The U.S. housing market as a whole continues to strengthen, with the collapse of 2008 fading farther in the rear-view mirror. Local housing markets across the country are stabilizing at a rapid rate, with more cities entering their stable ranges every month. These are the latest housing markets trends being reported by Freddie Mac. According to their most recent report, all signs point to a housing market that is still going up.
On January 27, Freddie Mac (OTCQB: FMCC) published its latest Multi-Indicator Market Index® report, known as MiMi for short. The latest data show that the U.S. housing market is continuing along its road to recovery. Trends are improving at the metro and state level as well.
At a Glance: How MiMi Tracks Market Stability
MiMi tracks and measures the overall stability of the U.S. housing market. It also monitors housing trends in all 50 states, the District of Columbia, and the top 100 metropolitan-level markets across the country.
MiMi uses a variety of indicators to assign a “stability” score to each of the aforementioned housing markets. Indicators include:
- Home purchase applications
- Payment-to-income ratios
- Proportion of on-time mortgage payments
- Local employment trends
Based on all of this, MiMi assigns a score to each housing market to determine where it is in relation to its long-term stable range. A higher number indicates a more stable market, and vice versa.
MiMi also determines trends and movement within each housing market, to determine if they are moving toward, of further away from, their stable ranges.
According to Freddie Mac: “A market can fall outside its stable range by being too weak to generate enough demand for a well-balanced housing market or by overheating to an unsustainable level of activity.”
7 Trends That Show the Housing Market Is Still Going Up
Here are the latest positive housing market trends revealed by MiMi:
- At the start of 2016, yet another U.S. state entered the outer range of what’s considered a “stable” housing market. Real estate conditions in Missouri are currently considered favorable, following a long period of instability. Missouri now joins 33 other states, plus the District of Columbia, all of which are showing stable housing market trends in 2016.
- Four more metro areas entered their stable ranges as well. Local housing markets in Rochester, NY; St. Louis, MO; Birmingham, AL; and Milwaukee, WI are now showing signs of improved strength and stability.
- Nationally, the housing market has improved significantly since the depths of the housing crisis. But there is still room for additional growth and improvement. The national MiMi score has rebounded 39% since hitting an all-time low in October 2010, and now stands at 82.5. While that marks a big improvement, the national MiMi is still well below its high point of 121.7.
- Nationwide, there are now 33 states (plus Washington, D.C.) with housing values in their stable ranges. According to the MiMi ranking, the five most stable markets among states are: the District of Columbia (101), North Dakota (96.5), Hawaii (95.9), Montana (95.7) and Utah (93.3). This time last year, only 21 states plus D.C. had values in the stable range. So the housing market “health” appears to be spreading across the country.
- Fifty-seven of the 100 major metro areas tracked by MiMi now have market values in the stable range. Fresno, California leads the advance with a MiMi value of 102.9, followed by Austin, TX (97.5); Honolulu, HI (97.1); Salt Lake City, UT (96.7); and Denver, CO (96.5).
- At the metro level, the most improved housing market trends (month over month) were seen in Orlando, FL (+2.21%); Denver, CO (+2.01%); Portland, OR (+2.00%); Albany, NY (+1.87); and Phoenix, AZ (+1.86%).
- Things are looking up in Florida. When measured year over year, the most improved metro-level housing markets were Orlando, FL (+19.48%); Cape Coral, FL (+18.27%); Tampa, FL (+17.65%); Denver, CO (+16.97%); and Portland, OR (+16.54).
While the U.S. housing market is improving as a whole, there are major differences at the local level. According to Freddie Mac’s Deputy Chief Economist Len Kiefer, regional variations in market health are becoming more noticeable:
“For example, we’re still seeing declines in oil-dependent housing markets, whereas the hardest hit metros from the Great Recession continue to see some of the best improvement as they recover. And at the same time, other markets are seeing even stronger improvement because of robust home sales fueled by strong local economies that remain largely affordable for the typical homebuyer.”
In the short term, Freddie Mac’s housing analysts expect home buyer affordability to “remain strong,” thanks in part to the favorable mortgage rates being offered by lenders these days.