37. Orlando-Kissimmee, FL
Market Health Indicator: 55.6
2011 Building Permit Forecast: 9,914
Percent Change in Building Permits: 98%
Median home prices have yet to fully correct in Orlando. They fell to $134,000 last year and are expected to drop another 11% this year. By comparison, they rose as high as $272,000 in 2006.
But builders aren’t waiting for prices to stabilize. Permit activity rebounded strongly last year, led by big gains in multifamily, and they are projected to nearly double again this year.
What’s causing the optimism? The local economy is recovering strongly, despite a persistent problem with foreclosures. Moody’s forecasts income gains of 3.84% this year, coupled with job growth of 3.23%, some of the biggest increases in those categories on our list. Walt Disney World is by far the biggest employer.
Orlando, the 21st largest housing market last year,ranks 9th on the list of markets hit hardest by foreclosure. Last year, one in 15 households received a notice, even though foreclosures fell 15%. They are still running 32% higher than they did in 2008.
Visit our Local Markets page for Orlando to see more data and analysis.
68. Phoenix-Mesa-Scottsdale, AZ
Market Health Indicator: 43.3
2011 Building Permit Forecast: 15,199
Percent Change in Building Permits: 82%
Lost in all the news about foreclosures and bankruptcies in Phoenix is the fact that the market remains the 5th largest housing market in the country, with more than 8,000 building permits pulled last year. Moody’s expects permitting to accelerate rapidly this year, as builders start putting homes on land bought at rock-bottom prices during the last several years.
Even if builders pull 15,000 permits this year, as Moody’s forecasts, that will still be a far cry from the nearly 70,000 permits this market produced in its heyday. An attractive place to live and do business, Phoenix still enjoys strong growth in household formations, which are expected to rise by another 3.24% this year. Unemployment is below average and expected to fall to 8.5% in 2011. Incomes have been holding steady at a median of about $53,000.
Phoenix has yet to work its way through one of the worst foreclosure problems in the country. It ranked fourth on RealtyTrac’s list of foreclosure hot spots, with one in 14 households, 124,720 all told, receiving a notice last year. The situation has resulted in dramatic decline in median home prices, which have fallen from $267,000 in 2006 to $140,000 last year. They are expected to tumble another 11% this year.
Visit our Local Markets page for Phoenix to see more data and analysis.
27. Portland-Vancouver-Beaverton, OR-WA
Market Health Indicator: 58.7
2011 Building Permit Forecast: 7,513
The new home construction market in Portland never went crazy during the housing boom, partly due to the difficulty of permitting projects. Permits only got as high as 17,000 in this metro region of 2.3 million, even as population grew by nearly 2% annually from 2005 to 2008.
Portland continues to operate as a demographic magnet, adding roughly 40,000 people a year, many of them Californians seeking a more affordable lifestyle. Household formations are expected to rise another 2% this year, the same rate as in the last six years. The city keeps showing up on important lists–one of the best places to have a baby, the cleanest city, the smartest city, and the fifth greenest city.
Strong population growth, coupled with a lid on construction, has helped prop up median home prices, which have fallen only 19% since the housing boom. They got as high as $295,000 and had fallen only to $238,000 last year. Moody’s expects a modest, 3.5% decline this year.
Portland’s employment growth, like its household growth, is above average at 2%.Median income, $56,000 in 2010, will also rise by 2.3% this year, making up for last year’s losses. Portland was the 26th largest housing market last year.
Visit our Local Markets page for Portland to see more data and analysis.
Market Health Indicator: 61.7
2011 Building Permit Forecast: 2,945
Percent Change in Building Permits: -3%
The housing market in Salt Lake City, the45th largest housing market last year, isn’t recovering as quickly as might be expected. And it won’t get much stimulus this year because unemployment, 7.11% at year end, is already low relative to the rest of the country. Only a small increase in jobs is expected.
