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Pittsburgh and New Orleans Among Those Included

The National Association of Home Builders (NAHB) released its first NAHB/First American Improving Markets Index (IMI), a new economic index revealing metropolitan areas that have shown improvement for at least six months in three key economic areas—housing permits, employment and housing prices.

The list of metropolitan areas includes:

• Alexandria, LA
• Anchorage, AK
• Bangor, ME
• Bismarck, ND
• Casper, WY
• Fairbanks, AK
• Fayetteville, NC
• Houma, LA
• Midland, TX
• New Orleans, LA
• Pittsburgh, PA
• Waco, TX

“Despite the challenging conditions in the national economy and housing sector, there are areas throughout the country where we are seeing pockets of improvement” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “Housing conditions are local, and do not always reflect the national picture. We created this new index to shine a light on those housing markets across the country that have stabilized and have begun to show signs of recovery.”

“By examining key indicators of home prices, employment and housing permits data, we are using a comprehensive, but conservative method in determining which markets are improving,” said NAHB Chief Economist David Crowe. “Last year at this time, there was not a single market that showed improvement using these criteria, and now we can point to 12 examples of growth.”

“It’s not surprising that many of the states represented are energy rich areas,” Crowe continued. “Those are the regions still experiencing relatively strong employment, supporting housing demand.”

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. A metro area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list. NAHB uses the latest available data from these sources to generate the list of improving markets.

Please visit www.nahb.org/imi for additional data, tables and a list of 2011 future economic release dates.


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       Homeowners in the Washington area can uncross their fingers -- 2011 is expected to be the best year for home prices the region has witnessed since the recession, with experts saying the area's market recovery will be tops in the nation.

       The region's relatively strong uptick in prices over the last year -- second in the nation -- gives analysts reason to believe the Washington market could see a 6.5 percent increase in home prices over the next 12 months, according to a new report by Clear Capital, which tracks real estate trends. It's the biggest increase the firm is predicting across the country.

       "D.C. prices are already going up for all homeowners who have purchased a home in last two years," said Alex Villacorta, senior statistician at Clear Capital. "So they are likely to see positive equity in that purchase."

       It's a different story, however, for those who bought a home at the height of the housing boom in the summer of 2006. The area's home prices on average are back to their 2004 levels, while houses in the rest of the nation are averaging prices closer to 2001 levels.

Annual price changes for 2011's top markets

       Strong employment and the relatively low percentage of bank-owned foreclosures on the market are two big factors that have contributed to the Washington area's ability to stay ahead of the curve, experts said. Roughly 15 percent of properties on the market in the region are bank-owned compared with more than 40 percent in other major markets, according to Clear Capital. Unemployment is a little more than half the national average of 9.8 percent.

       That helped propel Washington-area home prices in 2010 to a 5.3 percent increase, second only to Honolulu, where prices increased by 7.2 percent, according to the report.

       Meanwhile neighboring markets suffered significant declines. Prices in Richmond fell last year by more than 10 percent and Baltimore-area prices fell by more than 8 percent. Clear Capital expects both markets to see losses again this year.

       Nationally, prices fell by 4.1 percent in 2010. Much of it was because of the false boost the federal homebuyer tax credits gave the market during the first half of the year, which created a highly volatile atmosphere.

       "They probably did as much harm as they did good because the dramatic falloff of purchases ... seems to have had the effect of further depressing prices," Rick Sharga, executive vice president of foreclosure-tracking firm RealtyTrac, said last month.

       Real estate agents say it's a relief to hear the positive prediction for Washington -- but it's not surprising.

       "The average length of time a property stayed on the market once we got through the tax credit [has been] declining," said Joanne Darling, president of the Prince George's County Association of Realtors. "Properties are actually staying on market less than 90 days ... [whereas] at its worst, it was longer than six months."

       But location is key and real estate is highly local. Darling said she's seeing multiple offers on homes in places like Capitol Hill, Northwest D.C., Bethesda and Chevy Chase. But towns farther away from the city -- and where residents have to be more reliant on cars -- have been slow to come back, she said.

       The market volatility in 2010 created a shift toward rental properties, with potential buyers in the region being afraid to invest in a home that might continue to drop in value. But Villacorta said 2011 may see a shift back toward homeownership.

       "As rents start to increase, that could provide an opportunity for investors to come in and ... rent those properties back," he said. "That would drive prices up and that can swing the tide back into the favor of 'maybe it's a good time to buy.'"


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