Volume 3 Number 10
November 2006

In this Issue
Funding for Recovery in the Hurricanes' Wake, Part II
Affordable Housing Grows in Central San Joaquin Valley
Forecasts of Housing Demand in 18 Local Markets
In the next issue of ResearchWorks

Forecasts of Housing Demand in 18 Local Markets

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HUD's Comprehensive Market Analysis Reports (CMARs) contain a wealth of valuable information for builders, mortgagees, local planners, and others who need to keep up with local housing conditions and trends. Based in the Office of Policy Development and Research, HUD's Economic and Market Analysis Division prepares these reports to assist the Department in its operations and to provide the public with objective information. HUD economists develop a factual framework for each report based on information from local and national sources. Kristin Padavick, an economist in HUD's Columbus Field Office who writes CMARs, explains that these reports are unique in how they capture the relationships among local economies, demographics, and housing conditions.

The reports present data and estimates for employment, population, households, housing inventory, and likely changes in the demand for new housing. Each CMAR describes the economic, demographic, and housing inventory characteristics of a selected housing market area from 1990 to 2000, from 2000 to the date of the analysis, and from the publication date to a forecast date (for example, April 1, 2009). Analysts preface these reports by explaining that this forecasting "…presents the prospective housing production that would maintain a reasonable balance in the demand-supply relationship, given the market conditions on the as-of date of the analysis."

CMARs have been published in 2006 for 18 housing market areas (HMAs) located throughout the United States. Highlights of the housing demand forecasts for these HMAs give the reader a taste of the useful market information they contain. Let's look at some recent examples...

CMARs help localities maintain a balance between housing demand and supply.

• Akron, Ohio. In Akron, employment and population growth indicate demand for about 7,500 new housing units by April 2008, including 6,000 units for sale and 1,500 market-rate rental units.
• Albany-Schenectady-Troy, New York. One of New York's strongest economies, Albany-Schenectady-Troy will need 9,400 new housing units by January 2009, including 7,900 units for sale and 1,500 rental units. Sixty percent of the needed sale units should be priced below $275,000.
• Appleton-Oshkosh, Wisconsin. The estimated demand for owner-occupied homes in Appleton-Oshkosh is 7,150 units, a slight increase over the annual average rate of new sale units since 2000.
• Bloomington, Indiana. The principal factor in demand for new housing in Bloomington is household growth, which suggests that 3,800 new housing units will be necessary to satisfy demand.
• Buffalo-Niagara Falls, New York. Replacement housing needs and limited household growth are spurring demand in Buffalo-Niagara Falls; estimates indicate a need for about 4,800 additional housing units.
• Hamilton-Middletown, Ohio. The estimated demand for housing in Hamilton-Middletown totals 2,000 owner units annually for the next 3 years. Construction should keep pace with demand, maintaining a balanced sales market.
• Harrisburg-Lebanon, Pennsylvania. Demand and supply conditions balance one another out in the Harrisburg-Lebanon area. Household growth will drive the demand for approximately 8,900 new sale units and 900 new rental units before October 2008. Construction is currently underway for 330 rental units, and an additional 100 are in the planning stages.
• Hartford, Connecticut. The demand in Hartford reflects recent net gains in inmigration and employment. The 2,400 homes and 1,200 apartments under construction will help satisfy a projected need for 7,500 sale units of new market-rate housing and 3,300 market-rate rental units by November 2008.
• Kalamazoo-Portage, Michigan. The economy and population growth rate in the Kalamazoo-Portage area are projected to take an upward turn, creating demand for about 3,975 new housing units by January 2009.
• Killeen-Temple, Texas. New single-family detached homes will meet much of the anticipated demand for about 6,500 additional sale units in the Killeen-Temple area. Manufactured homes will likely make up about 10 percent of new home sales, and units with three bedrooms needed by military-connected families with dependents will meet rental housing demands.
• Las Vegas, Nevada. The area's high population growth rate is likely to create demand for approximately 88,000 new sale units, including both single-family homes and condominiums, and 18,000 new rental units. This estimate assumes that renters will continue their recent trend toward becoming homeowners.
• New Orleans-Metairie-Kenner, Louisiana. In New Orleans-Metairie-Kenner, the aftermath of Hurricane Katrina has citizen groups and local parish and city officials studying numerous economic and housing recovery plans and initiatives. A final recovery plan is still in development. Therefore, the analysis does not comment on any of the proposed recovery plans or initiatives, or provide demand estimates for future housing needs.
• Provo-Orem, Utah. In Provo-Orem, the probable demand is for 10,950 sale units, with an average of 3,650 units per year. Single-family detached homes priced at $200,000 or less will meet most of this need. However, rising prices for single-family detached homes and rising interest rates are expected to increase demand for townhomes and condominiums.
• Quad Cities (Bettendorf-Davenport-Rock Island-Moline), Iowa-Illinois. Market conditions and steady household growth in the Quad Cities will likely mean a demand for 3,000 owner-occupied housing units. In addition to the homes currently under construction, 625 new units need to be built during the first year of the forecast period and 1,000 units in each of the two subsequent years.
• Reno, Nevada. Building 12,100 sale units and 2,525 rental units will likely meet the need for new housing units in Reno brought about by significant inmigration since the 2000 census.

CMARs can help predict demand for new housing nationwide.

• San Diego, California. In the San Diego area, demand for housing is strong. Anticipated household growth and current market conditions will create a need for 56,400 new housing units between now and July 2008.
• Shreveport-Bossier City, Louisiana. Market conditions and household growth around Shreveport-Bossier City will probably result in demand for about 4,800 new housing units during the forecast period. The housing demand is adjusted for the current level of sale units under construction and for the anticipated number of Katrina evacuees expected to remain in the market. Sales demand should support building 1,260 units during the first year of the forecast period. At this rate of construction, supply and demand should remain in balance.
• Vallejo-Fairfield, California. Vallejo-Fairfield has a diverse economic base, affordable housing prices, and proximity to the San Francisco and Sacramento labor markets, which explains its steady population influx and employment growth. The demand for new owner-occupied and rental housing should continue to grow accordingly.

In addition to these new CMARs, the HUD USER website provides links to previously published reports covering 70 housing markets across the nation. All of these reports are available as free downloads from www.huduser.org/publications/econdev/mkt_analysis.html.