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What Falling Oil Prices Mean for Home Prices

The recent plunge in oil prices could cause home prices to slip in the oil-producing markets of Texas, Oklahoma, Louisiana, and elsewhere. But it typically takes two years for oil prices to fully affect home prices in those markets. At the same time, lower oil prices could boost home values in the Northeast and Midwest.

Jed Kolko, Chief Economist
January 8, 2015

The Trulia Price Monitor and the Trulia Rent Monitor are the earliest leading indicators of housing price and rent trends nationally and locally. They adjust for the changing mix of listed homes and show what’s really happening to asking prices and rents. Asking prices lead sales prices by approximately two or more months. As a result, the Monitors reveal trends before other price indexes do. Here then is the scoop on where prices and rents are headed.

Asking Prices Slowed in December, Rising 0.5% Month-Over-Month

Nationwide, asking prices on for-sale homes were up 0.5% month-over-month in December, seasonally adjusted — a slowdown after larger increases in September, October, and November. Year-over-year, asking prices rose 7.7%, down from the 9.5% year-over-year increase in December 2013. Asking prices increased year-over-year in 97 of the 100 largest U.S. metros.

December 2014 Trulia Price Monitor Summary
% change in asking prices # of 100 largest metros with asking-price increases % change in asking prices, excluding foreclosures
Month-over-month,
seasonally adjusted
0.5% N/A 0.7%
Quarter-over-quarter,
seasonally adjusted
3.4% 87 3.7%
Year-over-year 7.7% 97 8.1%
Data from previous months are revised each month, so current data reported for previous months might differ from previously reported data.

Where and When Falling Oil Prices Will Hurt — Or Help — Home Prices

Four of the five markets where asking prices rose most year-over-year are in the South, including Atlanta, Cape Coral-Fort Myers, North Port-Sarasota-Bradenton, and Deltona-Daytona Beach-Ormond Beach. Of the top 10, four are in the Midwest, including Cincinnati, Detroit, Lake-Kenosha Counties, and Indianapolis. Among markets with the largest asking price increases, Houston stands out for having a large local oil industry, accounting for 5.6% of jobs there.

 

  Where Prices Increased Most in December
# U.S. Metro Y-o-Y % asking price change, Dec 2014 % of jobs in oil-related industries
1 Atlanta, GA 15.9% 0.3%
2 Cape Coral-Fort Myers, FL 15.5% 0.1%
3 North Port-Sarasota-Bradenton, FL 15.0% 0.1%
4 Cincinnati, OH 14.8% 0.1%
5 Deltona-Daytona Beach-Ormond Beach, FL 14.7% 0.1%
6 Oakland, CA 14.5% 0.4%
7 Houston, TX 13.4% 5.6%
8 Detroit, MI 12.9% 0.6%
9 Lake-Kenosha Counties, IL-WI 12.7% 0.1%
10 Indianapolis, IN 12.6% 0.2%
Note: among 100 largest metros. Employment in oil-related industries is from County Business Patterns, 2012 (see note at end of post). To download the list of asking home price changes for the largest metros: Excel or PDF.

metro map dec 2014

Only Bakersfield and Baton Rouge have an even higher employment share in oil-related industries than Houston. Oklahoma City, Tulsa, New Orleans, and Fort Worth round out the seven large metros where oil-related industries account for at least 2% of employment. It’s not until you look at smaller metros that you find oil-related industries representing a larger employment share. In Williston, ND, and Midland, TX, they account for almost 30% of local jobs.

oil country map dec 2014

On average, in the seven large metros where oil-related jobs are at least 2% of the total, home prices rose 10.5% year-over-year — faster than the 7.7% increase for the 100 largest metros overall.

Home Price Changes in Top Oil-Employment Markets
# U.S. Metro Y-o-Y % asking price change, Dec 2014 % of jobs in oil-related industries
1 Bakersfield, CA 12.4% 6.9%
2 Baton Rouge, LA 3.0% 6.1%
3 Houston, TX 13.4% 5.6%
4 Oklahoma City, OK 6.3% 4.3%
5 Tulsa, OK 10.1% 3.7%
6 New Orleans, LA 7.3% 2.6%
7 Fort Worth, TX 10.2% 2.5%
8 Gary, IN 7.3% 1.8%
9 Wichita, KS 5.3% 1.4%
10 Toledo, OH 10.2% 1.0%
Note: among 100 largest metros. Employment in oil-related industries is from County Business Patterns, 2012 (see note at end of post).

Oil prices have plunged from over $100/barrel in July 2014 to around $50/barrel in early January 2015, threatening oil-producing economies around the world. Within the U.S., big oil price drops have historically been associated with job losses and falling home prices in energy-producing regions. In particular, plummeting oil prices in the 1980s were followed by declines in employment and home prices in Houston, Oklahoma City, Tulsa, New Orleans, and other nearby markets.