Salt Lake’s housing market benefits from strong household formations, which have been rising 2% annually for the last five years, a trend expected to continue this year. Strong demand has put a floor under median home prices, which only got as high as $231,000 during the boom and stood at $207,000 last year. They are expected to decline 5.5% this year, though, as aftershocks from the economic recession–in the form of heightened foreclosures–roll through the area. Salt Lake ranks 34th in foreclosures, according to RealtyTrac. One in 27 households received a notice last year.
Incomes are expected to recover this year, rising 3.16%, after falling for the previous two.Permit levels, which got as high as 9,243 in 2005, dropped to roughly 3,000 last year and are expected to stay at that pace this year.
Visit our Local Markets page for Salt Lake City to see more data and analysis.
46. San Diego-Carlsbad-San Marcos, CA
Market Health Indicator: 52.5
2011 Building Permit Forecast: 4,080
Percent Change in Building Permits: 11%
San Diego, a high-priced housing market that was one of the first to tumble during the housing recession, looks like it may recover before others. Single-family permits last year rose 28% in San Diego, the 35th largest housing market. Foreclosures have been declining since 2008.
Median home prices in this metro area of 3.1 million actually rose last year, as measured by the Case-Shiller Index in addition to National Association of Realtors’ numbers for median home prices. Median home prices, which topped out at over $600,000 in 2005, fell to $358,000 in 2009 then rose to $382,000 last year.
Incomes are high in San Diego at a median of $62,000, thanks to the many high-tech businesses that call the region home, and they are expected to grow another 2.22% this year. But this is a tough place to get a job. Unemployment is above average (10.5% in 2010) and expected to decline to only 10% this year. Roughly 100,000 jobs were lost in San Diego from 2008 through 2009.
Visit our Local Markets page for San Diego to see more data and analysis.
34. San Francisco-Oakland-Fremont, CA
Market Health Indicator: 56.5
2011 Building Permit Forecast: 5,583
Percent Change in Building Permits: 15%
San Francisco is another market where Moody’s is calling for a double-dip in median home prices. They managed to rise from $490,000 to $555,000 last year, driven by a nascent comeback in the move-up market. But they are expected to fall 15% this year to $517,000. They peaked at $798,000 during the housing boom.
The main problem is a continued loss of jobs.–23,000 last year, many of them in the government and construction sectors. Unemployment, 10.5% at the end of 2010, remains above the national average and is only expected to decline to 9.84% this year.
Otherwise, conditions seem to be improving. Household formations will continue their pattern of rising at a slow, steady pace. Median household income, $78,000 last year, will rise another 2.36%. And foreclosure problems are improving.
Persistent unemployment will slow growth in permit activity. Permits were up 31% last year, but Moody’s is only calling for 15% growth to 5,583 permits this year. At the top, in 2004, San Francisco produced almost three times as many.
Visit our Local Markets page for San Francisco to see more data and analysis.
33. Seattle-Tacoma-Bellevue, WA
Market Health Indicator: 56.8
2011 Building Permit Forecast: 10,747
Percent Change in Building Permits: 3%
Seattle, the6th largest housing market last year, has a lot going for it. It’s one of the few markets where Moody’s thinks prices may increase this year–though by a mere 1.48%. It enjoys a very low foreclosure rate for a city its size–84th in the nation, on a foreclosures-per-household basis. And unemployment here, 8.9% at the end of the year, is below the national average and expected to fall to 8.15% over the next two years.
In addition, median home prices, which peaked at $387,000 in 2007, haven’t fallen as much (22%) as they have elsewhere in the country. At $300,000 late last year, they are expected to rise over the next two years.
Seattle would be recovering faster if jobs and households were growing at a faster rate. (They are projected to rise 1.4% and 1.3% respectively this year.) Median incomes, which reached $71,142 last year, will rise another 1.72% this year. Building permits rose 33% last year, with the multifamily sector exhibiting very strong growth of 57%. They peaked at 26,000 in 2005.
Visit our Local Markets page for Seattle to see more data and analysis.