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Study Finds Population Growth Influences Home Values

Two-Story-HouseThe three fastest-growing areas of the country were largely immune from the effects of the housing crisis, leading Massachusetts-based Pro Teck Valuation Services to conclude that population growth is a strong indicator of home values, according to a report the company released Wednesday.

Pro Teck’s Home Value Forecast looked at population growth and housing trends in the three fastest-growing U.S. markets since 2000 to see if home prices corresponded with population changes. According to the company, The Villages, Florida, and Midland and Austin, Texas, ranked highest in population growth percentage through 2014; these markets, correspondingly, are at or near all-time highs in home prices and do not show much impact from the housing crisis, said Pro Teck CEO Tom O’Grady.

According to the report, The Villages, a rapidly growing retirement community that is a municipality unto itself, is expected to see average home prices rise from $220,000 to $300,000 over the next five years. The same rise is expected in Midland, where the mining, quarrying, and oil and gas extraction industries have ushered in quick population growth. This is despite the drop in energy prices that Pro Teck acknowledges could negatively affect the market there. And in Austin, where technology and manufacturing has evolved into a densely populated professional services hub, an almost-identical rise from $250,000 to $300,000 is expected by 2020.

Pro Teck’s report also looked at shorter-term trends in fast- and slow-growing U.S. markets, and the correlation between population growth and a healthy real estate market was similarly strong. According to the report, Bellingham, Washington, Denver, and San Antonio, all fast-growing metros, led the pack in several market categories, such as listing activity, prices, months of remaining inventory, days on market, sold-to-list price ratio, foreclosure percentage, and REO activity. The remaining seven markets in the top ten were all in coastal California cities.

On the other end of the scale,  markets in the Ohio/Pennsylvania area and Florida‒‒all of which are seeing either minimal population movement or even shrinkage and which still have a lot of surplus inventory‒‒comprised half the bottom ten in Pro Teck’s monthly list.

"Foreclosure sales as a percentage of total sales is still driving the bottom ten for this month," O'Grady said.  "Even with higher sales activity, the markets still have a way to go before they see a full recovery, as most of these markets continue to also have much higher months of remaining inventory."

About Author: Scott_Morgan

Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.

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