Comprehensive Market
Analysis Reports: Helping HUD and Local Communities Make Critical
Policy and Business Decisions
The Economic and Market Analysis Division within PD&R
regularly prepares Comprehensive Market Analysis Reports
on cities across the country. These reports assist and
guide HUD in its operations, but the content can also be useful
to builders, mortgagees, and others concerned with local housing
conditions and trends. Each analysis identifies changes in
the economic, demographic, and housing inventory characteristics
of a specific housing market area (HMA) during three periods:
from 1990 to 2000, from 2000 to the as-of date of the analysis,
and from the as-of date to a forecast date. The reports present
counts and forecasts of different variables that drive the
housing market, such as employment, population, households,
and housing inventory. For each HMA under consideration, the
report offers fairly detailed analyses of key market indicators,
including:
- Overall economy;
- Household incomes;
- Population;
- Households;
- Housing inventory;
- Housing vacancy;
- Sales market conditions;
- Rental market conditions; and
- Forecast of housing demand.
New reports have recently been published for Madison, Wisconsin;
Sacramento, California; Salem, Oregon; and published editions,
including:
Erie, Pennsylvania; Des Moines, Iowa; Grand Rapids, Michigan;
Dutchess County, NY; Lancaster, Pennsylvania; Reading, Pennsylvania;
Asheville, North Carolina; Morgantown, West Virginia; Austin-Round
Rock, Texas; Bellingham, Washington; Rochester, Minnesota;
Fresno, California; Janesville-Beloit, Wisconsin; Orlando,
Florida; Lincoln, Nebraska; Wilmington-Newark, Delaware-Maryland;
Las Vegas, Nevada, Colorado Springs, Colorado; Albuquerque,
New Mexico; Allentown-Bethlehem-Easton, Pennsylvania; Canton,
Ohio; Lafayette, Indiana; Boise, Idaho; Athens, Georgia; Caguas,
Puerto Rico; Champaign-Urbana, Illinois; Elmira-Corning, New
York; Lubbock County, Texas; Monroe, Louisiana; Montgomery,
Alabama; and Westchester County, New York.
Each report tells the story of the local housing market.
Descriptions follow a logical flow, beginning with a discussion
of the local economy, which has a direct effect on population
growth or decline, and which in turn exerts a strong influence
on the demand for housing and rental properties. To better
illustrate how information in these publications is structured
and presented, we’ve selected an analysis drawn from
a typical Midwestern city.
In the recently published Madison, Wisconsin Comprehensive
Housing Market Analysis, the story line resembles the
plot of a feel-good summer movie: increasing employment opportunities
are leading to a growth in the population of the area, and
therefore strong home sales and an increasing demand for new
housing.
Madison has a diverse and vital economy. The HMA is home
to both the state capital and the University of Wisconsin,
which together account for about a quarter of the jobs in
the HMA. From 1990 to 2000, total resident employment increased
at a rate of 2.3 percent annually. Between 2000 and 2002,
employment increased at a rate of 2.6 percent, and during
the most recent 12-month period (as of the date of the analysis),
employment has increased by 10,400 jobs.
Between 1990 and 2000, the population in the Madison HMA
increased at an annual rate of 1.6 percent, with a resulting
population of 426,526 in 2000. Since that time, the population
has continued growing at the same 1.6 percent rate, reaching
an estimated 450,000 people as of October 1, 2003. Since 1990,
the number of households in the HMA has increased from 142,766
in 1990 to 173,484 in 2000; an annual rate of 2.1 percent.
As of the date of the analysis, there are 186,300 households
in the HMA.
Since 1990, Madison’s healthy economic conditions in
the HMA have led to substantial increases in household growth
and demand for new housing. Between 1990 and 2000, the number
of housing units increased by an average of 3,205 each year;
a rate of 2.2 percent. Since 2000, the inventory has risen
by 4,230 units annually. In 1990, housing tenure was 55 percent
owner and 45 percent renter. It’s estimated that as
of the date of the analysis, ownership has increased to nearly
59 percent. From 1990 through 1999, single-family permits
averaged 1,770 per year in the HMA, but a sizeable jump occurred
in 2002, when a total of 2,472 permits were issued. The strong
demand for new homes continued in 2003, when during the first
9 months, 1,761 single-family permits were issued. Multifamily
building permit activity between 1990 and 1999 averaged 1,550
units annually. The level of activity increased to an average
of 2,150 units a year between 2000 and the date of the analysis.
Sales in the Madison HMA continue to be very strong for both
new and existing homes. According to the Realtors® Association
of South Central Wisconsin, between 1997 and 2002, on average,
4,750 homes were sold annually in the HMA. During 2002, a
record 5,226 homes were sold. In the first 9 months of 2002,
sales reached 4,316—on pace to set a new record. The
median sales price has increased from $132,900 in 1997 to
$178,000 in 2002. The sales vacancy rate for the HMA in 1990
was 0.8 percent; this rate increased slightly to 1.0 in 2000,
which is also the estimated sales vacancy rate as of the date
of the analysis.
Historically, the rental market has been tight, with a very
low vacancy rate. However, a recent surge in the construction
of new rental projects, coupled with a growin number of renters
taking advantage of low mortgage interest rates to purchase
homes, has caused the rate to rise. As of the 2000 Census,
the vacancy rate had increased to 4.2 percent, but the market
remains tight. According to a local survey, the rate as of
the third quarter of 2003 was 5.8 percent.
Based on anticipated household growth and current market
conditions, it is projected that there will be a demand for
an estimated 8,100 new housing units during the two-year forecast
period ending October 1, 2005. It is estimated that sales
housing demand will account for 5,700 units, while rental
housing demand will account for another 2,400 units.
The Madison, Wisconsin Housing Market Analysis Report,
and the reports for the areas listed above, are available
for free download from HUD USER at http://www.huduser.org/publications/econdev/mkt_analysis.html
or in printed form for a nominal charge by calling HUD USER
at 1-800-245-2691.
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