We looked at year-over-year trends in oil prices, jobs, and home prices from 1980 to the present in the 100 largest metros and found that:

  1. In oil-producing markets, home prices tend to follow oil prices, but with a lag. For instance, in the 1980s, the largest year-over-year oil price declines were in early- and mid-1986. In Houston, job losses were steepest in late 1986. But home prices didn’t slide most until the third quarter of 1987. Since 1980, employment in oil-producing markets has followed oil-price movements roughly two quarters later and home prices have followed oil-price movements roughly two years later.
  2. While home prices and oil prices move in the same direction in oil-producing markets, they tend to move in the opposite direction in many other markets. Cheaper oil lowers the costs of driving, heating a home, and other activities, boosting local economies outside oil-producing regions. In the Northeast and Midwest especially, home prices tend to rise after oil prices fall. The specific markets where home prices get the biggest jolt depend on which years we analyze.

This history offers three lessons for today’s housing market. First, any negative impact of falling oil prices on home prices should be concentrated in oil-producing markets in Texas, Oklahoma, Louisiana, and other places with large oil-related industries. Second, in these markets, oil prices won’t tank home prices immediately. Rather, falling oil prices in the second half of 2014 might not have their biggest impact on home prices until late 2015 or in 2016. Third, falling oil prices will probably help local economies and home prices in markets that lack oil-related industries.

Rental Affordability Toughest in Miami, Los Angeles, and New York

Nationwide, rents rose 6.1% year-over-year in December. The least affordable rental markets are Miami, Los Angeles, and New York, where median rent for a two-bedroom unit eats up more than half of the local average wage. Rents are rising faster than the national average in the markets that are already the least affordable. The most affordable large rental markets are St. Louis, Phoenix, and Houston. Although Denver had the largest year-over-year increases, Denver rentals remain more affordable than those in most of the big coastal markets.

Rent Trends in the 25 Largest Rental Markets
# U.S. Metro Y-o-Y % change in rents, Dec 2014 Median rent for 2-bedroom, Dec 2014 Median rent for 2-bedroom as share of average local wage
1 Miami, FL 7.4% 2300 57%
2 Los Angeles, CA 7.0% 2450 53%
3 New York, NY 9.3% 3200 52%
4 Oakland, CA 11.6% 2400 45%
5 San Francisco, CA 10.8% 3600 45%
6 Riverside-San Bernardino, CA 5.0% 1500 44%
7 Orange County, CA 7.4% 2050 44%
8 San Diego, CA 4.1% 1950 42%
9 Cambridge-Newton-Framingham, MA 6.8% 2250 39%
10 Boston, MA 4.3% 2300 39%
11 Newark, NJ 7.1% 2100 37%
12 Chicago, IL 6.0% 1750 37%
13 Baltimore, MD 8.7% 1550 35%
14 Washington, DC 2.9% 2000 34%
15 Denver, CO 14.1% 1500 31%
16 Philadelphia, PA 7.5% 1500 31%
17 Seattle, WA 6.1% 1700 31%
18 Portland, OR 8.8% 1300 30%
19 Tampa-St. Petersburg, FL 7.5% 1100 29%
20 Dallas, TX 5.4% 1400 29%
21 Atlanta, GA 5.9% 1250 28%
22 Minneapolis-St. Paul, MN 3.2% 1300 28%
23 Houston, TX 3.1% 1400 27%
24 Phoenix, AZ 8.6% 1050 26%
25 St. Louis, MO 8.5% 900 22%
Note: average local wage is from the Quarterly Census of Employment and Wages for the year up to 2014 Q2.

The next Price and Rent Monitors are scheduled to be released on Tuesday, February 10.

Notes:

The share of jobs in oil-related industries is based on County Business Patterns, 2012. Oil-related industries include NAICS codes 211, 213111, 213112, 2212, 23712, 32411, 333132, 4247, 4861, 4862,and 48691; these cover oil and gas extraction, drilling, support operations, refineries, machinery construction, pipeline construction, and pipeline transportation. Nationally, 0.9% of jobs are in these oil-related industries. For counties where the exact industry employment level was suppressed for confidentiality reasons, we estimated employment based on the establishment size distribution.

To estimate the relationship among trends in oil prices, employment, and home prices, we identified the lags that yielded the highest correlations between the time series for individual metros. Because the results are sensitive to the time period analyzed and other assumptions, we are reporting only the broad results that hold under various assumptions.

This post (and future Trulia Trends posts) uses new government metropolitan area definitions, as explained in this FAQ.

The Trulia Price Monitor and the Trulia Rent Monitor track asking home prices and rents on a monthly basis, adjusting for the changing composition of listed homes, including foreclosures provided by RealtyTrac. The Trulia Price Monitor also accounts for regular seasonal fluctuations in asking prices in order to reveal underlying price trends. The Monitors can detect price movements at least three months before the major sales-price indexes. Historical data are revised monthly. Thus, historical data presented in the current release are the best comparison with current data. Our FAQs provide the technical details.

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Housing’s Millennial Mismatch

Asking prices are rising faster in Gen X, boomer, and senior markets than in millennial markets. But there’s a mismatch in where young adults live versus where they can afford to buy a home. For many millennials, homeownership will require moving to a cheaper market.

Jed Kolko, Chief Economist
December 9, 2014

The Trulia Price Monitor and the Trulia Rent Monitor are the earliest leading indicators of housing price and rent trends nationally and locally. They adjust for the changing mix of listed homes and show what’s really happening to asking prices and rents. Asking prices lead sales prices by approximately two or more months. As a result, the Monitors reveal trends before other price indexes do. With that, here’s the scoop on where prices and rents are headed.

