House Price Appreciation by State and Metro Area: The First Quarter of 2024


Despite higher mortgage rates, limited resale inventory and strong growth in demand continued to put upward pressure on house price appreciation. House price appreciation was recorded in all 50 states and the District of Columbia. According to the quarterly all-transactions House Price Index (HPI) released by the Federal Housing Finance Agency (FHFA), U.S. house prices rose 6.3% between the first quarter of 2023 and the first quarter of 2024. Nationally, house prices have experienced positive annual appreciation for each quarter since the third quarter of 2012. The quarterly FHFA HPI not only reports house prices at the national level, but it also provides insights about house price fluctuations at the state and metro area levels. The FHFA HPI used in this article is the all-transactions index, measuring average price changes in repeat sales or refinancings on the same single-family properties. Over the past four years, house prices have increased dramatically, and are much higher than they were before the pandemic. Nationally, house prices rose 47.7% between the first quarter of 2020 and the first quarter of 2024. At the state level, Florida led the way with the highest price appreciation (+67.0%) due to strong population growth and limited housing supply. It was followed by Maine with a 63.6% gain, and Tennessee with a 61.7% gain. Meanwhile, the District of Columbia had the lowest price growth (+14.6%) as people moved away from the high-density areas and toward more affordable suburbs. House prices have changed unevenly across U.S. metro areas, from the first quarter of 2020 to the first quarter of 2024. House price appreciation ranged from 12.2% to 81.1%. More than half of the metro areas saw house prices rise by more than the national price growth rate of 47.7%. House prices in the South and the West have grown faster than the prices in the Midwest and Northeast. Within the top 20 metro areas that had the highest house price appreciation, 13 metro areas are located in the South Atlantic Division and four in the East South Central Division, while none of them were in the Midwest. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

House Price Appreciation by State and Metro Area: The First Quarter of 20242024-06-06T10:23:51-05:00

More Gen Z Entering the Construction Industry


The median age of construction workers is 42, one year older than a typical worker in the national labor force, according to NAHB analysis of the most recent 2022 American Community Survey (ACS) data. However, more younger people are joining the construction industry. Despite some improvements since the peak of the skilled labor shortage in 2021, attracting skilled labor remains the primary long-term goal for the construction industry. The median age of construction industry workers varies across states. The color coding in the map above tracks the median age of people working in the construction industry.  The state with the oldest median age (45 years old) is West Virginia, followed by Connecticut, New York, Rhode Island and Vermont, where the median age of construction workers is 44. Construction workers are younger on average in the central part of the nation. For example, half of all construction workers in Utah are under 39. The second data series mapped above is the difference between the median age of construction workers in each state and the median age of all industries. These estimates are reported as the numbers printed on each state. A positive number indicates that on average, construction workers are older than a typical worker in the state labor force.  West Virginia, New York and Rhode Island are the states where the median age of construction workers is 3 years higher than the overall median. On the other hand, a negative number indicates construction workers are, in general, younger than the state labor force.  In South Dakota and Wyoming, the median age of construction workers is 1 year younger than the overall median. Analysis of the age distribution of construction workers over time reveals that Gen Z, those born between mid-1990s and early 2010s, are more likely to enter the construction industry than Millennials, when they were the youngest generation in the labor force.  They are drawn to careers in the construction industry due to factors, like the innovative aspects of modern construction technologies, high cost of college education, competitive wages in construction, job security and potential for growth.  Proving this point, the share of younger construction workers ages 25 under increased to 10.8% in 2022 from 9% in 2015. At the same time, the proportion of workers aged 35 to 54 declined from 71.8% to 67.3% in 2022. The share of older workers aged 55+ rose from 19.1% to 21.8%, as the youngest Baby Boomers entered this age cohort.    The chart below shows that, as of 2022, only about 16.8% of construction workers were Gen Zers.  Around 66.9% of the construction workforce were Millennials and Gen-Xers, who are in the prime working years, compared to 62.2% in overall workforce. The relative greater share of Gen X construction workforce reveals the current challenge. Gen X is a smaller generational group than the Baby Boomers. The share of Baby Boomer Construction workforce is 16.2%, implying that a substantial portion of workforce would retire in near future. Attracting more skilled labor, especially younger generations, remains the primary long-term goal for the construction industry. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

