As the weather continues to cool and the real estate enters its slow season, properties in 12 major metro areas are still selling quickly, less than two months on the market, according to the National Association of Realtor’s National Housing Trend Report.
These markets also demonstrate strength in standard economic indicators and share unexpected commonalities -- large populations of engineers and baby boomers. The 12 markets include: Oakland, Calif.; San Jose, Calif.; San Francisco, Calif.; Denver; Washington, D.C.; Seattle-Bellevue-Everett, Wash.; Houston, Texas; Los Angeles-Long Beach; Austin-San Marcos, Texas; Omaha; San Diego, Calif.; and Melbourne-Titusville-Palm Bay, Fla.
"When we see homes moving quickly in a particular market, we expect the trend to be supported by signs of local health like growth in economic production and employment," said Jonathan Smoke, chief economist for Realtor.com "This month, we also observed more out of the ordinary trends including high proportions of math and science professionals, as well as baby boomers in each of the fast moving markets.”
Smoke added that as the technology industry grows and aging baby boomers decide to make housing moves to support their retirement, the market will continue to see strong housing demand in those markets.
Markets with the fastest median age of inventory:
Income and occupation: Each of the 12 markets can be considered a land of opportunity with higher median incomes and larger proportions of six-figure salaries when compared to national averages. When examining local occupation distributions, these markets have more architects and engineers as well as professionals in the computer and mathematical industries. These fields represent 4.3% of occupations across the U.S., but in these markets account for 7.4% of careers.
Age demographics: The U.S. population of 65 years and older is forecasted to grow by 18% by 2019, which will have significant impact on the real estate market as baby boomers make retirement-related housing decisions. In these markets the population over 65 is expected to see growth between 19 to 35% – well above the national average – in the next five years. The Palm Bay market is the only exception with projected growth of 15%.
Gross domestic product (GDP): These fast moving markets are in full economic recovery or expansion mode when considering local estimated GDP, employment growth and declines in unemployment. The Washington, D.C. market is the weakest of the 12 markets, but likely due to the impact of sequestration. The Denver, Austin and Houston areas top the list with the largest gains in GDP and employment.
Population and household formation: All markets showed substantial growth from a population and household formation perspective. With the exception of the Palm Bay market, the population in every market grew faster than the national population between 2010 and 2014. Additionally, when reviewing Nielsen's five-year population growth forecast, all of the markets have a higher projected population growth than the U.S. overall.
Housing markets improve nationally, too
On a national level, median age of inventory is lower than last year with a reduced number of homes on the market. In September, homes spent approximately 90 days on the market, which is three days less compared to this time last year.
Median listing prices held steady for the fourth consecutive month, maintaining a 7.7% gain year-over-year. According to NAR, inventory continued to demonstrate persistently low months' supply at 5.5 months compared with normal levels of six to seven months. New homes months' supply was even lower at nearly five months in August.
"To truly relieve the inventory shortage on a sustained basis, new home construction needs to rise by at least 50% from the current levels," said Lawrence Yun, chief economist for NAR.