Some markets are hot and others not. Once again I invoke the TINSTAANREM clause — There Is No Such Thing As A National Real Estate Market. Each real estate market is different. Ditto the respective economy. Both are changing. What is hot today may or may not be hot tomorrow.
When studying the higher job-growth markets this year, the following trends have converged in identifying many of the top performing metros:
- Leisure and hospitality destinations
- High-Tech centers
- Markets with major universities
- State capitals
- Resurging manufacturing markets (including the U.S. auto industry)
Single family properties are the foundation of the U.S. housing market, making up 68.6 percent of the housing stock as of the latest Census. To identify the hottest single family housing markets in the U.S., Ten-X looked at the largest 50 markets and ranked them based on “current and forecasted housing fundamentals.”
The following metrics were also included in Ten-X’s analysis:
- Home prices
- Residential building permit activity
- Economic growth
- Population (on an annualized basis from the Census Bureau
So what were the top-10 single family markets for fall 2016 based on Ten-X’s analysis? In addition to the rankings, I added the latest 12-month job growth rate (as of the end of September 2016) for each of the respective Metropolitan Statistical Areas (MSAs) of Divisions. Also included was the number of new jobs per new building permits (both single- and multifamily) for the 12-months ending June 2016. See The Jones on Real Estate Blog at http://blog.stewart.com/stewart/2016/08/17/the-three-bears-paradox-on-an-msa-level-jobs-and-residential-permits-2012-to-q2-2016/. Normal is from 1.25 to 1.50 net new jobs per new dwelling unit. More jobs than 1.50 indicates a market in which demand is outstripping supply.
Five of the top-10 markets were from Florida, including four of the top-five. Seven of the top-10 were high leisure and hospitality markets.
My primary economic axiom is that jobs are everything to an economy and the real estate market. In each of the top-10 markets, the 12-month job growth was significantly greater than the 1.72 percent posted by the U.S. Several were multiples of that.
To read the entire press release from Ten-X click http://www.prnewswire.com/news-releases/florida-cities-and-las-vegas-top-ten-xs-list-of-falls-hottest-single-family-markets-300349500.html
My hypothesis has been that employment and economic activity in leisure and hospitality markets and business is a leading indicator of overall consumer confidence. Evidently, consumers today are feeling pretty good about the future.