More Gen Z Entering the Construction Industry2024-06-03T09:21:44-05:00

Positive Momentum in Demand, Lending Conditions: Q1 2024 SLOOS


According to the Federal Reserve Board’s April 2024 Senior Loan Officer Opinion Survey (SLOOS), lending standards loosened further for all commercial real estate (CRE) loan categories and residential real estate (RRE) categories in the first quarter of 2024.  While the Federal Reserve left the federal funds rate unchanged during their last meeting, demand for RRE and CRE loans saw marked improvement across all categories in the quarter.  Residential Real Estate (RRE) A higher net percentage of banks reported looser residential mortgage lending standards in Q1 2024 compared to Q4 2023 for all categories of RRE loans.  For the second consecutive quarter, the largest improvement occurred for Qualified Mortgage (QM) jumbo which fell 11.8 percentage points (pp) from 15.4% in Q4 2023 to 3.6% in Q1 2024.  GSE-eligible was the only RRE category which saw more banks reporting looser rather than tighter conditions, as evident by a negative reading in Q1 2024 (-1.8%).  Government loans (i.e., issued by FHFA, Department of Veteran Affairs, USDA, etc.) saw a neutral reading where the number of banks reporting tighter and those reporting looser lending conditions was the same (0%). All RRE categories but one (subprime) experienced a quarter-over-quarter increase of at least 25 pp in demand from Q4 2023 to Q1 2024, led by GSE-eligible loans improving 42.1 pp to -8.8%.  On other hand, all RRE categories saw year-over-year double-digit percentage point increases from Q1 2023 to Q1 2024, with two categories increasing by at least 40 percentage points: GSE-eligible (+43.9 pp) and QM jumbo (+40.2 pp). Commercial Real Estate (CRE) Both multifamily as well as all CRE construction and development loans, on net, experienced a loosening of lending standards from Q4 2023 to Q1 2024.  Construction & development experienced the share of banks reporting tightening conditions drop 15.1 pp to 24.6% while multifamily decreased by 6.8 pp to 33.9%.  On a year-over-year basis, lending conditions for both construction & development (-49.2 pp) and multifamily (-30.6 pp) loosened substantially. About a third of banks reported weaker demand for loans secured by multifamily properties compared to 16.7% for construction & development loans; this marked double-digit percentage point quarterly improvements for both loan types, led by construction & development (+29.9 pp).  While demand continues to be negative, both construction & development (+50.5 pp) and multifamily (+38.7 pp) experienced large increases in activity year-over-year. Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Positive Momentum in Demand, Lending Conditions: Q1 2024 SLOOS2024-05-07T14:16:52-05:00

Increasing the Market for Green Building


Building upon our exploration of green building trends, major practices, and resilience strategies based on The Building Sustainably: Green & Resilient Single- Family Homes 2024 SmartMarket Brief, this article now shifts focus towards ways to increase green building within the housing market.    Top Incentives to Build Green  The survey asked all respondents to select the top three factors that would increase their engagement with green building in the future. Half of respondents listed increased home buyer demand for green homes in their top three reasons. The second highest at 48% was availability of government or utility incentives in my area. Third, at 37%, was available, affordable high-quality green products.   Methods of Showcasing Green Homes  Home builders and remodelers who have built green projects were asked if they utilized any of the six approaches provided to demonstrate their projects were green. The top method was using a Home Energy Rating System (HERS) score at 39%. This was followed by website marketing at 35%, which had notable regional differences. Website marking was most used in the Northeast (60%), then the Midwest (52%) and West (43%), but it was least common in the South (20%). The other four approaches listed were: third-party certification (34%), MLS information (33%), silent salesperson signage (20%), and green appraisal form (6%).  Terms for Describing Green Features  Home builders and remodelers who do green home projects were asked to rank the three most effective terms for talking to their customers about green-related features from a list of 12 options. The most effective term was “High Performance” at 49%. The second highest at 46% was “Quality Construction” while third, at 44%, was “Operating Efficiency”. The complete rankings are shown in the chart below.  Home Appraisals  Home builders and remodelers were asked how frequently home appraisals accurately reflect the added value of a green home. The majority of respondents (60%) reported that they never see this occur. The second highest were those that said infrequently at 22%. Notably, there are no significant differences between the responses of builders and remodelers or the respondents from the four regions. This suggests accurate home appraisals are a significant challenge across the green building industry.   MLS Listings  Home builders and remodelers were also asked about the frequency with which green features are reflected in MLS listings, the database used by realtors for home sales. Less than one-third (31%) listed never, comparatively less than with home appraisals. However, infrequently was listed at 41%.   In order for builders to supply green homes, there needs to be a home buyer demand. As we have seen, the prevalence of green home construction has seen little growth over the past few years. Contributing to this is the fact that consumers are not able to reliably compare homes with green elements to those without them. This is seen when green home appraisals and listings do not accurately reflect the added value of green building. The sustainability & green building industry faces headwinds to gain appropriate recognition from consumers about the advantages of green homes.   Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Increasing the Market for Green Building2024-04-29T10:15:34-05:00

