Area housing market ranks among nation's healthiest

The Cape Girardeau area has one of the healthiest housing markets in the nation, according to a report released this month by Nationwide Mutual Insurance.

The report, which examined stability of the U.S. housing industry, said the Cape Girardeau metropolitan statistical area (MSA) was ranked as the eighth most attractive housing market among 400 MSAs in the United States during the fourth quarter of 2020.

The Cape Girardeau MSA includes Cape Girardeau and Bollinger counties in Southeast Missouri and parts of Alexander County in Southern Illinois.

The MSA's housing market ranking was based on the stability of home prices in comparison to other MSAs throughout the nation.

Nationwide's quarterly Health of Housing Markets (HoHM) report also said the housing market is facing a spike in mortgage delinquencies almost as severe as during the height of the Great Recession more than a decade ago. But it also said government intervention is keeping the delinquencies from becoming foreclosures, thereby supporting the housing market.

The report found the rates of mortgages delinquent 90 days or more are peaking in nearly all corners of the nation, reaching levels close to those experienced in 2010 during the Great Recession's housing bust.

"The spike in mortgage delinquencies would normally have had a significantly negative impact, but delinquencies in the current environment should not be viewed as they have been in the past due to government policy changes," according to Nationwide senior vice president and chief economist David Berson.

"It seems the federal government learned a valuable lesson from the Great Recession, realizing that massive and timely forbearance policies were necessary," he continued. "As a result, many of these loans have not slipped into foreclosure."

National trends

With expectations forbearance options will be extended further under the incoming Biden administration, the national Leading Index of Healthy Housing Markets (LIHHM) remains in modestly positive territory, the Nationwide report noted.

While the latest HoHM report said the LIHHM remained in positive territory thanks to government intervention measures, the report also revealed the overall health of the housing market is still being weighed down by a mix of factors, including the recovering job market.

According to the U.S. Bureau of Labor Statistics, November marked the seventh consecutive month of job growth for the U.S. economy, but employment remains more than 10 million jobs in the hole compared to peak employment levels before the start of the COVID-19 pandemic. Moreover, the report stated the national unemployment rate, despite having fallen sharply, Is still at recession levels.

Meanwhile, home price gains are accelerating thanks to an imbalance between supply and demand in the market. Throughout much of 2020, mortgage rates have remained historically low. Combined with a shift in housing preferences for "space" as many workers are transitioning to home-based jobs, the report found housing prices have been rising rapidly nationwide.

"Home price appreciation has accelerated in many local markets in response to the extremely tight supply of homes," Berson said. "Even with low mortgage rates, which we expect will remain near record lows for the foreseeable future, rapidly rising prices are a risk for housing affordability, especially if inventory levels remain as low as expected."

The HoHM report stated areas hardest hit by this have been Texas and parts of the Pacific coast. Those areas included several MSAs in Texas such as San Angelo, Odessa, Brownsville-Harlingen and Fort Worth-Arlington. Other areas facing a housing recession include Cheyenne, Wyoming; Clarksville, Tennessee; Kennewick-Richland, Washington; State College, Pennsylvania; and Manhattan, Kansas.

Along with Cape Girardeau, the metropolitan areas where home prices have remained relatively stable included Saginaw, Detroit and Flint, Michigan; Johnstown and Altoona, Pennsylvania; St. Joseph, Missouri; Tuscaloosa, Alabama; Alexandria, Louisiana; and Wheeling, West Virginia.

Local market performing 'remarkably well'

"Even though we have been in a pandemic, the local housing market has performed remarkably well this year," said Terry Baker, association executive with Southeast Missouri Realtors based in Cape Girardeau.

Baker said that as of Nov. 30, home sales in the Cape Girardeau, Jackson, Perryville and northern Scott County areas was up 11% compared to the same period in 2019 and the area's total sales volume through November stood at $317,863,133.

Baker offered several observations and statistics related to the housing industry and the National Association of Realtors, including:

• In a typical year, home sales in the U.S. support more than 2.5 million private sector jobs and for every home sold, nearly two jobs are created.
• Members of the National Association of Realtors are engaged with private partners, housing industry trade groups and lawmakers at every level of government to raise awareness about the challenges facing home buyers and to promote solutions addressing critical housing needs.
• Homeownership can be a challenge for some consumers with rising home prices, housing supply shortages and depressed rates of new construction making it increasingly difficult for many families and first-time buyers to purchase homes.

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