|
Sunbelt Shines as Hottest Housing Region
 When it comes to employment and population growth, two key factors that drive housing demand, the Sunbelt stands alone as the nation’s hottest region, according to analysts at NAHB’s Construction Forecast Conference.
While payroll employment is back to March 2001 pre-recession levels in 32 states, the five-year outlook appears brightest for the western states, said Jim Diffley, managing director of Global Insight's Regional Services Group.
“For the next five years, employment in the Sunbelt will grow much faster than in the Northeast or Midwest,” he said, noting that with the exception of Florida, the only states expected to register annual job growth above 2% will come from the western part of the country.
Manufacturing states in the upper Midwest, particularly Michigan and Ohio, are still feeling the impact of the 2001 recession, he said. “We don’t expect those jobs to come back for some time.”
Sounding a similar note, Bernard Markstein, NAHB’s director of forecasting, said that Nevada, Arizona and Florida posted the largest population gains in 2003-2004 and that the West and the Southeast attracted the greatest migration during the past three years.
 “Housing demand is driven by population growth and employment and income growth,” said Markstein, who added that changes in home prices, a desire for a second home and replacement of existing housing stock also figure into the equation.
During the past year, he said that housing prices increased in every state across the nation. California and Nevada were the pace setters, posting an average home price appreciation rate of more than 20%, while Florida, Arizona and much of the Northeast registered gains of 10%-20%.
Markstein said that rising home prices actually spur many buyers to enter the housing market.
“For first-time buyers, there is a real incentive to jump into the market if they think that prices will go up,” he said, because it offers them a chance not only to become home owners but to also tap into rising equity. “Move-up buyers also view this as an investment. By getting a bigger house, it will appreciate over time. So, there is actually an incentive to buy as long as prices are increasing.”
And it appears that in the coming years, these new home buyers will be migrating in far greater numbers to the Sunbelt region.
Global Insight is projecting that the lion’s share of new population growth will occur in the South and West during the next 25 years. Diffley said the West will surge by 48.5%, followed closely by the South at 42.5%. Lagging behind are the Midwest at 14.6% and the Northeast at 5.9%.
“People follow jobs, and jobs follow people,” he said, pointing out that Las Vegas; Fayetteville, Ark; Orlando, Fla.; Boise City, Idaho; Riverside, Calif.; Phoenix; West Palm Beach, Fla.; and Austin and Raleigh, N.C. will be among the hottest job markets in the next five years.
“Fayetteville is home of Wal-Mart, Boise has wonderful amenities and a low cost of living, Southern California is booming and Austin and Raleigh are high-tech centers,” said Diffley.
Another wrinkle in demand for housing is the desire to own a second home. Markstein said that the states with the highest percentage of second homes (over 10%) are Maine, New Hampshire and Vermont.
Photos by Morris Semiatin
|