Green Building: Resiliency Practices


Green homes go beyond lessening their environmental impact; they also actively mitigate the effects of the environment upon them. All homes can face damage from environmental hazards, prompting builders to implement resiliency practices to reduce such risks. This post will detail the prevalence of resiliency building, specific practices by hazard, as well as resiliency certification systems. This is a follow up to the previous posts about the prevalence of green building and green building practices, based on the The Building Sustainably: Green & Resilient Single- Family Homes 2024 SmartMarket Brief.  Prevalence   The most common natural hazards can be broken into five categories: wind, flood, fire, earth, and temperature. Three quarters of builders say they mitigate for at least one of these five hazards. Expectantly, there is a difference by region in those that mitigate at least one of the five hazards. The highest percentage is the West at 84%, then the South at 77%, followed by the Midwest at 69%, lastly the Northeast at 66%. Broken down by each hazard, wind was the most actively mitigated risk at 55%. Next was floods (44%), temperature extremes (41%), fire (36%), and then earth-related hazards (12%). These are broken out by region in the chart below.   Wind Hazards  Breaking into each hazard, builders/remodelers were further asked which wind mitigation practices they used. The top three were as follows: use a roof system built for high-wind events (46%), continuously sheath exterior from roof to foundation with oriented strand board or plywood (41%), and use high-wind-rated roof coverings installed using practices for high-wind areas (38%). The other four practices are listed in the chart below. Builders and remodelers also mentioned additional practices that they use to address wind hazards including the use of hurricane ties and using hurricane clips for each rafter, additional bracing, and design strategies like designing for a “partially enclosed structure” and detailing airflow through attic spaces.   Flood Hazards  Flood damage is another risk for real estate. The top practice used to mitigate water damage was using a secondary water barrier on the roof at 32% of total respondents. This was followed closely by raising the lowest floor of home more than one-foot above flood levels (31%), and using water-resistant materials for walls that allow for easy repair/replacement or promote drainage behind wall cladding (30%). The other practices are provided in the chart below.   Fire Hazards  Wildfire events present another risk for homes and home builders. The top practice for fire mitigation was using noncombustible or fire-resistant materials for exterior walls at just 18%. The second most used practice was installing a roof with fire-resistant features (17%). Followed by the third, landscaping to create a defensible barrier (15%). The final three were installing multipaned windows with one tempered glass pane (13%), installing vents that resist intrusion of embers and flames (13%), and protecting floors over open foundations with noncombustible cladding and type x gypsum board (10%). A few additional approaches were also volunteered by respondents: fire-resistant insulation, fire-suppression systems, draft stops, fire-retardant spray foam and heavy timber construction.  Earth-Related Hazards  Earth-related hazards include earthquakes, landslides/mudslides, and sinkholes. Earth-related resiliency measures are the most niche as a majority of home residential developments are located away from active fault lines. Hence, it’s unsurprising that only 12% of respondents overall actively address these hazards, but this percentage increases to 40% among respondents in the West. The top practices were: provide strong floor-to-wall connections (11%), provide positive connections of posts to beams above and footings below (10%), and create a continuous load path (10%). The rest all fell below 10%*.  Resiliency Certifications   All home builders and remodelers, regardless of whether they identified hazards that they actively seek to mitigate, were asked if they received any of the seven resiliency certifications: NGBS Green+Resilience, LEED resilience credits, IBHS FORTIFIED, NFPA Firewise Community, US Resiliency Council Earthquake or Wind certification, and Arup REDi™ Rating System. Only 14% responded that the homes they build are resiliency certified. The top resiliency system certifications were NGBS Green+Resilience (7%) and LEED Resilience Credits (5%).  Builders who demonstrate that they can build homes that are better able to withstand environmental hazards could develop a competitive advantage. Because these hazards can cause insurance rates to increase, and insurance in some regions can become unavailable altogether, resiliency practices can be helpful to consider. Resilient and green construction are great ways to help builders and homeowners reduce the risks of such events as costs to recover from natural disasters continue to skyrocket.    *Other earth-related hazard mitigation practices: provide strong wall-to-foundation connections (9%), use hurricane clips to connect roof framing to the walls and/or blocking between trusses or rafters continuous sheathing on cripple walls with hold-downs (9%), anchor bolts and tight nail spacing use exterior braced wall practices for high-wind or high-seismic areas or engineered shear walls (8%), install portal frames at garage door openings using (8%), hold-downs and anchor bolts (7%), screw and glue drywall to reduce cracking (5%)    Discover more from Eye On Housing Subscribe to get the latest posts to your email.

