Relieved Builders Say Goodbye to Lackluster 2014 and Hello to Consumer Segmentation in 2015

Posted in Phoenix - Tucson Market | Posted on 03-02-2015 | Written by Metrostudy News

  • Despite high expectations, 2014 New Home Starts were down 14% from 2013
  • Affordability is a concern as new communities come on line at higher prices; it is not clear if condos and infill will be the affordable solution but the market should be watched
  • Builders should not expect much organic growth through the market and should be focusing on the consumer if they want to larger share of the starts

March 2015: According to the Metrostudy 4Q14 survey, home starts, attached and detached, in the Phoenix area numbered 10,140 over the last four quarters, down 14% from 2013.  This was a disappointment as initial expectations were for a substantial increase for 2014. The largest declines (25.7%) continued in Pinal County, followed by the Southeast Valley that saw a 15.9% decrease. The competition in the Southeast contributed to the decrease as more competitors have entered this area in hopes of gaining more market share. The Northeast Valley continues to see the strongest starts growth year over year with an increase of 15.3% (820 starts). Closings over the last four quarters are also trending down to 10,329; though we had hoped that closings would remain flat for the year we finished out with a 10.6% decrease.

MLS single family listings have started a slight downward trend down 8% to a total of 21,484 when looking at December over December. Though still higher inventory numbers than we saw through most of 2013 it appears that sellers are still in the market as sales ended the year up 9%. The market is currently holding 3.6 months of supply and days on market have been holding steady at 88 days over 4Q 2014. With room to grow in the resale market the undersupply of homes has been under our equilibrium of 5-6 months since 2009.

Annual New Home Starts and Closings

Phoenix 4q14

For 2014, single family annual MLS sales numbered 72,402 units, down 11% from one year ago, but it still represents a large volume of transactions. The median price of a single-family home sold through the MLS rose slightly reaching $204,000, a 3% increase from twelve months ago. Despite what was expected median price did increase slightly from the previous quarter. Condo sales are on the watch list though annual sales were down 5% and inventory is also down slightly. We did see strong median price appreciation up 13% to $129,400.

“With new homebuilders entering the market in the next year it will be interesting to see what occurs in the infill market and what effect that will have on resales specifically condos,” said Rachel Cantor, Director of Metrostudy’s Phoenix market. “We expect to see strong numbers coming from projects in the Central Valley and Scottsdale area. But the question is will buyers be able to pay the higher prices we expect to see in these new communities and how deep is the pool of buyers interested in the product.”

SE Valley is still drawing a majority of the starts and the competition landscape already filled to capacity will see more additions in 2015. The upside is that buyers are still in the market. The first two weeks of 2015 has seen traffic and sales in the Gilbert market come in very strong and we are currently tracking traffic at the same pace we saw in the beginning of 2014 which makes us cautiously optimistic. The competition is constantly changing and builders should now begin looking and start thinking about replacement projects as well as consumer segmentation. With little growth expected in 2015 market share will be gained by beating out the competition.

As we see the SE Valley is drawing the largest amount of starts and carrying only 18% of VDL supply for the market. The overall inventory of vacant developed lots (VDL), or finished lots, continued to rise in Q4. The total of 55,136 vacant lots includes all product types. Though VDL inventory has seen minor growth year over year currently up 6% from last year it has been a consistent growth throughout the year. Through most lots are in the outlying areas of Pinal County and the SW Valley reviewing existing positions and timeline for lot deliveries is going to be critical in 2015. Planning lot deliveries and subdivision close-outs in highly competitive areas like the SE Valley will help builders begin to review purchases for lots in 2016 and 2017.

“2015 is currently the year of watching population, wages, jobs, and migration very closely,” said Cantor.  “Any changes in these areas could make or break our housing industry. With little to no affordable housing left it is not a surprise that apartment and condo growth seems to be on the rise, though it is not yet clear if apartments or condos will become how we now define affordability. Phoenix is not alone in the quest for affordable product – several higher permit producing markets like Texas and Florida are beginning to see the slow erosion of their affordability market and increasing land prices leading them to wonder how they will be changing in the next few years. Locally, I question how deep the pool of clients that want this type of product is and how much can they afford? I am not yet convinced that condos and infill are the new affordable solution but never say never.”

For information contact:
Rachel Cantor
480.588.1585
rcantor@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

The Double Edged Sword of Tight Supply

Posted in Salt Lake City Market | Posted on 03-02-2015 | Written by Metrostudy News

  • Despite a slowdown in 2014, the Salt Lake City housing market remains one of the healthiest in the country
  • The supply of resale homes is at the lowest level seen in the market since prior to the recession
  • Tight supply is a double edged sword – even as it pushes buyers into the new home market it increases prices there, and many cannot qualify

 

March 2015: Metrostudy’s 4Q14 survey of the housing market in the Greater Salt Lake region shows that despite a slow 2014, the market remains one of the healthiest in the country.  New home production for both attached and detached new homes in the Greater Salt Lake market has experienced a decrease for the past 3 quarters.  There were a total of 7,576 new home starts in 2014, which is a 9% decrease compared to 2013.  However, with that said, the market averaged a 30% increase from 2012 through the first half of 2014; therefore, it is no surprise that the pace has tapered off.

