One of the best sources for broad market analysis are the companies that provide mortgage insurance. MGIC (Mortgage Insurance Guaranty Corporation) provides mortgage insurance nationwide. It is in their interest to know where the markets are going because it is their money that is on the hook if a mortgage is defaulted. In a market where values are rising they really can’t lose because as the value rises, equity rises, and as equity rises the risk of loss falls. On the other hand in an environment of stable or falling prices the risk of loss remains high over time.
So, I was interested to find that MGIC has on their website a Market Trend Analysis for the top 72 real estate markets in the country. It gives a summary view which states whether the current conditions are stable, soft or strong as well as a projection for the future. For example, Denver is currently rated “Stable” with “No Change” as the projection.
Who’s Hot and Who’s Not
Currently there are 11 markets or 15% that are rated “Soft”. These are mostly in the Midwest with the few exceptions being Miami, FL, San Jose, CA and San Francisco, CA. Conversely, there are currently 12 markets that are rated as “Strong”. Markets rated as “Strong” include Seattle, WA, Salt Lake City, UT, Tuscon, AZ, Washington, D.C., and five locations in Florida. This leaves the majority of markets around the country as “Stable”.
What I find even more interesting are the projections, are markets getting better or worse in general. Six markets are “Improving”. These include; Albuquerque, Austin, Nashville, Raleigh, San Antonio and San Francisco. There are 12 areas that are listed as “Softening” or “Weakening”. I think this represents the general fizzle of the markets nationally, which is a natural result of the strong gains in recent years.
The website then focuses in on each of the markets and gives a snapshot of income trends, employment, housing affordability, home prices from OFHEO, employment mix and household growth.
General Observations about Denver are as follows: “Denver’s economy has maintained a steady growth rate. Annual employment increased 1.7%, as the unemployment rate held int eh mid 4% range. The proposed redevelopment of Union Station and expansion of the light rail system provide for a positive outlook. Denver’s housing market is showing signs of slowing, but remains stable. The supply of single family homes increased to 7.2 month, with almost 65% of the sales in the $200,000 to $500,000 range. The supply of condominiums is now at 9.2 months, with 40% of the sales under $140,000. Steady population and job growth will help both the housing sector and the demand for office space.”
I will compare our outlook to some others in the coming days. Stay Warm!