Asking Prices Accelerated in November, Rising 7.4% Year-over-Year

Nationwide, asking prices on for-sale homes jumped 1.5% month-over-month in November, seasonally adjusted — a surprisingly large increase. Future months will tell whether this was a blip or the beginning of a sustained climb. Year-over-year, asking prices rose 7.4%, down from the 10.3% year-over-year increase in November 2013. Asking prices rose year-over-year in 98 of the 100 largest U.S. metros — everywhere but Little Rock and New Haven.

November 2014 Trulia Price Monitor Summary
% change in asking prices # of 100 largest metros with asking-price increases % change in asking prices, excluding foreclosures
Month-over-month,
seasonally adjusted
1.5% N/A 1.6%
Quarter-over-quarter,
seasonally adjusted
3.4% 95 3.5%
Year-over-year 7.4% 98 7.3%
Data from previous months are revised each month, so current data reported for previous months might differ from previously reported data.

Prices Rising Fast in Florida, Slowest in Favorite Millennial Markets

Four of the 10 metros where asking prices rose most year-over-year were in Florida. These Sunshine State markets have older populations, and they all have a lower share of millennials than the national average of 21% and a higher share of baby boomers than the average of 24%. In fact, only one of the 10 markets with the largest price increases in November has a higher share of millennials than the national average—and only slightly (Las Vegas, at 22%).

Where Prices Increased Most in November
# U.S. Metro Y-o-Y % asking price change, Nov 2014 % of population age 20-34 (Millennials) % of population age 50-69 (Boomers)
1 Ventura County, CA 17.2% 20% 24%
2 Palm Bay-Melbourne-Titusville, FL 15.2% 16% 30%
3 North Port-Bradenton-Sarasota, FL 14.7% 14% 30%
4 Oakland, CA 13.4% 21% 24%
5 Cincinnati, OH-KY-IN 13.4% 20% 25%
6 Cape Coral-Fort Myers, FL 13.3% 16% 29%
7 Lakeland-Winter Haven, FL 13.0% 18% 25%
8 Las Vegas, NV 12.9% 22% 23%
9 Detroit, MI 12.9% 20% 25%
10 Atlanta, GA 12.9% 21% 22%
- National average 7.4% 21% 24%
Note: among 100 largest metros. Population shares based on 2013 Census population estimates. To download the list of asking home price changes for the largest metros: Excel or PDF

metro map nov 2014

To see how the age distribution of a metro’s population relates to home prices, we identified the 10 markets with the highest shares of each of four distinct generations: millennials (age 20–34); Gen X (age 35–49); boomers (age 50–69); and seniors (age 70 and up). (See note.) In the 10 markets where millennials account for the largest share of the population, including Austin, San Diego, and Virginia Beach-Norfolk, the average year-over-year price increase was 6.1% — below the 7.4% national increase. Markets with the highest shares of Gen Xers, including Raleigh, San Francisco, and San Jose, averaged price increases of 9.4% — highest among the four age groups. Prices in the favorite markets of seniors, most of which are in Florida, rose 8.6% — also above the national increase.

GenerationalHomePrices

The Millennial Mismatch in Housing Affordability

When young adult renters are asked if they will buy a home someday, a whopping 93% say yes. You’d think it would be good news for them that prices are rising more slowly in the markets where they currently live. Not so fast though. Prices might be rising more slowly in millennials’ favorite metros. But affordability is nonetheless a big challenge in those markets.

To see this, compare the millennial population share in each metro with the percentage of homes for sale that a typical millennial household can afford (from our most recent Middle Class Affordability report — see note below on how we define affordability). In metros with higher millennial shares, homeownership tends to be less affordable for this group. For instance, in Austin, Honolulu, New York, and San Diego, 20–34 year-olds account for at least 23.5% of the population, putting those metros in the top 10 for millennial share. But fewer than 30% of homes for sale in those markets are within reach of the typical millennial household. Some markets with a high millennial share are more affordable, including Oklahoma City and Baton Rouge, but they’re the exception (see note).

LiveVsAfford[2]

Call it the “millennial mismatch.” Millennials can afford markets where they don’t live, but they can’t afford many of the markets where they do live. Many millennials who hope to buy someday will be priced out of the market where they live now. They’ll face a tough choice: Do they keep renting or move to a cheaper market?

Rents Gains Easing Slightly in Most Large Markets

Rents continued to climb. Nationwide, rents rose 6.1% year-over-year in November. Still, rent gains have cooled since August in 14 of the 25 largest rental markets, including the Northern California markets of San Francisco, Oakland, and Sacramento. In November, Denver had the steepest increases in the country, though the typical two-bedroom unit there still rents for less than half of what it would cost in San Francisco or New York. But rent increases could slow next year if new apartment construction finally catches up with demand.

