Houston Widens its Lead in Single-family Market
Houston is widening its lead over Atlanta as the top single-family housing market in the U.S. Permits have declined only 6% in Houston from the peak of the housing boom, but are off 55% in Atlanta where 2004 to 2005 overbuilding was more serious. Some of the housing demand in Houston has come from Katrina refugees. However, oil and gas, low taxes and plenty of water are the main supports of the Houston housing market. Housing demand in Houston has not faltered as hurricane refugees increasingly move back to Louisiana.

Houston Moves into Second-place in Multi-family Market
Houston has also moved into second place on the list of the largest multiple-family housing markets, ahead of much larger Los Angeles and Chicago. The latter two cities also have much higher land prices, which is typically a strong driver of multi-family development. Miami has fallen to the middle of the list amidst several years of surplus condo inventory. Only condo sales to European and Latin American buyers at once-in-a-lifetime cheap prices are keeping Miami on the list.

Generally speaking, apartment permits are rising rapidly and condo permits are falling. The Census Bureau does not completely capture the dynamics of the multi-family market because it excludes the conversion of condos to apartments and hotels that is now underway, as well as the conversion of vacant single-family homes from owner-occupied to rental units or to apartments with a small amount of remodeling. Hence, multi-family construction activity is higher than the Census data suggests.

New Orleans and Las Vegas Make Gains
New Orleans (hurricane rebuilding) and Las Vegas (condos for foreign vacationers) are the only large cities on the list of largest increases. Each of the other cities has a strong source of local jobs. This includes: military bases; booming farm incomes; hurricane rebuilding; state government hiring; new oil and gas fields; and very successful local manufacturers. These permit surges could persist for a year or more, but will prove to be temporary in most cases.

Riverside and Miami are Hardest Hit Major Markets
The permit decline is over 80% in nine small Florida and California markets, led by Cape Coral with a 93% decline. Cape Coral had 108 permits in November compared to over 2,000 per month during the peak of the housing boom.

Riverside and Miami are the hardest hit of the major housing markets. Permits have dropped 75% in both cities. Myrtle Beach has the most intense housing development (i.e., permits per thousand population) over the last year, even though permits are off 68% most recently.

For more information, please see Gap Widens Between Stable and Recessionary Housing Markets.

Member Comments