THE MARKET STORY THIS year is one of vulnerability and searching—as in, searching for ‘The Next Phoenix.' Jonathan Dienhart, manager of consulting at Hanley Wood Market Intelligence—which compiled the data and projections in this section—finds the most “compelling” (this year's translation: vulnerable) markets are those where low rates have sustained the industry in spite of lackluster population and job growth. Detroit and Cleveland are prime examples. Projected population growth for both: 0.1 percent.
Another cautionary market is San Francisco (No. 13), where housing prices have outpaced those in the rest of the state. The environment doesn't spell impending doom, but with employment and population gains having underperformed, expect more challenges in adjusting to a world of rising interest rates, Dienhart says.
Meanwhile, builders are always looking for the next hot market. “The question over the next six to 12 months is whether or not the big builder will slow the pace of expansion or take a bet on what may be the next big thing,” says Dienhart.
Reno (3.9 percent projected population growth) has been called The Next Phoenix. Dienhart points to a “ring of cities” that show some potential for taking the ‘Next' moniker (all of which show up beyond the top 50 markets listed here, which are ranked by permit projections). In addition to Reno (No. 55), Albuquerque (No. 62) shows similar climate and cultural attributes to Phoenix, and Salt Lake City (No. 55) looks strong, too, he says.
Anecdotal evidence confirms Albuquerque's robustness amidst the slowing national climate. “It's pretty darn good here,” says Vantage Homes president Vincent Pizzonia, explaining that the area boasts the biggest Intel plant, the impending arrival of Eclipse Aviation, the best school system in the state in nearby Rio Rancho, and a retiree friendly climate which he says is superior to Arizona and Nevada, with summer temperatures seldom rising over 90 degrees. Pizzonia says he gets calls frequently from big builders wanting to buy his company.
SOURCE: HANLEY-WOOD MARKET INTELLIGENCE