Rent Trends in the 25 Largest Rental Markets
# U.S. Metro Y-o-Y % change in rents, Nov 2014 Y-o-Y % change in rents, Aug 2014 Median rent for 2-bedroom, Nov 2014
1 Denver, CO 14.2% 12.7% 1550
2 San Francisco, CA 12.2% 13.4% 3600
3 Oakland, CA 11.9% 14.3% 2450
4 Baltimore, MD 9.3% 8.1% 1550
5 Phoenix, AZ 8.5% 8.1% 1050
6 New York, NY-NJ 8.3% 5.4% 3400
7 Sacramento, CA 8.2% 13.4% 1200
8 Portland, OR-WA 7.8% 3.5% 1300
9 Philadelphia, PA 7.5% 9.2% 1550
10 Tampa-St. Petersburg, FL 7.4% 5.5% 1150
11 Miami, FL 7.3% 9.0% 2300
12 Los Angeles, CA 7.3% 8.2% 2500
13 Seattle, WA 7.3% 8.5% 1750
14 Orange County, CA 7.3% 4.7% 2100
15 St. Louis, MO-IL 7.3% 6.3% 950
16 Las Vegas, NV 6.5% 5.4% 950
17 Chicago, IL 5.9% 7.2% 1700
18 Riverside-San Bernardino, CA 5.8% 6.1% 1550
19 Dallas, TX 5.7% 4.5% 1400
20 Atlanta, GA 5.6% 7.5% 1200
21 Houston, TX 4.2% 4.2% 1400
22 San Diego, CA 4.0% 6.5% 2000
23 Boston, MA 3.8% 4.5% 2300
24 Washington, DC-VA-MD-WV 3.4% 3.6% 2000
25 Minneapolis-St. Paul, MN-WI 1.8% 1.7% 1300
Note: among 100 largest metros. Population shares based on 2013 Census population estimates. To download the list of rent price changes for the largest metros: Excel or PDF

Note: Data on share of metro population in each age group are from the Census’s 2013 county population estimates. Because the Census reports county population estimates by age in 5-year buckets (20–24, 25–29, etc.), we defined the four age groups as 20–34 (millennials), 35–49 (Gen X), 50–69 (boomers), and 70+ (seniors).

The correlation for the data shown in the scatterplot between millennial share and homeownership affordability for millennials is -0.28 (-0.48 when weighted by metro number of households), which is statistically significant at the 5% level.

We measure affordability as the share of homes for sale on Trulia within reach of the typical millennial household. Our standard is whether the total monthly payment, including mortgage, insurance, and property taxes, is less than 31% of the metro area’s median income for households headed by millennials. The total monthly cost includes the mortgage payment assuming a 4.2% 30-year fixed rate mortgage with 20% down, property taxes based on average metro property tax rate, and insurance. We chose 31% of income as the affordability cutoff to be consistent with government guidelines for affordability.

The Trulia Price Monitor and the Trulia Rent Monitor track asking home prices and rents on a monthly basis, adjusting for the changing composition of listed homes, including foreclosures provided by RealtyTrac. The Trulia Price Monitor also accounts for regular seasonal fluctuations in asking prices in order to reveal underlying price trends. The Monitors can detect price movements at least three months before the major sales-price indexes. Historical data are revised monthly. Thus, historical data presented in the current release are the best comparison with current data. Our FAQs provide the technical details.

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Where Veterans Live

Veterans tend to live in affordable smaller metros and rural areas, near military bases, and in places with fewer immigrants. Among the largest 100 metros, Colorado Springs and Virginia Beach have the highest concentration of veterans, while Miami, New York, and Los Angeles have the lowest.

Jed Kolko, Chief Economist
November 10, 2014

Roughly 1 in 12 civilian adults are veterans. But in some smaller metros that figure is as high as 1 in 5, while in several large metros it’s just 1 in 20. We’re marking Veterans Day the Trulia way, by taking a look at where people who served their country in the armed forces live.

Basic Training on Veteran Demographics and Homeownership

Where veterans live reflects who they are. Veterans tend to be older. Their median age is 64, nearly two decades older than the 45-year-old median age of civilian adults who didn’t serve in the armed forces. Gulf War veterans are relatively young, with a median age of 41. But they’re outnumbered by Vietnam Era vets, whose median age is 65. Veterans of the Korean War and World War II are older still.

War or Era Served In

Share of civilian adult population Median age
Gulf War 2.2% 41
Vietnam Era 2.9% 65
Korean War 0.9% 81
World War II 0.5% 88
All veterans
8.1% 64

Note: Some veterans served in multiple wars or eras, and others served only between wars and eras. Therefore, data for “all veterans” does not equal the sum or average of the above rows in the table.

Veterans are also overwhelming male (92%), and born in the U.S. Just 3% of veterans are foreign-born, compared with 17% of the non-veteran civilian population.

Finally, veterans are more likely to be homeowners than other adults. Households headed by veterans have a 79% homeownership rate, significantly higher than the 63% rate for households headed by civilian non-veterans. Age accounts for most of this gap. As we noted, there’s a two-decade age gap between veterans and non-veteran civilians, and, except for the very old, the homeownership rate is higher for older adults. Nevertheless, even adjusting for this age difference, homeownership is still about seven percentage points higher for veterans, thanks in part to U.S. Department of Veterans Affairs loan programs (VA loans) and other incentives.

As we’ll see below, these demographic differences help explain where veterans live.

Top Veteran Areas are Smaller Metros Near Military Bases

Veterans tend not to be concentrated in big cities. They account for only 6.4% of the civilian adult population in big, dense cities (see note). But they make up 11.2% in small towns and rural areas.