New home closings for the year totaled 7,502, a 4% decrease from last year.  4Q14 starts totaled 1,953, down 4% from 4Q13, and 3% from 3Q14.  New home closings took a slightly larger hit during the fourth quarter of 2014 for a total of 1,860, which is a 9% decrease from last year, and 8% from last quarter.  Annual starts for Single Family detached homes totaled 5,566 for 2014, down 12% from 2013.  Starts during the fourth quarter are down 3% from last quarter to 1,387.  Annual starts for Attached (for sale)homes totaled 1,999 for 2014, a 1.2% increase over last year.  Starts during the fourth quarter totaled 594, which is up 10% over this time last year, and up 38% from last quarter.

New Home Inventory & Month Supply

SLC 4q14

“According to the Wasatch Front MLS, the supply of used homes in the Greater Salt Lake market is at the lowest level seen in the market since prior to the recession,” said Eric Allen, Director of Metrostudy’s Utah/Idaho region.  “New listings in December totaled 4,680, 13% less than December of 2013.  This tight supply is a doubled edge sword.  While pushing buyers into the new home market, due to the lack of available homes, prices continue to rise, making it difficult for buyers to qualify for those homes.  Annual closings for used homes during 2014 totaled 31,268, a 4.8% increase from 2013.  However, the average days on market has increased to 65 days, up from 56 last December.”

Mortgage qualifications have been a challenge for the past few years; however Fannie Mae and Freddie Mac have indicated that lending requirements may be loosening throughout the year, which could provide a new surge in the housing market.  It appears that new home prices in the Greater Salt Lake market may have finally begun to peak, which will also have a positive impact on housing.

The median price for a new Single Family home is currently $330,720, which has increased 5% from last year at this time.  The median price for a new Attached unit is currently $216,000 which is a 9% increase compared to this time last year, and 3% above last quarter.

New home inventory for Single Family Detached homes has been slowly increasing over the past year, however remains well within equilibrium at 6.8 months.  There are currently 704 finished vacant homes on the ground, a 33% increase over this time last year. There are currently 1,356 townhome units in inventory, a 10.0 month supply, up from 8.6 months in 4Q13.  Of these, 999 are under construction, a 7.4 month supply.  There are also 302 finished vacant units on the ground, which is up 71% from last year. Condo inventory totaled 481 units, which is an 18.2 month supply.

Inventory of vacant developed lots (VDL), or finished lots, for single family detached homes has begun to increase once again.  Compared to last year, VDL inventory increased 5% to a total of 16,248 lots.  Currently the supply is 35 months, up from 29.2 months at this time last year.  There were 6,658 new detached lots delivered to the market in 2014, a 48% increase over 2013, however the market is still in need of good, desirable lots.  Vacant developed lot inventory for townhomes increased 2.4% from last year to 2,773, which is an 18.6 month supply.  There are also 780 condo lots on the ground, which is a 39.7 month supply.

“While new home production waned for 2014, Metrostudy expects demand to remain relatively steady for 2015,” said Allen. “With lending qualifications projected to loosen, a strong job market, along with the possibility of slower rising home prices, many indicators suggest the market will continue to remain healthy.”

For information contact
Eric Allen
801.571.7700 x424
eallen@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Signs of Stabilization as Market Finishes 2014 Down

Posted in Boise Market | Posted on 03-02-2015 | Written by Metrostudy News

  • New Home Starts in the Boise market for 2014 are down 15% from 2013
  • Lack of lot inventory in Ada County is holding back production for the region as a whole.
  • We expect loosened lending requirements in 2015 that could provide a new surge of activity in the housing market

March 2015: Metrostudy’s 4Q14 survey of new home production in the Boise/Treasure Valley region shows that the market has experienced a steady decrease for the past 12 months, but appears to be stabilizing. There were 636 new home starts – both attached and detached – in 4Q14, down 10% from 4Q13, and down 21% from 3Q14. Annual new home starts for all of 2014 totaled 2,951, which is a 16% decrease compared to 2013, however is up 21% compared to 2012. New home closings totaled 679 during the fourth quarter, which is 14% below 4Q13, and down 28% from last quarter. Annual closings for 2014 decreased 11% from last year, but are up 37% over 2012.

Ada County started 451 new homes during 4Q14, which is down 12% compared to 4Q13, and another 20% from last quarter. Annual starts for 2014 decreased 17% compared to last year, for a total of 2,146. There were 470 new home closings during 4Q14, down 19% compared to last year, 32% from last quarter. Closings for 2014 were down 15% from last year to 2,176. Canyon County started 183 new homes during the fourth quarter, which is down 3% compared to 4Q13, and down 21% from last quarter [PLEASE REVIEW THAT NUMBER – down 216%??]. Closings during the fourth quarter increased 3% compared to last year, however decreased 10% from last quarter, for a total of 208. Annual new home starts for 2014 decreased 11% from 2013 to 783 and annual closings dropped 1%, for a total of 771.

