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Topics
Orientation
Housing market analysis is an example of applied urban
economics.
Urban economics is a mix of geography and economics.
What is an urban area? A place with relatively higher
population density than the surrounding area.
The Census Bureau defines an urban area as a place with at
least 1,000 persons per square mile.
The demand for products and services produced locally drives
the changes in employment, population and all types of local housing needs
(even seniors housing).
Seniors for example often move to areas with
pleasant climates.
Seniors also relocate to be near middle aged family
members, most whom are still working.
Back to Methodology
Why Do Urban Areas Exist?
No single answer. But by definition, urban areas exclude
agriculture.
So, urban areas at a minimum must export products and/or
services in order to generate income for food.
But export activities often .out-bid. housing demand for
available land.
Exports could include: finished goods; shipping nearby
natural resources; government administration; education and health care
services; or tourism.
Housing market analysis starts with an analysis of what
exports .drive. the urban area and whether these .drivers. are likely to
continue.
No local export base; no local housing market.
Characteristics of Urban Areas:
Modern metropolitan areas are decentralized.
Jobs are spread throughout the urban area.
Export generating activities typically lead to higher
overall local income levels.
Practical Considerations: Local Economy
Statistical data on jobs, people and housing are generally
collected by political boundaries.
Labor market areas are typically counties or groups of
counties.
Start by checking employment and unemployment rate trends at
the county level.
These estimates are made monthly by the U.S. Dept. of Labor
for all 3,000+ counties.
Be alert to the difference between employment by place of
residence vs. place of employment.
Total Employment YOUR Primary Market Area
|
Month and Year |
Total |
Annual
Change |
|
Number |
Percent |
| 4/1990 |
130,170 |
NA |
NA |
| 4/2000 |
135,262 |
509 |
3.9 |
| Current "as of" |
145,000 |
1,391 |
1.0 |
| Forecast "as of" |
150,380 |
1,793 |
1.0 |
Websites
http://www.census.gov
Go to American Fact Finder, select data
sets, decennial census; census 2000 (SF3); select .enter a table.; enter
DP-3 Economic Characteristics; choose geography. You should be here
http://www.bls.gov/lau/
Scroll down to "detailed LAUS statistics";
create custom tables (multiple screens); you should be here:
Choose state; choose county; select unemployment rate and
employed; select "not seasonally adjusted"; select data for the three most
recent years.
http://www.census.gov
Go to American Fact Finder, select data
sets, annual economic reports; tab at top of page to "Business Patterns";
select most recent "County Business Patterns". You should be
here:
Back to Methodology
Household Income
There is wide variation in income among householders by age
group and tenure (owner and renter).
Differences in income result in variations of attainable
sales prices and rent levels.
Households spend a constant proportion of their consumable
income on housing.
But income levels also vary by household size; for example,
one person elderly householders typically have much lower incomes than
couples in the same age group.
Practical Considerations: Income Data
Income data from the U.S. Census is collected for
households, not persons in group quarters (i.e. residents of nursing homes,
college dormitories, or military barracks.).
Households can be separated by owner and renter, then by age
and household size such as 1-person, 2-person, etc.
Census income data are benchmarks that must be updated.
Median Incomes 2000 Census YOUR Primary Market Area
|
Total Households |
$48,655
|
| Under Age 25 |
$22,639 |
| Age 25 to 34 |
$46,767 |
| Age 35 to 44 |
$58,331 |
| Age 45 to 54 |
$63,767 |
| Age55 to 64 |
$56,837 |
| Age 65 to 74 |
$37,852 |
| Age 75 and over |
$26,782 |
Websites
http://www.census.gov
Go to American Fact Finder, select data sets,
decennial census; census 2000 (SF3); enter table number P56 for median
household income by age; select geography.
http://www.huduser.org/datasets/spectabs.html
Select at bottom of page; select Go; select year
2000; select state, then county; select tables (s) for household income by
age, tenure and size.
http://www.huduser.org/
Go to "Data Sets"; then "Income Limits" (http://www.huduser.org/datasets/il.html)
Choose most recent year; then select median family
income documentation.
Back to Methodology
Housing Market Area Definition
The overall housing market area corresponds to the labor
market area.
The overall market connects jobs, people and housing units.
Within the overall market, housing units are connected by a
chain of substitutes-- different bundles of location, type, and quality.
Natural and manmade barriers create breaks in the chain--
excessive drive times-- that we call submarkets or primary market areas.
National data show average travel time to work, one-way (all
modes of transportation), is about 25 minutes.
The same survey data shows that householders travel about 15
minutes one-way in and around home for shopping or personal business such as
visiting a frail parent.
Overall housing market areas can often be divided into 15
minute "chunks" of travel time called primary market areas.
Sometimes the overall market and the primary market is one
in the same-- a county for example.
Other times, primary market areas can be conveniently
defined by assembling the boundaries of several ZIP code areas or portions
of ZIP code areas.
An overall market with 250,000 total population could easily
have three primary market areas.
Rarely is a primary market area a circle.
Website
http://www.census.gov
Go to American Fact Finder, select data sets, census
2000 (SF1); select "enter a table"; enter QT-P1; choose geography; select
ZIP code, print map of ZIP code area, then print data.
Back to Methodology
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