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Th e M Rep o RT | 59 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ANALYTICS Department LocaL eDition ANALYTICS study Finds Population growth influences Home values Florida and Texas ciTies lead The pack. MASSACHUSETTS // The three fastest-growing areas of the country were largely immune from the effects of the housing crisis, leading Massachusetts- based Pro Teck Valuation Services to conclude that popu- lation growth is a strong indica- tor of home values, according to a recently released report from the company. Pro Teck's Home Value Forecast looked at population growth and housing trends in the three fastest-growing U.S. markets since 2000 to see if home prices corresponded with population changes. According to the company, The Villages, Florida, and Midland and Austin, Texas, ranked highest in population growth percent- age through 2014; these markets, correspondingly, are at or near all-time highs in home prices and do not show much impact from the housing crisis, Pro Teck CEO Tom O'Grady said. According to the report, The Villages, a rapidly grow- ing retirement community that is a municipality unto itself, is expected to see average home prices rise from $220,000 to $300,000 over the next five years. The same rise is expected in Midland, where the min- ing, quarrying, and oil and gas extraction industries have ushered in quick population growth. This is despite the drop in energy prices that Pro Teck acknowledges could negatively affect the market there. And in Austin, where technology and manufacturing has evolved into a densely populated professional services hub, an almost-identical rise from $250,000 to $300,000 is expected by 2020. Pro Teck's report also looked at shorter-term trends in fast- and slow-growing U.S. markets, and the correlation between population growth and a healthy real estate market was similarly strong. According to the report, Bellingham, Washington, Denver, and San Antonio, all fast- growing metros, led the pack in several market categories, such as listing activity, prices, months of remaining inventory, days on market, sold-to-list price ratio, foreclosure percentage, and REO activity. The remaining seven markets in the top ten were all in coastal California cities. On the other end of the scale, markets in the Ohio/ Pennsylvania area and Florida— all of which are seeing either minimal population movement or even shrinkage and which still have a lot of surplus inventory— comprised half the bottom 10 in Pro Teck's monthly list. "Foreclosure sales as a percentage of total sales is still driving the bottom 10 for this month," O'Grady said. "Even with higher sales activity, the markets still have a way to go before they see a full recovery, as most of these markets con- tinue to also have much higher months of remaining inventory." renters aren't converting into Homebuyers, report shows despiTe rising renT cosTs, daTa reveals declining renTer-Turned-owner numbers. CALIFORNIA // It seems that despite low mortgage rates and ever-increasing rents, most apartment renters just aren't making the switch to homeownership anymore. In fact, according to a recent market intelligence report from John Burns Real Estate Consulting, headquartered in Irvine, California, the rate of renters entering the housing market in Q 4 of last year was just 14 percent. In the mid- 2000s, that number was closer to 20 percent, with about one in every five renters purchasing a home after their apartment lease expired. But these declining numbers are nothing new. The numbers of renters making the transition to homeownership has dropped consistently over the past couple of years, and rates have remained below 17 percent mark (the historical average) since 2008. The report, which uses data from publicly traded REITs, studies the habits of tenants living in 520,000 units across the United States–specifically those whose leases are up or close to expiring. Most of the REITS studies are located in financially stable or affluent communities and cater to largely millennials demographics. In addition to its findings that home ownership ratings are on the decline, the report also shed light on some important informa- tion regarding rental costs. According to the report, the average rent for these REIT- owned apartment units is $1,652 per month. That's more than 30 percent higher than the national average. These inflated rates appear to have little effect on the rates of homeownership, though. "One would think that endur- ing years of sizeable annual rent increases would push tenants toward owning a home," the report reads. "However, even with an improving economy and a more stable employment outlook, this trend has simply not occurred." Fortunately, the recent revi- sions to FHA loan requirements may change all that, but accord- ing to the report, data has not shown a significant increase in FHA buyers as of yet.