VeteranGraph

Because veterans tend to live outside larger markets, we looked at the largest 500 metros rather than just the 100 largest, as we typically do in Trulia Trends. In 7 of the 500 largest metros, veterans represent more than 20% of the civilian adult population. The 10 metros with the highest share of veterans have one thing in common: they are affordable. Their median asking price per square foot is below $150 in all but Oak Harbor, WA. Several of these metros have large military bases, including Camp Lejeune in Jacksonville, NC; Fort Hood in Killeen-Temple-Fort Hood, TX; and Fort Sill in Lawton, OK.

Metros with Highest Veteran Share

# U.S. Metro Veteran Share of Civilian Adult Population Median Asking Home Price Per Square Foot, $
1 Crestview-Fort Walton Beach-Destin, FL 22.3% 137
2 Oak Harbor, WA 22.0% 173
3 Jacksonville, NC 21.4% 110
4 Killeen-Temple-Fort Hood, TX 21.2% 82
5 The Villages, FL 20.4% 122
6 Sierra Vista-Douglas, AZ 20.2% 91
7 Fayetteville, NC 20.0% 86
8 Lawton, OK 19.6% 75
9 Clarksville, TN-KY 19.2% 91
10 Bremerton-Silverdale, WA 19.1% 142
Note: among 500 largest U.S. metros. Veteran share is from Census; home prices from Trulia.

None of the 100 largest metros makes the list. In fact, the largest of the top 10 is Killeen-Temple-Fort Hood, TX, which ranks just 153rd in population nationwide. Among the largest 100, Colorado Springs and Virginia Beach-Norfolk have the highest share of veterans. Both also have major military bases. Even among these larger metros with high concentrations of veterans, housing is relatively affordable.

Metros with Highest Veteran Share (Large Metros Only)

# U.S. Metro Veteran Share of Civilian Adult Population Median Asking Home Price Per Square Foot, $
1 Colorado Springs, CO 18.4% 107
2 Virginia Beach-Norfolk, VA-NC 17.8% 129
3 Palm Bay-Melbourne-Titusville, FL 16.4% 100
4 Tacoma, WA 15.2% 134
5 North Port-Bradenton-Sarasota, FL 14.4% 150
6 Jacksonville, FL 14.0% 109
7 Charleston, SC 13.2% 134
8 Cape Coral-Fort Myers, FL 13.1% 133
9 San Antonio, TX 12.9% 107
10 Tucson, AZ 12.5% 111
Note: among 100 largest U.S. metros ONLY. Veteran share is from Census; home prices from Trulia.

Where are veterans scarce? Of the largest 500 metros, the 10 with the lowest share include several large metros: Miami, New York, Los Angeles, San Jose, and San Francisco. But the list also includes Laredo and McAllen-Edinburg-Mission, TX, and El Centro, CA, on the Mexican border. Five of the bottom 10 are expensive markets, with prices over $300 per square foot: New York, the 3 big California metros, and Edwards, CO, which includes the Vail ski resort.

Metros with Lowest Veteran Share

# U.S. Metro Veteran Share of Civilian Adult Population Median Asking Home Price Per Square Foot, $
1 Miami, FL 3.2% 180
2 Laredo, TX 3.7% 94
3 New York, NY-NJ 3.8% 320
4 McAllen-Edinburg-Mission, TX 4.6% 82
5 Los Angeles, CA 4.6% 334
6 San Jose, CA 5.1% 430
7 Edwards, CO 5.2% 336
8 Provo-Orem, UT 5.4% 96
9 El Centro, CA 5.4% 116
10 San Francisco, CA 5.5% 613
Note: among 500 largest U.S. metros. Veteran share is from Census; home prices from Trulia.

So what can we say in general about where veterans live? The map shows no clear regional pattern. Many western states have pockets where veterans live, but California has relatively few veterans. Florida includes the metro with the highest share of veterans, Crestview-Fort Walton Beach-Destin, and the lowest, Miami. Texas has Killeen-Temple-Fort Hood, with a high proportion of veterans, and border towns with low concentrations.

veterans county map

 

Still, we can make some generalizations. We should note first though that where veterans live depends on when they served. Gulf War vets tend to live in different places than World War II vets, not least because they’re on average more than four decades younger.

In sum, veterans are more likely to live:

  1. Near military bases and areas with active-duty residents. This is especially true for Gulf War veterans.
  2. In more affordable, lower density areas. Vietnam Era veterans, in particular, are more likely than other veterans or civilian non-veterans to live in small towns and rural areas.
  3. In areas with a lower share of foreign-born residents, especially older vets.
  4. In retirement areas, especially if they’re Korean War or World War II vets. In fact, the metros with the highest shares of these older veterans are in Florida.

Though their share of the population may vary, veterans can be found in nearly every community in America. If you want to thank a veteran on November 11, you probably won’t have to look far.

 

Notes: the Census identifies veterans as serving in the Gulf War, the Vietnam Era, the Korean War, and World War II, as well as between conflicts. See tables S2101 and B21002 in American FactFinder.

Homeownership rates are calculated from the 2013 American Community Survey (ACS) Public Use Microdata Sample (PUMS) and are based on whether the head of household, spouse, or unmarried partner is a veteran.

All national figures are based on the 2013 1-year ACS. All metro and county figures are based on the 2012 5-year ACS, covering the period 2008-2012. Nationally, veteran share of the civilian population was 8.1% in the 2013 ACS and 9.3% in the 2012 5-year ACS.

