NBN Online for the week of July 23, 2007

The Good Life Starts With Housing Growth, Study Finds

Local housing growth helps buoy the quality of life of the area’s residents, according to a recent follow-up to a 2006 survey and analysis by NAHB economists of 260 metropolitan statistical areas across the U.S.

“Although there is some indication that the correlation is not as strong with the updated data, there is still a clear positive relationship between the third-party qualify of life indices as presented and high housing growth,” the land development study says.

The new analysis also finds that there can be some reduction in quality of life if housing growth is extremely high in an area experiencing accelerated growth, although this is the exception and not the rule.

The NAHB study matched average housing starts per capita from the U.S. Census Bureau for the five-year period of 2002 to 2006 with a quality of life index created by Bert Sperling, who produced the second edition of the publication “Cities Ranked & Rated: Your Guide to the Best Places to Live in the U.S. & Canada.”

Sperling also developed the very first “Best Places to Live” for Money magazine and he is a well-known researcher in the field.

The primary intent of the study was to try to dispel the commonly held perception that additional growth in communities is detrimental to the qualify of life. “Many local decisions made by officials concerning growth and development are based on this perception,” said Edward Tombari, the originator of the study and a land use planner at NAHB.

“Elaborate public policy initiatives — such as impact fees, urban service boundaries and mandatory land conservation — are developed and implemented in order to mitigate the ‘negative consequences of growth’ and to ‘preserve quality of life,’” Tombari said. “But all too often, the many benefits of growth — such as job creation, increased cultural and educational facilities, transportation improvements and improved health care facilities — are overlooked during the development approval process.”

Sperling’s quality index includes hundreds of data sources grouped into “quality of life” indices such as education, health care, transportation, jobs and crime. While most of the data used is objective, the assessment of the quality of life in different locations also includes surveying the residents and their opinions.

To reach its conclusion, NAHB economists conducted a simple correlation analysis between Sperling’s quality index, represented by the x axis on a graph, and the growth index, represented by the y axis. Each of the 260 metro areas is represented on the graph by a single point, and the analysis clearly shows a positive correlation between growth and qualify of life.

(The straight line on the graph shows the positive correlation, the bending line shows the atypical decline in the quality of life.)

“While local governments have a responsibility to respond to the needs of their citizens by utilizing local land use tools such as zoning, they need to apply those tools with a better understanding that improvements to their community also occur through growth and development,” Tombari said.

While there are some exceptions to the rule — places that either have a good quality of life but low growth and areas with a low quality of life and high growth — for the most part the areas plotted on the graph demonstrate a correlation between housing and growth and a favorable qualify of life.

Looking at 373 areas, Sperling’s research found the following to be the top 20 areas for quality of life, which are also the places where growth is likely:

1. Gainesville, Fla.
2. Bellingham, Wash.
3. Portland, Ore.
4. Colorado Springs, Colo.
5. Ann Arbor, Mich.
6. Ogden, Utah
7. Asheville, N.C.
8. Fort Collins, Utah
9. San Luis Obispo, Calif.
10. Boise, Idaho
11. Santa Barbara, Calif.
12. Logan, Utah
13. Provo, Utah
14. Corvallis, Ore.
15. Durham, N.C.
16. Olympia, Wash.
17. Charlottesville, Va.
18. Flagstaff, Ariz.
19. Indianapolis
20. Santa Fe, N.M.

The bottom 20 cities, starting with the worst:

1. Modesto, Calif.
2. Visalia, Calif.
3. Yuba City, Calif.
4. Merced, Calif.
5. Monroe, La.
6. Farmington, N.M.
7. Lafayette, La.
8. Alexandria, La.
9. El Centro, Calif.
10. Anniston, Ala.
11. Sumter, S.C.
12. Hanford, Wash.
13. Pine Bluff, Ark.
14. Elmira, N.Y.
15. Florence, S.C.
16. Steubenville, Ohio
17. Muscle Shoals, Ala.
18. Victoria, Texas
19. Jackson, Tenn.
20. Danville, Ill.

For more information on the study, e-mail Edward Tombari at NAHB, or call him at 800-368-5242 x8309. 

Want to Know the Housing Forecast for the Top 100 Metros? 

Find out in HousingEconomic.com’s 2007-2008 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.

To learn more, visit www.HousingEconomics.com.

NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market

With the current cooling of the nation’s housing market expected to persist into next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.

To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.

For assistance, call the NAHB Member Service Center at 800-368-5242.