Home prices have shot up over the last 12 months, according to Trulia. In the report, 2013’s Top 10 Healthiest Housing Markets, Trulia reviews the largest housing markets in the nation based on three characteristics: it identifies the characteristics of a healthy housing market as – strong job growth; low, but manageable vacancy rates; and low foreclosure inventory. Houston was ranked number one, and it wasn’t the only Texas City to rank. San Antonio came in at a close fourth.
Trulia’s Chief Economist, Jed Kilko, explained that the majority of increases are rebounds from the large declines in home values. He stated, “Markets with the biggest price increases are some of the boom and bust markets.” Phoenix, Las Vegas, Miami, and Detroit are all markets that experienced the largest amount of decline in home values, but have also seen a significant increase in prices over the last year.
An important measure to look at in housing demand is employment growth. Kolko stated, “When people have jobs, they are able to spend more on renting or buying, and they are more likely to buy.” According to economist, there are 10 metro areas that will be the healthiest in 2013. They also have the highest job growth across the nation. Each of them is within the top 20 percent for job growth nationwide.
A low vacancy rate is also important for the long-term health of the housing market. Kolko stated, “High vacancy rates hold back price increases, they hold back construction, they hold back the recovery.” He also explained why a vacancy rate should not be too low: an extremely low vacancy rate constricts availability resulting in prices increasing way too much. The top 10 housing markets have a vacancy rate that’s below 3.4 percent.
Another important measure for housing demand is a low foreclosure inventory.
Cities with low foreclosure inventory had less severe declines during the recession. Of the 10 healthiest housing markets, very few of them saw severe declines in home value. This resulted in fewer homes on the market that were foreclosed. For these areas, the increase in home prices resulted from the growing market, and are not the result of depressed prices resulting from the market being flooded with foreclosed homes.
The markets identified in Trulia’s 2013s Top 10 Healthiest Housing Markets all have high job growth, low vacancy rates, and low foreclosure inventory.
Houston had a 3.6 percent job growth rate, a 3 percent vacancy rate, and 15.4 construction permits issued per 1,000 homes. The city’s job market grew the most out of all the other major housing markets and home prices remain affordable even after the slight increase. Trulia stated that, “affordable home prices have attracted people and jobs to Houston, and in turn, we’ve seen strong construction activity continue here.” In addition, Houston’s commercial real estate market is also booming. According to the New York Times, the Woodlands planned communities are the highest in demand.