Green Building: Resiliency Practices2024-04-22T10:15:33-05:00

Green Building: Trends, Motivations, and Challenges


NAHB and the Dodge Construction Network published research on the prevalence of green building in The Building Sustainably: Green & Resilient Single- Family Homes 2024 SmartMarket Brief.  The research found that the overall share of home builders classifying more than half their projects as green1 is at 34% for 2023 a one-percentage point increase from 2019. Similarly, for remodelers, this figure stands at 22%, a five-percentage point increase from 2019. This post will further examine these statistics, as well as delve into the drivers and obstacles for green building.   Level of Engagement   To further dissect the share of builders and remodelers involved with green projects, see the charts below. As shown, the largest proportion for both builders and remodelers are those with “no green engagement”. However, these numbers have diminished since the 2019 report, decreasing two percentage points for builders and seven percentage points for remodelers. Following those with no green engagement, are those with “little green engagement” (1-50% green projects). For builders, the next highest share is “dedicated green builders” (more than 90% green projects), and then “green builders” (51-90% green projects). The opposite is true for remodelers with the least prevalent share being dedicated green builders.    When looking at dedicated green builders, we see regional differences as well. Based on new home builder respondents, the region with the highest share is the Northeast at 45%. Followed by the West at 28%, the Midwest at 22%, with the South at 16%.   Motivations Respondents who have done green projects were asked to pick the most important reasons for doing so. The top reason at 48% was “The Right Thing to Do”, followed by the closely aligned “Creating Healthier Homes” at 38%. This demonstrates many builders’ intent to create efficient, resilient and environmentally friendly housing, whether it is considered green or not. Other reasons listed include: “Code Requirements” (36%) “Reputation in Industry” (30%), “Differentiate Product in Local Market” (23%), “Market Demand” (18%), and “Tax Credits or Government Incentives” (16%).   Obstacles  Respondents were also asked the top obstacles for them to not undertake green projects. The top answer at 77% was “Lack of Customer Demand”. This is unsurprising with “Market Demand” being listed almost last for reasons to build green. “Too Expensive” was the second reason at 53%. All other reasons fell below 20% of respondents.   Costs Delving into the expense of building green, respondents were asked about the cost premium to build green. Across the board, remodelers found green building to be more expensive.  The highest percent of remodelers (36%) and builders (38%) were those that found green building to be between 11-20% more costly. The next highest for remodelers (28%) were those that found the cost premium to be more than 20%, while the second highest for builders were those the cost premium under 10%. The other categories are shown in the chart below.     Unsurprisingly, builders and remodelers with more green engagement found the cost margin to be lower than those who did fewer green homes. Nearly half (45%) of dedicated green builders found that the added cost of building green is 10% or less. This is in contrast to only 25% of green builders, and 16% of low green engagement builders who listed the added cost as less than 10%. This may suggest that dedication to green building is needed to result in sufficient expertise and economies of scale to lower the cost of building green.   Looking forward, this post will be followed by a series of analyses that further examine the The Building Sustainably: Green & Resilient Single- Family Homes 2024 SmartMarket Brief.    *A green home incorporates strategies in design and construction that improve energy, water and resource efficiency, indoor environmental quality, and minimize environmental impacts on the site; and/or is certified by a third party to the National Green Building Standard, LEED for Homes, or any other green rating system or high-performance standard. 

Green Building: Trends, Motivations, and Challenges2024-04-08T12:17:19-05:00

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