BYTHE NUMBERS
LOCAL MARKET MONITOR
say, prices can increase at a level that is “just right.” Local Market Monitor’s list of top 10 markets this month includes markets in the just-right range. According to the Income Price indica- tor, these markets are neither depressed nor in a boom. According to job growth, the local economy is doing well. Home prices increased at a good rate in the past year (and more than in the previous year) but not at an alarming pace. No guarantees in real estate, but these are markets where an investment in rental property is a good long-term bet. •
IngoWinzer is president of Local Market Monitor, which analyzes conditions in 300 U.S. markets, using such economic data as home values and growth in employ- ment and population. Winzer, who has
analyzed real estate markets for more than 20 years, was a founder and executive vice president of First Research, an industry research company that was acquired by Dun & Bradstreet in March 2007. He is a graduate of MIT and holds an MBA in finance from Boston University. Winzer resides in Cambridge, Mass. www.localmarketmonitor.com.
10 Markets that are “Just Right” for Long-Term Real Estate
POPULATION (2017)
HOME PRICE INCREASE (2016)
HOME PRICE INCREASE (2017)
JOB GROWTH RATE INCREASE (2017)
HOME PRICE VERSUS INCOME PRICE
LOCAL MARKET MONITOR
2,069,681
8%
11%
2.6%
1%
Las Vegas, NV
IN THE MIDDLE, PRICES RISE AT RATES THAT ARE IDEAL FOR INVESTING.
2,244,397
7%
10%
1.9%
15%
Sacramento, CA
by Ingo Winzer
3,495,176
5%
8%
2.2%
5%
Minneapolis, MN
hanges in home prices give us the best idea of what's going on in a
much every one of the 330 markets that Local Market Monitor follows. The rebound doesn't last very long, however, unless something has fundamentally changed in the local economy. 2 At the high end, prices can be in the middle of an unsustainable boom. You might get another few years of price increases, but you also might get one almighty crash.
C
632,293
8%
10%
2.7%
12%
Ogden, UT
INCOME PRICE: A calculated value that shows where home prices should be according to local income. Income price metrics are used to help determine whether a market is over- or underpriced, and are based on data from the FHFA Home Price Index and the Bureau of Economic Analysis. Local Market Monitor developed this metric.
2,350,233
9%
11%
2.7%
7%
local real estate market. But you can't just take price increases at face value and think that bigger is better. Home prices can be increasing at a good clip for three main reasons, two of which are not friendly to investors dealing with rental properties: 1 At the low end, prices can rebound in a depressed market. We saw that a few years ago in pretty
Fort Worth, TX
542,710
6%
8%
3.0%
-3%
Durham, NC
1,027,703
8%
10%
2.3%
-7%
Grand Rapids, MI
523,552
5%
8%
1.8%
9%
Portland, ME
1,966,530
6%
8%
2.6%
7%
Boston, MA
1,994,536
7%
8%
1.5%
-13%
Columbus, OH
In the middle, as Goldilocks might
Source :: Local Market Monitor, January 2018
110 | think realty magazine :: march 2018
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