MARKET & TRENDS
MARKET WATCH
Heating and Cooling Trends Across the Country
JOB CREATION IS NECESSARY FOR SUPPORTING STRONG HOME PRICES.
by Ingo Winzer
JOB GROWTH POSSIBLE PRICE SLIDE FEB MAY
ith the smell of recession in the air and home prices too high, it’s time
W
to look closely at which local markets have the best—and the worst—chance to weather an economic downturn without a wholesale crash in prices. Over the last few years, home prices have been driven higher both by pandemic-buying at a time when nobody wants to sell and by population inflow to markets with strong job growth. Higher mortgage rates are squelching the pandemic-buying, so support for home prices will remain strong only in markets that are creating new jobs. Even there, the sky-high prices can’t persist, but a softer landing is possible. We’ve separated out two groups of markets where home prices have rocketed well above local income levels and a drop in prices is quite likely. In the first group, job growth is not only weak but has hardly improved in the last few months. The local economy is cooling. In these markets, the risk of a crash in home prices is greater. In the second group, current job growth not only is strong but also has been heating up. In these markets, the risk of a crash is lower; a more gradual adjustment of prices is possible. A correction of home prices will happen in almost all local markets, but the pain will be less in those that continue to create new jobs. And if a worldwide recession hits, these differences won’t matter and all bets are off. •
GREATER RISK
1.1% 0.9% 36%
Ogden, UT
1.0% 1.0% 38%
Lakeland, FL
0.6% 1.0% 31%
Fort Lauderdale, FL
1.2% 1.2% 48%
Boise, ID
1.1% 1.4% 21%
Tucson, AZ
LESSER RISK
2.6% 4.8% 33%
Dallas, TX
2.1% 3.6% 37%
Nashville, TN
2.1% 3.5% 24%
Raleigh, NC
2.2% 3.3% 39%
North Port-Bradenton, FL
1.9% 3.3% 30%
Houston, TX
LOCAL MARKET MONITOR, CARY NC
Ingo Winzer is president of Local Market Monitor. The company’s Investors Metro Analysis shows the opportunity and risk in 200 local real estate markets at www.LocalMarketMonitor. com, including strategic analysis of all local ZIP codes. Winzer has analyzed real estate markets for more than 30 years, and his views on real estate markets are often quoted in the national press. Previously, Winzer was a founder and executive vice president of First Research, an industry research company acquired by Dun and Bradstreet in 2007. Winzer is a graduate of the Massachusetts Institute of Technology and holds a master’s degree in finance from Boston University.
68 | think realty magazine :: september - october 2022
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