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Home Value Forecast: Population Growth Impact on Home Values

Last month the United States Census Bureau released its Cumulative Estimates of Resident Population Change and Ranking: April 1, 2010 to July 1, 2014. In a chart you can view here, the Bureau ranked 381 metropolitan statistical areas by their percent change in population during the timeframe. The top three areas of growth in terms of percent change:

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In this month’s Home Value Forecast we will look at housing trends in these areas and see if home prices correspond with population changes.

The Top Three:

Other than two of the three being from the same state, the three fastest growing areas couldn’t be any more different.

  • The Villages in Florida is a rapidly growing retirement community. The average age is 68.7 years, the oldest in the country and almost 30 years above the US average age of 36.8. This is not an influx of new families fueling the growth, it’s retirees moving into the area. And with nature working against it, it is amazing that The Villages is fueling such dramatic growth.
  • Midland, Texas’ growth in the last four years can be directly linked to the energy business, with 13.6 percent of the population involved in the mining, quarrying, and oil & gas extraction businesses. In last month’s Home Value Forecast we touched on the effects of energy prices on some Texas communities, including Midland. Click here to read the full report.
  • Austin, the capital of Texas, was first known as a college city, then with the growth of Dell and others as a technology manufacturing hub. Today, the influx of Facebook, Google and others have made it a professional services hub. Educational, professional, scientific and technical services jobs now account for 35.5 percent of the jobs in Austin. And reflective of its college city roots, the average age in Austin is 31.1.

Now let’s look at home appreciation and the Collateral Analytics forecast for all three:

the-villages-austin-midland-forecast

All three share the fact that they are all at or near all-time highs and don’t show much impact from the housing crisis. To show how The Villages is truly an outlier, the below chart graphs its performance against that of the Core Base Statistical Area (CBSA) of Orlando-Kissimmee-Sanford, which the community is part of:

villages-orlando-home-value-forecast

The Orlando CBSA is still trending 40 percent below historic highs, showing that the recovery has a ways to go outside the retirement community.

CBSA Winners and Losers

Each month, Home Value Forecast uses a number of leading real estate market-based indicators to rank the single-family home markets in the top 200 CBSAs to highlight the strongest and weakest metros.

The ranking system is purely objective and is based on directional trends. Each indicator is given a score based on whether the trend is positive, negative or neutral for that series. For example, a declining trend in active listings would be positive, as will be an increasing trend in average price. A composite score for each CBSA is calculated by summing the directional scores of each of its indicators. From the universe of the top 200 CBSAs, we highlight each month the CBSAs which have the highest and lowest composite scores.

The tables below show the individual market indicators that are being used to rank the CBSAs, along with the most recent values and the percent changes. We have color coded each of the indicators to help visualize whether it is moving in a positive (green) or negative (red) direction.

Top 10 CBSAs:

home-value-forecast-top-performing-housing-markets

Denver was the most active market this month in terms of sales activity, and Bellingham, WA continues to lead the top ten.

As has been the trend for many months, all of our top ten markets are from the west of the nation, with seven of the top ten being California markets. Two of the California markets (San Francisco and San Rafael) had active sales prices of more than $1 million.

Both San Francisco and San Rafael were in our top ten from October, 2013, both had a “Sold Price” of $910,000 at that time.

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What we thought at the time were signs of a very heated market (MRI: 3.29 and 3.07, Sale Price to List Price Ratio: 104.74 and 100) have stayed as hot or have become even hotter over the last 17 months (MRI: 2.80, 3.52, SP to LP ratio: 105.54 and 100). It will be interesting to track how long these communities sustain these dramatic housing gains.

Bottom 10 CBSAs:

home-value-forecast-bottom-performing-housing-markets-658x493

 

Foreclosure sales as a percentage of total sales is still driving the bottom ten for this month. Even with higher sales activity, the markets still have a way to go before they see a full recovery as most of these markets continue to also have much higher months of remaining inventory.