If you haven’t noticed, discussion of the housing market has been relentlessly focused on price (average sales price, median sales price,) price direction, and units.
And for good reason – they are useful and telling numbers. But price movements alone do not tell the whole story. particularly if we are talking about the overall health of our real estate market, and especially it’s long term prospects for recovery.
In that case, the focus on price/units as the sole measure of the housing market is a little like diagnosing a patient with a influenza as terminally ill because they’ve spiked a fever.
Which is why we were pleased to see this piece from Finance & Commerce’s Burl Gilyard on a recently released housing market study:
The new “Homeowners’ Market Fundamentals Index,” from Montana-based Redfish Emerging Markets LLC, ranks 185 U.S. metro areas, and the Twin Cities metro area comes in at an ignoble 108th place.
Mark McGlothlin, CEO of Redfish, noting that Minneapolis-St. Paul still gets a solid (if uninspiring) “C” grade.
Though the grade doesn’t put us on any sort of honor roll, we do appreciate the study’s attempt to look forward and weigh factors beyond simple price/unit metrics:
The Redfish rating system weighs five factors: population demographics, job growth, local economic development, single family market “metrics” and the health of the rental market.
McGlothlin said that Minneapolis and St. Paul were hurt in the rankings by slowing population growth, a lagging job outlook and the current supply of homes and condos available for sale on the market.
“I tell you what hurts Minneapolis the most … jobs,” McGlothlin said. “Job growth creates population growth, which drives housing demand.”
You can find the full study, and more information on it’s methodology right here:
Homeowners’ Market Fundamentals Index [Redfish Emerging Markets]