Military housing markets not immune to downturn

The transient nature of military life can provide a boost to housing markets with a military presence, but such markets have had their share of struggles from the housing downturn, including negative equity, price declines, and tight lending standards, according to a snapshot of five military markets from ERA Real Estate, released in time for Veterans Day.

"Military housing markets are definitely insulated but not immune to broader economic pressures," said Charlie Young, ERA Real Estate’s president and CEO, in a statement.

Deployments, relocation and base realignments mean that "there is a lot of activity, but we are seeing many buyers move into rental markets because they are underwater in their homes due to frequent moves or the market drops that have eroded home values across the country," Young added.

ERA Real Estate examined five military housing markets across the country: Fayetteville, N.C.; Colorado Springs, Colo.; El Paso, Texas; Virginia Beach, Va.; and Merritt Island, Fla.

The following data and commentary is provided by the individual ERA Real Estate brokerages noted, with the exception of metro foreclosure rates, which were provided by RealtyTrac. A market’s "inventory sweet spot" is the price at which brokerages reported most activity was happening in their market. ERA Real Estate is a Realogy subsidiary.

Sources: ERA Real Estate; RealtyTrac.

Larry Strother, CEO, ERA Strother Real Estate:

"Based in Fayetteville, Fort Bragg is one of the country’s largest military installations, with a population of nearly 40,000. Best known as home to the U.S. Army Airborne Forces and Special Forces, it is also the new home to U.S. Army Forces Command (FORSCOM), which has resulted in the relocation of many officers and Department of Defense officials. In fact, Fort Bragg has more officers and Department of Defense personnel than any place in the country other than the Pentagon.

"Civilians from the former FORSCOM base in Atlanta, Ga.  have also moved to Fayetteville creating a positive impact on sales volume. The depressed market in Atlanta has created a booming rental market in Fayetteville."

Sources: ERA Real Estate; RealtyTrac.

Stephanie Kasanicky, relocation manager, ERA Shields Real Estate:

"There are five military bases in Colorado Springs: four Air Force locations, including the Air Force Academy, and one Army post, Fort Carson. The top four employers in the area, accounting for 20 percent of all jobs, are military bases: Fort Carson, Peterson Air Force Base, the U.S. Air Force Academy, and Schriever Air Force Base. In 2009, Fort Carson became the home station of the 4th Infantry Division, which nearly doubled the base’s population, bringing it to about 10,000.

"While relocation activity has remained steady in Colorado Springs, sales have declined slightly due to tightened lending standards. The rental market is flourishing."

Sources: ERA Real Estate; RealtyTrac.

Douglas Van Nortwick, broker/owner, ERA Sellers, Buyers and Associates:

"The Army’s second-largest installment, Fort Bliss, comprises 1,700 miles spanning New Mexico and Texas and is FORSCOM’s largest installation. As part of the Army’s base realignment initiative, 11,500 new troops from the U.S. 1st Armored Division, currently stationed in Germany, as well as units from Fort Sill and Fort Hood will be transferred to Fort Bliss by 2012, creating an expected 20,000 direct and indirect military and civilian jobs in El Paso.

"Prices have remained relatively stable over the past few years with an average sales price at around $170,000, but … the current inventory sweet spot consists of new homes priced between $125,000 and $175,000. Many military buyers are first-time homebuyers looking for turnkey properties and 30-day closings. (There is a) thriving rental market."

Sources: ERA Real Estate; RealtyTrac.

Mary Feckler, sales associate, ERA Real Estate Professionals:

"Virginia Beach is home to Naval Air Station Oceana, a complex of seven miles of runways and the latest equipment to serve military air traffic. It is manned by more than 14,600 military personnel, 2,000 civilians and is home to 19 fighter/attack squadrons. The total Navy community, including spouses, numbers approximately 20,000 people. NAS Oceana is the largest employer in Virginia Beach. The Naval Surface Warfare Center, which employs 2,400 scientists and engineers and the Navy’s Joint Expeditionary Base East, formerly the Army’s Fort Story, are also located in Virginia Beach.

"Unlike other military markets, Virginia Beach is a well-rounded market close to the beach and the mountains with a strong local population and a popular second-home destination. The combination of excellent pricing and historically low mortgage rates as well as a steady influx of military personnel has resulted in an uptick in sales over the last year. The Virginia Beach market is primarily existing homes, and while inventory has been declining over the last year, the rental market is also going strong."

Sources: ERA Real Estate; RealtyTrac.

Barb Keller, broker/owner, ERA Showcase Properties:

"(My brokerage) is just a stone’s throw from Kennedy Space Center, Cape Canaveral Air Force Station and Patrick Air Force Base, which employs 10,400, and houses a total of 13,100 military, dependents, civilian employees and contractors. However, unlike other military markets, most people live on base.

"Sales are picking up (and) a healthy investor market is supplementing the steady military market of officers moving off base. Many officers are eyeing value-priced properties as potential retirement homes (or) engaging property management companies to rent the homes until they retire. (There is also a) brisk rental market."