2013 Housing Recovery : 276 of 361 Markets Now Labeled “Improving”
As the U.S. housing market improves nationwide, it's taking the broader economy with it.
According to National Association of Homebuilders (NAHB), 274 U.S. metropolitan areas are "improving" -- more than double the tally from last November -- as rising home prices, strong job growth, and new construction propel the economy forward.
The 2013 housing market has started off strong. Rising home prices are expected head.
Improving Market Index : "Measurable And Sustained Growth"
Each month, the National Association of Homebuilders publishes its Improving Market Index (IMI), a report which attempts to identify U.S. housing markets in which general economic growth is ongoing.
The NAHB positions the Improving Market Index as more than just a home value tracker; as the Case-Shiller Index may be classified, and which may report such bullet points as "home prices are rising in Phoenix, Arizona".
In contrast, the Improving Market Index doesn't just focus on home prices. It uses three separate data series to determine whether the economy of a given metropolitan area is expanding or contracting. If each of the three data points shows measurable and sustained growth, the IMI deems the area "improving".
The three series used by the Improving Market Index are :
- Employment Statistics from the Bureau of Labor Statistics
- Home Price Growth from Freddie Mac
- Single-Family Housing Growth from the U.S. Census Bureau
In order to qualify for the Improving Market Index list, an area must show growth for each of the series a month-to-month basis, and at least six months must have passed since each of the series have "bottomed out".
San Francisco, California; Las Vegas, Nevada Improving
The number of metro areas on the Improving Markets Index climbed by fifteen this month to 276 areas. The NAHB tracks 361 markets overall.
Newly-added areas included all of the cities below :
- Colorado Springs, Colorado
- Gainesville, Florida
- Bloomington, Indiana
- Santa Fe, New Mexico
- Santa Barbara, California
The inclusion of these 5 cities on the Improving Market Index list is significant because each was hit-hard in last decade's housing market downtown, as were the following five cities which have maintained their respective slots in the March 2013 Improving Markets Index :
- Phoenix, Arizona
- Detroit, Michigan
- Cincinnati, Ohio
- Philadelphia, Pennsylvania
- San Jose, California
March's IMI includes cities from all 50 states, and includes the District of Columbia, too. 19 markets dropped off from February.
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For real estate investors, the NAHB Improving Market Index can provide a roadmap for real estate investment opportunities; cities experiencing broad-based economic growth may be good cities in which to invest in real estate.
Similarly, for first-time buyers, the IMI may suggest cities in which home inventory may go scarce, which can result in higher home prices. Even with low downpayment options including the FHA's 3.5 percent down loan and Fannie Mae's Conventional 97, higher prices means that buyers must come to closing with larger downpayments.
If your plans for 2013 include buying real estate, consider going into contract sooner rather than later. Rising home prices and rising mortgage rates can make for a bad combination.