According to the National Association of Home Builders/First American Improving Markets Index, the number of housing markets designated as improving took a leap in December. The list of improving markets in metro areas increased from 76 to 201 and Atlanta is one of the cities that made the list.
The index ranking improving markets is based on a couple of factors. The markets must show six consecutive months of improvement from their lowest point in three separate measures: employment, home prices and construction.
In Atlanta, we don’t need the report to tell us our employment, home prices, and construction have seen improvement, but it serves as a further validation that each of these factors are connected and influential in our housing market’s recovery.
In the article “Why Atlanta, New York, and Chicago are poised to drive a housing recovery,” The Washington Post reported that Atlanta was among the cities with a significant opportunity to drive a housing recovery. The index report produced by the National Association of Home Builders illustrates the market has taken advantage of the opportunity.
The article states: “A good way to look at which housing markets are potentially overvalued and which are undervalued […] is to look at the relationship between rents and home prices.”
When the housing market bust hit, Atlanta saw steep price drops much like other markets. Over the following years, rent prices increased slightly while home prices continued to fall.
The article states that this correlation primes a market for improvement because “when rents are rising faster than home prices, it is a sign that purchasing a home is becoming relatively more affordable, and so it will behoove people to seriously think about buying.”
In previous Thought Leadership posts, we have commented on the recent housing prices increase and the benefit to the economy as well as the increase in construction and the benefits it provides to the economy.
These factors are two of three that have juxtaposed Atlanta with 200 other cities deemed as improving markets by the National Association of Home Builders. The gradual gains in different sectors of the market are beginning to show their correlation with the results from reports like these, and we can expect more correlations in the future.
“The dramatic expansion of improving markets at the end of the year should help encourage consumers who may have been on the fence about a home purchase that a housing recovery is now firmly underway,” said Vice Chairman of First American Title Insurance Company in an interview with the NAHB.
The opportunity for recovery has been presented, and with the recent report as evidence, the market has begun to take advantage of it.
- J.D. Crowe, Senior Vice President of Southeast Mortgage