County density is based on tract-weighted density, and quartiles were defined to be roughly equal in total population.. See note to this post for more detail.

To identify the location of military bases, we used Census data on the share of adults currently in the armed forces (which not does include veterans) from table DP03 in American FactFinder.

 

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What Home Price Slowdown? Some Markets Buck the Trend

Jed Kolko, Chief Economist
November 6, 2014

Asking prices are rising more slowly now than a year ago. The price slowdown in especially sharp in California and the Southwest. Nevertheless, in 40 of the 100 largest markets, price gains have accelerated.

The Trulia Price Monitor and the Trulia Rent Monitor are the earliest leading indicators of housing price and rent trends nationally and locally. They adjust for the changing mix of listed homes and show what’s really happening to asking prices and rents. Asking prices lead sales prices by approximately two or more months. As a result, the Monitors reveal trends before other price indexes do. With that, here’s the scoop on where prices and rents are headed. 

Asking Prices Rose 6.4% Year-over-Year in October

Nationally, the month-over-month increase in asking home prices rose to 1.0% in October. Year-over-year, asking prices rose 6.4%, down from the 10.6% year-over-year increase in October 2013. Asking prices rose year-over-year in 91 of the 100 largest U.S. metros.

October 2014 Trulia Price Monitor Summary
% change in asking prices # of 100 largest metros with asking-price increases % change in asking prices, excluding foreclosures
Month-over-month,
seasonally adjusted
1.0% N/A 1.1%
Quarter-over-quarter,
seasonally adjusted
2.2% 90 2.2%
Year-over-year 6.4% 91 6.1%

Data from previous months are revised each month, so data being reported now for previous months might differ from previously reported data.

Price Gains Aren’t Slowing Everywhere

Nationally, year-over-year price gains have slowed from a year ago. In some markets, this price slowdown has been precipitous. In the most extreme case, Las Vegas prices rose 10.1% in October 2014 versus 31.9% in October 2013, a drop of 21.8 percentage points. Price gains have slowed by almost 20 percentage points in both Northern California (Sacramento, Oakland) and Southern California (Riverside-San Bernardino, San Diego) markets. Among the 10 markets with the largest price slowdowns, only one – Warren-Troy-Farmington Hills, next to Detroit – is outside California or the Southwest.

Nationally, price gains have slowed in 60 of the 100 largest metros, although prices are actually falling year-over-year in only nine metros.

Where Price Gains Have Slowed Most
# U.S. Metro Y-o-Y % asking price change, Oct 2014 Y-o-Y % asking price change, Oct 2013 Difference in price change, Oct 2014 vs Oct 2013, percentage points
1 Las Vegas, NV 10.1% 31.9% -21.8%
2 Sacramento, CA 10.0% 29.8% -19.9%
3 Riverside-San Bernardino, CA 9.1% 28.4% -19.3%
4 San Diego, CA 2.0% 21.0% -19.0%
5 Oakland, CA 11.3% 29.9% -18.6%
6 Bakersfield, CA 6.8% 24.6% -17.8%
7 Orange County, CA 5.1% 21.5% -16.4%
8 Los Angeles, CA 6.0% 22.0% -16.0%
9 Warren-Troy-Farmington Hills, MI 8.3% 22.6% -14.3%
10 Phoenix, AZ 4.2% 18.4% -14.2%
Note: among 100 largest metros. Differences in price gains were calculated before rounding. To download the list of asking home price changes for the largest metros: Excel or PDF

Where then are the 40 metros where prices have accelerated? They’re concentrated in the Midwest and the South. Prices gains have accelerated most in Dayton, Louisville, and Akron. However, the speed-ups aren’t as dramatic as the slowdowns. In no metro have prices accelerated by more than 10 percentage points. Dayton comes closest at 9.1 percentage points. By contrast, prices have slowed by more than 10 percentage points in 12 metros, including Orlando and Fort Lauderdale in addition to the 10 listed above.

Where Price Gains Have Accelerated Most
# U.S. Metro Y-o-Y % asking price change, Oct 2014 Y-o-Y % asking price change, Oct 2013 Difference in price change, Oct 2014 vs Oct 2013, percentage points
1 Dayton, OH 8.9% -0.2% 9.1%
2 Louisville, KY-IN 10.7% 2.1% 8.6%
3 Akron, OH 5.9% -0.7% 6.5%
4 Palm Bay-Melbourne-Titusville, FL 13.5% 7.9% 5.6%
5 Toledo, OH 9.2% 3.9% 5.3%
6 Gary, IN 8.3% 3.1% 5.1%
7 Tulsa, OK 7.8% 2.9% 4.9%
8 Pittsburgh, PA 5.7% 1.0% 4.7%
9 Virginia Beach-Norfolk, VA-NC 5.1% 0.7% 4.4%
10 Syracuse, NY 4.5% 0.4% 4.1%
Note: among 100 largest metros. Differences in price gains were calculated before rounding. To download the list of asking home price changes for the largest metros: Excel or PDF

Thus, the price deceleration is very pronounced in some markets, but by no means universal. In fact, the slowdown represents continued fallout from the housing crisis. Metros where the past decade’s housing crisis was especially severe (see note) experienced huge price rebounds last year, rates of increase that couldn’t be sustained. On average, these severely hit markets notched almost 20% price gains year-over-year in October 2013, compared with 7.9% in October 2014. Things that can’t last forever, don’t. And double-digit home-price increases are a prime example of something that can’t last forever. By contrast, markets that had a moderate housing bust experienced a gentler rebound in 2013 and slowdown in 2014. Markets that had only a mild housing bust have seen year-over-year price gains ease back just slightly, from 6.8% in October 2013 to 6.2% in October 2014.

