Gathering Strength: The Healthiest Markets for 2011

Stronger economic metrics lay groundwork for a housing recovery in the healthiest markets.

From: www.builderonline.com, By: Boyce Thompson

3. Durham-Chapel Hill, NC
Market Health Indicator: 81.5
2011 Building Permit Forecast: 3,250
Percent Change in Building Permits: 70%

Thanks to a strong base of employment in higher education and research, the median income in Durham will rise to 4.36% this year, faster than in any of the other top 20 markets. Durham added another 4,100 jobs last year to reach 287,300, dropping its unemployment rate below 7.5%. With a repeat performance in 2011, it will climb above 2007 employment levels.
The housing market here appears to have recovered, if it ever really suffered. Existing home prices rose 3% in 2010, to $178,000, even as sales fell 6% in the Triangle area, according to the local Realtors association. Home prices have barely fallen--they only got as high as $180,000 in 2007.
The permit situation is stacking up as a tale of two industries. Single family permits rose 60% last year. But a sharp fall off in apartment permits kept the overall total in the minus category. Moody's is calling for a reversal this year, with total building permits rising by 70%.

1. Raleigh-Cary, NC
Market Health Indicator: 86.9
2011 Building Permit Forecast: 9,604
Percent Change in Building Permits: 90%

Raleigh builders sense that their market may be in for something big--building permits increased 85% last year to 8,600, with much of the strength on the multifamily side. But single-family permits increased as well as builders took stock of improving market conditions.
The market was hot enough that existing home prices rose 4% in 2010, though they are expected to fall 10% this year due to a spreading foreclosure problem. But excess inventory may be absorbed quickly, because households are still moving in large numbers to Raleigh, drawn by its temperate climate and good employment prospects.
Raleigh continued to add jobs last year, especially in services, lowering its unemployment rate to 8.4%. This is an affordable place to live, and it recently ranked among the best places to retire.