Which markets are expected to see a sizable uptick in seller and buyer activity during Q2 2018? According to Attom Data Solutions’s latest Pre-Mover Housing Index, Nevada (200), Delaware (163), Florida (159), Colorado (154) and Virginia (149).
The PMHI indicates the markets where current homeowners are most and least likely to move, using data from purchase loan applications on residential real estate purchases.
Markets receive an index rating based on the “ratio of homes with a pre-mover flag during a quarter to total single-family homes and condos in a given geography,” said the report. An index above 100 indicates an above-average ratio of homes that will be sold in the next three months.
“Markets with a high pre-mover index tend to be in areas where homes are still somewhat reasonably priced and have a growing job market, allowing for greater upward mobility,” said Attom Data Solutions SVP Daren Blomquist in a press release.
“Markets with a low pre-mover index tend to be in areas with a struggling job market or with home prices that are out of reach for the average wage earner.”
Blomquist explained to Inman that Nevada, Delaware, Florida and Colorado all had large increases in net migration in 2017 from domestic and international residents. The in-migration, he said, is due to strong jobs markets matched with affordable costs of living.
“This in-migration is creating additional demand for homes in these markets often from buyers coming from more expensive markets on the coasts or even internationally that are willing to pay a price point that is high enough to convince local homeowners to move or to convince homebuilders to start building,” Blomquist said in an emailed statement.
“Virginia is a bit different as it experienced a substantial drop in domestic net migration in 2017 — particularly in Fairfax County in the D.C. area, according to Census data,” he added. “That out-migration is providing additional inventory of homes for sale in that market, but there was a big increase in international migration to Virginia counties in 2017 and demand from those international buyers is soaking up the inventory.”
On the other hand, Vermont (5) and South Dakota (12) had the lowest pre-mover scores due to a “nearly flat” migration pattern. New York (42) and Michigan (47) were also at the bottom of the list but decreases in domestic net migration and sluggish economies are to blame.
“In New York particularly, positive international net migration was not enough to offset the negative domestic net migration, which means there are likely more homes going up for sale as folks leave, but we aren’t seeing new buyers move into those homes as readily as in Virginia,” Blomquist said. “This may have to do with the generally more sluggish economy in Michigan and New York as well as high home prices and high property taxes in New York.”
So, what will it take to turn the ride in low-ranking PMHI markets? More jobs, higher wages, and most of all, lower home prices.
“Increasing jobs and wages will help bolster demand for homes in these markets, particularly from first-time homebuyers,” he noted. “This increased demand from first-time homebuyers will in turn prompt current owners to move up into bigger homes (often new homes), and that will start creating more churn in the local real estate market.”
“Another alternative that may be more likely in some of the high-priced coastal markets with a low index is a correction in home prices that bring them more in line with what local wage earners can afford,” Blomquist finished. “Unfortunately, a correction in prices will not likely bolster demand from first-time homebuyers as they could be scared off by the dropping market, but it would likely increase supply and eventually churn in the market as current homeowners decide they should sell before their home value drops further.”
Using data collected from purchase loan applications on residential real estate transactions, the ATTOM Data Solutions Pre-Mover Housing Index is based on the ratio of homes with a “pre-mover” flag to total single family homes and condos in a given geography, indexed off the national average. Any index above 100 is above the national average and indicates an above-average ratio of homes that will likely be sold in the next 30 to 90 days in a given market. Historical pre-mover data going back to Q1 2014 shows that 59 percent of homes with a pre-mover flag sell within 30 days of the estimated loan settlement date that is provided in the pre-mover data, and 76 percent sell within 90 days of that settlement date. The loan application data used for the pre-mover index also includes the intended purpose of the potential purchase: primary residence, secondary (vacation) home, or investment property.