By all accounts, the housing sector was the beneficiary of a successful 2013. But it quickly became apparent that certain geographical regions and metropolitan areas were recovering at different rates. According to the U.S. Conference of Mayors, however, 2014 will not share the same sentiment. This year, the U.S. economic expansion will be much more broadly shared among the nation’s cities. Nearly every U.S. city is expected to experience a good 2014. This is great news for the housing sector and the economy as a whole.
All but seven of the nation’s 363 metropolitan areas will see their economies grow this year, compared with 97 areas whose economies contracted in 2013, according to the report, which was done by IHS Global Insight. Released last Wednesday at the mayors’ semi-annual conference in Washington, the report is a forward-looking indicator of what we should expect in 2014.
According to IHS predictions, 340 metropolitan economies are expected to experience a growth of at least one percent. The forecast is particularly encouraging, as 183 economies experienced similar growth patterns last year. Of those that are expected to grow in 2014, 69 should grow at a rate of three percent or more.
“We’re finally on an upward trajectory with good job growth,” said Jim Diffley, a senior director at IHS and lead author of the report. “The recovery has started to affect substantially everywhere.”
While nearly every metro is expected to witness their economy grow, some will do so better than others. Naples, Florida, in particular, has been singled out as the city most primed for economic growth. Analysts familiar with the market predict that Naples will be the fastest-growing metro area in the country. Current projections have Naples’ economy expanding by as much as 6.3 percent. This is due, largely in part, to the job growth expected to hit the area.
Among larger cities, top performers include Raleigh, N.C., expected to grow by 4.2%; Atlanta, 3.7%; and Austin, at 3.6%.
High expectations have been in effect for those cities that were hit the hardest during the recession. Essentially, there is nowhere to go for them but up. Youngstown, Ohio, and Buffalo will return to growth this year and boost their economies by 1.5% in Buffalo and 1.6% in Youngstown, IHS predicted. The biggest turnaround, however, should come from Shreveport, La., which is expected to grow 1.6% after suffering a 5.2% drop as recently as last year.
“The key thing in the northeast was the stabilization of housing,” Diffley said. “When prices normalized and people weren’t underwater any more, small but positive job growth has been able to stimulate spending.”
Surprisingly, the Conference of Mayors report acknowledged that college towns will thrive. Austin, Charlottesville, VA., Lawrence, Kan., and other college towns are predicted to outpace the economic growth of large cities. Conversely, those large cities are expected to grow at a rate that is slower than the national average. New York, Chicago and Los Angeles all fit into this category. A slow growth rate, however, suggests that each respective city recovered prior to 2013.
The report expects the economy to grow by as much as 2.7% on a national level. With the economy primed for better days, the housing sector can expect a similar boost.