Still, even with the sharp price slowdown in the severely hit markets, in October 2014 asking prices still rose more year-over-year in markets where the housing bust was severe than in moderate or mild markets.

HousingBustGraph

Rents Rising Fast in the Least Affordable Rental Markets

Nationally, rents rose 6.2% year-over-year in October. But in the markets where renters are stretched thinnest, rents are rising even faster. In Miami, Los Angeles, and New York, the median rent on a 2-bedroom unit equals more than half of the average monthly wage, and it’s nearly that much in Oakland and San Francisco. In all five of these least-affordable markets, rents rose 7.8% or more year-over-year. The rental affordability crisis is getting worse in the markets where it’s already bad – and that may hold until apartment construction brings more units onto the market.

 

Rent Trends in the 25 Largest Rental Markets
# U.S. Metro Y-o-Y % change in rents, Oct 2014 Median rent for 2-bedroom, Oct 2014 Median rent for 2-bedroom, as share of average local wage
1 Miami, FL 7.8% 2400 61%
2 Los Angeles, CA 8.3% 2550 56%
3 New York, NY-NJ 7.8% 3450 55%
4 Oakland, CA 13.3% 2550 49%
5 San Francisco, CA 14.4% 3600 49%
6 Riverside-San Bernardino, CA 6.1% 1550 46%
7 Orange County, CA 6.8% 2100 46%
8 San Diego, CA 5.3% 2000 44%
9 Boston, MA 4.2% 2300 40%
10 Chicago, IL 5.9% 1700 37%
11 Washington, DC-VA-MD-WV 4.0% 2050 35%
12 Baltimore, MD 8.4% 1550 35%
13 Denver, CO 14.3% 1550 33%
14 Philadelphia, PA 7.7% 1600 33%
15 Seattle, WA 8.5% 1750 32%
16 Tampa-St. Petersburg, FL 6.6% 1150 31%
17 Portland, OR-WA 5.9% 1300 31%
18 Dallas, TX 5.7% 1400 29%
19 Houston, TX 4.9% 1500 29%
20 Sacramento, CA 9.6% 1250 29%
21 Atlanta, GA 6.1% 1250 28%
22 Minneapolis-St. Paul, MN-WI 0.6% 1300 28%
23 Las Vegas, NV 5.8% 1000 28%
24 Phoenix, AZ 8.2% 1050 26%
25 St. Louis, MO-IL 5.9% 950 24%
Note: average local wage is from the Quarterly Census of Employment and Wages for full-year 2013.

 

The next Trulia Price Monitor and Trulia Rent Monitor will be released on Tuesday, December 9.

The severity of the housing crisis for each metro is based on peak-to-trough price declines in the Federal Housing Finance Agency’s home price index.

The Trulia Price Monitor and the Trulia Rent Monitor track asking home prices and rents on a monthly basis, adjusting for the changing composition of listed homes, including foreclosures provided by RealtyTrac. The Trulia Price Monitor also accounts for regular seasonal fluctuations in asking prices in order to reveal underlying price trends. The Monitors can detect price movements at least three months before the major sales-price indexes. Historical data are revised monthly. Thus, historical data presented in the current release are the best comparison with current data. Our FAQs provide the technical details.

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Blue Markets Face Bigger Housing Challenges Than Red Markets

Jed Kolko, Chief Economist
October 27, 2014

The housing crisis hurt Democratic- and Republican-leaning markets similarly, but today blue markets have lower affordability, lower homeownership, and greater income inequality.

As Election Day 2014 approaches, we see sharp differences in local housing markets depending on whether they are blue or red. As the political urgency of the housing crisis fades, longer-term issues like declining affordability, low homeownership, and rising inequality are taking center stage. And these issues play out differently in Democratic- and Republican-leaning metros.

To show this, Trulia categorized the 100 largest metros as red or blue depending on their 2012 presidential vote. In 32 metros—the red markets—the Republican candidate, Mitt Romney, got more votes than the Democrat, President Obama. These include places like HoustonCincinnati, and Salt Lake City. In 40 light-blue markets, including St. LouisAustin, and Buffalo, Obama beat Romney by less than 20 percentage points. And in 28 dark-blue markets, including Los AngelesNew York, and San Francisco, Obama’s margin exceeded 20 points.

When we looked at housing trends in these metros, we found that the housing crisis and recovery affected red and blue markets similarly. But today’s pressing housing issues are more severe in blue markets.

The Housing Crisis Hit Both Red and Blue America

When the housing bubble of the mid-2000s burst, both red and blue markets felt the pain. The markets with the most severe housing busts included dark-blue metros like Detroit and Oakland as well as red markets like Bakersfield and Cape Coral – Fort Myers, FL. The peak-to-trough price decline averaged 16% in red markets, 26% in light-blue markets, and 25% in dark-blue markets. But the relationship between price declines and redness or blueness was not statistically significant. (See note.)

