Magazine article Nation's Cities Weekly

Five Factors That Impact Housing Markets

Magazine article Nation's Cities Weekly

Five Factors That Impact Housing Markets

Article excerpt

Local government leaders could not have predicted the seizing up of the mortgage finance system or the severity of the foreclosure crisis. What they can do going forward, however, is look to the places where the housing market remains basically stable, learn what factors contributed to that stability, and decide what resources to employ that will improve conditions in the medium- and longer-term.

Affordability: Places where the cost of living--prices for food, utilities, entertainment and taxes--remains moderate have seen housing prices hold steady and continue to attract new residents. Cities such as Austin, Texas, Ann Arbor, Mich., and Minneapolis have median home prices that are only three times the median family income; below the national average. Contrast these communities to places such as Los Angeles, New York and San Francisco where median home prices are six to seven times higher than median income.

Young Buyers and Immigrants: Recent Census figures point to much less mobility by Americans since the end of World War II. Young people, who tend to be single, without children and new to the housing market, buck this trend and are gravitating to Salt Lake City, Colorado Springs, Colo., and San Antonio. Similarly, immigrants from outside the U.S., who continue to arrive in numbers not seen since the 1990s, are moving to several locations that were heretofore not known as "gateway" cities. Nashville, Tenn., Columbia, S.C., and Raleigh, N.C., have experienced home sales stability because of the demands by these new residents.

Livability: Defined as places that mix residential, retail and commercial, these bastions of the "new urbanism" are in many cases classic suburban communities that have acquired an urban feel. Saratoga Springs, N.Y., and Gaithersburg, Md., are examples of this virtue. Real estate prices benefit from the fact that homes, shops and entertainment opportunities are in close proximity to one another. …

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