Is the real estate market better yet? Seeking a way to aggregate local data, the National Association of Home Builders and First American Title Insurance constructed an “Improving Markets Index” in an effort to track metro area markets as they came off their housing lows. The good news is that the index leapt last month, with 40 cities being added to the 41 already on the list — while just five fell off.
To make the list, a city has to show recovery as measured by three criteria: housing price appreciation, job growth, and single-family housing permits (this does come from the Home Builders, after all).
By those measures, large metro areas such as Dallas and Philadelphia are recovering, as are smaller cities including Denver, Honolulu, Indianapolis, and Nashville.
Of course, “improving,” as anyone in the real estate industry knows, does not necessarily mean “improved.” Even as these markets are coming off their post-crash lows, we are in many cases a long way from the glory days of 2005-2006.
However, since one-third of all American counties are in a Metropolitan Statistical Area, the list may be a good way to measure the current breadth of a pickup in the housing market. The NAHB points out that at least 31 states have some metro area on the list.
Unfortunately, with more than 200 metros eligible nationwide, at 76 metros, the list still has quite some room to grow.
There’s also the possibility that new foreclosures are set to come onstream and further depress the housing markets. We’ve seen a recent lull in those distressed properties — the rate of foreclosures dropped to 1 in 69 last year, according to data provider RealtyTrac, making it the lowest rate since 2007. However, that may have been a temporary respite on account of the robo-signing scandal, where banks were accused of filing bulk and inaccurate foreclosure paperwork. Banks in many states are now being careful to follow procedures to the letter, and as they do, those foreclosures may rear their heads in 2012.
And a supply of foreclosures can indeed hamper a market’s recovery. No cities in California, Arizona, or Nevada — all states that have been hit heavily by the foreclosure crisis — made the list. Florida, a state where there had been massive bubble-related overbuilding, is represented by just three smaller markets: Cape Coral, Jacksonville, and Punta Gorda.