Nor does the recent recovery show any clear bias toward red or blue markets. In September 2014, home prices were up 7.0% year-over-year in red markets, 6.2% in light-blue markets, and 6.3% in dark-blue markets. The markets with the largest price increases included red metros like Palm Bay-Melbourne-Titusville, FL, and Birmingham, AL, and dark-blue metros like Miami and Toledo, OH. The relationship between year-over-year price increases and 2012 voting patterns is not statistically significant. Another recovery measure, the share of homes in foreclosure, also doesn’t show a statistically significant correlation with 2012 voting patterns.

Key Housing Data in the Reddest Metros
U.S. Metro 2012 Vote Margin: Obama vs. Romney Price Decline in Housing Bust, Peak-to-Trough Year-Over-Year Price Change, Sept. 2014 Median Asking Price Per Square Foot, $
1 Knoxville, TN -34% -8% 2.1% $98
2 Tulsa, OK -32% -4% 7.3% $90
3 Greenville, SC -30% -8% 5.9% $92
4 Oklahoma City, OK -27% -3% 4.0% $98
5 Fort Worth, TX -23% -6% 6.4% $94
6 Salt Lake City, UT -21% -22% 4.7% $129
7 Colorado Springs, CO -21% -12% 4.0% $107
8 Birmingham, AL -20% -13% 11.5% $96
9 Jacksonville, FL -19% -38% 7.0% $109
10 Bakersfield, CA -17% -52% 8.2% $126

Note: among 100 largest U.S. metros. Reddest metros are those with highest negative margin for Obama vs. Romney in 2012. See blogpost note for data sources. Data for all 100 metros available here.

Key Housing Data in the Bluest Metros
U.S. Metro 2012 Vote Margin: Obama vs. Romney Price Decline in Housing Bust, Peak-to-Trough Year-Over-Year Price Change, Sept. 2014 Median Asking Price Per Square Foot, $
1 San Francisco, CA 58% -23% 9.9% $613
2 Oakland, CA 50% -39% 11.9% $342
3 New York, NY-NJ 49% -18% 4.3% $320
4 Detroit, MI 47% -40% 11.4% $75
5 San Jose, CA 42% -26% 8.6% $430
6 Los Angeles, CA 42% -35% 6.9% $334
7 Honolulu, HI 39% -11% 4.1% $439
8 Washington, DC-VA-MD-WV 37% -25% 3.2% $177
9 Fort Lauderdale, FL 35% -48% 6.9% $143
10 Seattle, WA 35% -26% 8.9% $197
Note: among 100 largest U.S. metros. Bluest metros are those with highest positive margin for Obama vs. Romney in 2012. See blogpost note for data sources. Data for all 100 metros available here.

 

 

Affordability Is a Bigger Problem for Blue Markets

Things look fundamentally different when we compare red and blue markets in terms of affordability and related measures. The tables above show that none of the 10 reddest markets had a median asking price per square foot above $130 in Sept. 2014. But nine of the 10 bluest markets did. Looking across all 100 largest metros, the correlation between price-per-square-foot and 2012 vote margin was positive, high (0.63), and statistically significant. In fact, the only expensive red market was Orange County, CA, at $363 per square foot. There was a huge drop-off to the next-most-expensive red market—North Port-Bradenton-Sarasota, FL, at $150 per square foot.

When we plot local market home price per-square-foot and the 2012 presidential vote, we see that most of the red metros are clustered in the lower left-hand corner of the figure, where prices were lowest.

margin-vs-ppf

Strikingly, housing costs nearly twice as much in dark-blue markets ($227 per square foot) than in red markets ($119).

MedianAskingPrice

Sure, households in blue markets tend to have higher incomes. But those higher incomes are not enough to offset higher home prices. Our middle-class affordability measure, which reflects the share of homes for sale within reach of a median-income household, is significantly lower in bluer markets. Furthermore, blue markets have lower homeownership and greater income inequality than red markets. As with affordability, the relationships between homeownership and inequality on one hand and 2012 voting patterns on the other hand are statistically significant.

What does all this mean? The point is not that Democrats cause expensive housing, lower homeownership, or greater inequality. Determining whether and how the political views of voters or their elected officials affect local housing markets is the stuff of scholarly research, not short blogposts. But because blue markets are less affordable, have lower homeownership, and have greater income inequality, political leaders in Democratic-leaning and Republican-leaning metros may push for different policies.

Furthermore, these local differences in home prices mean that some national housing policies favor red markets and others blue markets. For instance, the current system of conforming loan limits benefits red markets more because homes in those markets are likelier to fall within local loan limits. But the mortgage interest deduction benefits blue markets more, thanks to higher home prices and more residents in higher tax brackets. Such differences could make it harder to reform these long-standing policies. In short, the differences between blue and red local housing markets may add to the challenge of reaching agreement on national housing policies.

Note: Metro-level 2012 Presidential election data are aggregated from county-level data in the Atlas of U.S. Presidential Elections. Peak-to-trough price declines are calculated from the Federal Housing Finance Agency House Price Index. Year-over-year price changes and median asking prices per square foot are from the Trulia Price Monitor. Correlations mentioned in this post are metro-level, weighted by number of households in the metro, and statistically significant if p<.05. The correlation of price per square foot and vote margin is calculated using the natural log of price per square foot.

 

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