lifestyle. Household formations are expected to rise another 2% this year, the same rate as in the last six years. The city keeps showing up on important lists--one of the best places to have a baby, the cleanest city, the smartest city, and the fifth greenest city.
Strong population growth, coupled with a lid on construction, has helped prop up median home prices, which have fallen only 19% since the housing boom. They got as high as $295,000 and had fallen only to $238,000 last year. Moody's expects a modest, 3.5% decline this year.
Portland's employment growth, like its household growth, is above average at 2%.Median income, $56,000 in 2010, will also rise by 2.3% this year, making up for last year's losses. Portland was the 26th largest housing market last year.
Visit our Local Markets page for Portland to see more data and analysis.
Market Health Indicator: 61.7
2011 Building Permit Forecast: 2,945
Percent Change in Building Permits: -3%
The housing market in Salt Lake City, the45th largest housing market last year, isn't recovering as quickly as might be expected. And it won't get much stimulus this year because unemployment, 7.11% at year end, is already low relative to the rest of the country. Only a small increase in jobs is expected.
Salt Lake's housing market benefits from strong household formations, which have been rising 2% annually for the last five years, a trend expected to continue this year. Strong demand has put a floor under median home prices, which only got as high as $231,000 during the boom and stood at $207,000 last year. They are expected to decline 5.5% this year, though, as aftershocks from the economic recession--in the form of heightened foreclosures--roll through the area. Salt Lake ranks 34th in foreclosures, according to RealtyTrac. One in 27 households received a notice last year.
Incomes are expected to recover this year, rising 3.16%, after falling for the previous two.Permit levels, which got as high as 9,243 in 2005, dropped to roughly 3,000 last year and are expected to stay at that pace this year.
Visit our Local Markets page for Salt Lake City to see more data and analysis.
46. San Diego-Carlsbad-San Marcos, CA
Market Health Indicator: 52.5
2011 Building Permit Forecast: 4,080
Percent Change in Building Permits: 11%
San Diego, a high-priced housing market that was one of the first to tumble during the housing recession, looks like it may recover before others. Single-family permits last year rose 28% in San Diego, the 35th largest housing market. Foreclosures have been declining since 2008.
Median home prices in this metro area of 3.1 million actually rose last year, as measured by the Case-Shiller Index in addition to National Association of Realtors' numbers for median home prices. Median home prices, which topped out at over $600,000 in 2005, fell to $358,000 in 2009 then rose to $382,000 last year.
Incomes are high in San Diego at a median of $62,000, thanks to the many high-tech businesses that call the region home, and they are expected to grow another 2.22% this year. But this is a tough place to get a job. Unemployment is above average (10.5% in 2010) and expected to decline to only 10% this year. Roughly 100,000 jobs were lost in San Diego from 2008 through 2009.
Visit our Local Markets page for San Diego to see more data and analysis.
34. San Francisco-Oakland-Fremont, CA
Market Health Indicator: 56.5
2011 Building Permit Forecast: 5,583
Percent Change in Building Permits: 15%
San Francisco is another market where Moody's is calling for a double-dip in median home prices. They managed to rise from $490,000 to $555,000 last year, driven by a nascent comeback in the move-up market. But they are expected to fall 15% this year to $517,000. They peaked at $798,000 during the housing boom.
The main problem is a continued loss of jobs.--23,000 last year, many of them in the government and construction sectors. Unemployment, 10.5% at the end of 2010, remains above the national average and is only expected to decline to 9.84% this year.
Otherwise, conditions seem to be improving. Household formations will continue their pattern of rising at a slow, steady pace. Median household income, $78,000 last year, will rise another 2.36%. And foreclosure problems are improving.
Persistent unemployment will slow growth in permit activity. Permits were up 31% last year, but Moody's is only calling for 15% growth to 5,583 permits this year. At the top, in 2004, San Francisco produced almost three times as many.
Visit our Local Markets page for San Francisco to see more data and analysis.
33. Seattle-Tacoma-Bellevue, WA
Market Health Indicator: 56.8
2011 Building Permit Forecast: 10,747
Percent Change in Building Permits: 3%
Seattle, the6th largest housing market last year, has a lot going for it. It's one of the few markets where Moody's thinks prices may increase this year--though by a mere 1.48%. It enjoys a very low foreclosure rate for a city its size--84th in the nation, on a foreclosures-per-household basis. And unemployment here, 8.9% at the end of the year, is below the national average and expected to fall to 8.15% over the next two years.
In addition, median home prices, which peaked at $387,000 in 2007, haven't fallen as much (22%) as they have elsewhere in the country. At $300,000 late last year, they are expected to rise over the next two years.
Seattle would be recovering faster if jobs and households were growing at a faster rate. (They are projected to rise 1.4% and 1.3% respectively this year.) Median incomes, which reached $71,142 last year, will rise another 1.72% this year. Building permits rose 33% last year, with the multifamily sector exhibiting very strong growth of 57%. They peaked at 26,000 in 2005.
Visit our Local Markets page for Seattle to see more data and analysis.