Thursday we began a series of posts discussing what factors our research has shown to have exerted the most significant impact on the health and vitality of single family from the perspective of a homeowner. 

Thursday we looked at job growth and unemployment; yesterday at housing affordability, PMI Market Risk Index rankings, and median price.  Today let’s look at the impact another “common sense” factor has had on housing market vitality – population growth.

This is another “common sense” housing market factor in our minds – yet you never see population growth mentioned in media discussions of the “housing crisis”.  Overly simplifying the issue, population growth data could be considered to be a de facto indicator of  housing demand.  

Take for instance population growth from 2005 to 2009 (actual and estimated with an internal algorithm).  Looking at the top ten markets in this month’s Homeowners’ Market Fundamentals Index rankings, the average growth rate from 2005 – 2009 for the top ten markets was 14.4%, compared to 7.2% for our entire database.  Raleigh’s population growth during this same period was been / will be a blistering 22.3 percent. 

The point – those who live in markets with declining populations have another strike against them in terms of preserving home equity.  Think about it – population declines are typically driven by a declining local or regional economy, which of course critically wounds housing demand as well.  Add on the stressors of a contracting national economy in recession and vulnerable markets look even weaker. 

On the contrary – some of the healthiest housing markets today are in communities that are attractive to live in and creating jobs – thereby stimulating their population to grow.  Again, common sense you say?  You wouldn’t know it from the behavior of many leaders at the state and local level in some of these very states with declining populations and struggling housing (the rust belt comes to mind). 

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