“The decrease in new home production has primarily occurred in Ada County,” said Eric Allen, Director of Metrostudy’s Utah/Idaho region. “Part of this retraction is due to the lack of lot inventory. Rising home prices have also played a key role in the decrease, and as a result, many new homebuyers are being pushed into Canyon County, where they can find more homes available in the lower price ranges. Mortgage qualifications have been a challenge for the past few years; however Fannie Mae and Freddie Mac have indicated that lending requirements may be loosening throughout the year, which could provide a new surge in the housing market.”

Annual Starts by Price Range

boise 4q14

Home price increases do appear to be slowing, which will also have a positive impact on the housing market. The median price for a new home in Ada County is $292,500, which is up 19% over last year and 3% above last quarter. The median price in Canyon County has increased 8% over last year to $182,300 and is 1% higher than last quarter.

As of December, there is a 5.6 month supply of new single family detached home inventory in the Boise/Treasure Valley market, which is up from 5.0 months recorded at this time last year, and is considered to be below equilibrium (6-9 months). Under construction inventory increased 7% over last year at this time, however decreased 2% from last quarter, which is to be expected. Finished vacant inventory is down 12% from last year and another 8% from last quarter. This represents a 2.0 month supply, which is unchanged from this time last year, and considered to be within equilibrium. There are currently 107 attached homes/units in inventory, which is a 9.7 month supply.

Inventory of vacant developed lots (VDL) in Ada County has increased for the past 3 quarters to 5,352. This is 17% above 4Q13 and up 8% from last quarter. Based on the current pace of absorption this is a 29.9 month supply, up from 21.1 months last year. There were 2,925 lots deliver to the county in 2014, which is 62% more that 2013. Vacant developed lot inventory in Canyon County is down 4% from last year to 3,740. Based on the current pace of absorption, this is a 57.3 month supply, which is up from 53.3 months at this time last year. There have been 611 new lots delivered over the past year, which is 58% more than 2013.

“With new home production scaling back, as we get closer to spring it will be imperative to monitor inventory levels of both finished vacant homes and vacant developed lots,” said Allen. “With a healthy economy, along with the expectations of loosening mortgage qualifications and slower price increases, the Boise/Treasure Valley market should experience a stable market throughout 2015.”

For information contact
Eric Allen
801.571.7700 x424
eallen@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Reno Continues Booming

Posted in Reno Market | Posted on 03-02-2015 | Written by Metrostudy News

  • The Reno housing market continues to boom as 4Q14 new home starts are up 54% from 4Q13
  • Annual new home starts for 2014 were 1,458, up nearly 25% over 2013
  • Affordability and supply are concerns as new home starts are concentrated into the higher price ranges; supply of finished homes is at its lowest point since 2006

March 2015: Metrostudy’s 4Q14 survey of the Reno housing market showed that while job growth may have cooled slightly this year, annual new home starts and closings continue to rise. Annual new home starts through 4Q14 were 1,458, up nearly 25% over 4Q13. Annual starts are an indicator of future new home closings, and annual closings are 1,331, which is 24% more than one year ago. Increased demand continues to drive builders to start new homes. Quarterly new home starts in the fourth quarter were 54% higher than in 4Q13.

Our average “offer to build” base price for new homes in active projects decreased slightly to $331K. This is an increase of about 1% from one year ago. The average price has increased steadily since 2012 and now, base prices have remained fairly steady over the past year. Builders are pricing their product to the competing resales and trying to remain in line with market affordability.

reno 4q14

“Start activity has shifted over last year into the price ranges above $300K as builders adjust pricing to offset increased land and construction costs,” said Greg Gross, Director of Metrostudy’s Nevada region. “Again, this quarter we are seeing starts fall in the range below $300K. Lot costs are also increasing as lot supply dwindles. Affordability remains a concern as home prices are rapidly increasing. Last year, 54% of all new home starts were under $300k; this year only 39% were priced below $300k.”

With 126 Finished Vacant Single Family homes, the market has only 1 month of supply at current absorption pace. The number of Finished Vacant Homes is at the lowest level since Metrostudy began tracking the Reno market in 2006. Finished Vacant Homes make up only 15% of total housing inventory which is below what we consider equilibrium. However, the number of Under Construction homes has increased 30% since last year. We will continue to closely monitor inventory levels over the next two quarters, but it appears the market is not at immediate risk for over-supply.

The Reno market has virtually ceased single family lot delivery, but with lot absorption outpacing lot deliveries for more than four years, lot Inventory continues to shrink. The greater Reno market has less than 5,000 Finished and Vacant single family lots which equates to 41 months of supply or roughly 3.5 years, based on current start pace. Only 3 years ago we had 14 YEARS of lot supply!

Over-supply of lots along with diminished demand has driven down lot prices and land values in the past, but shrinking supply will force builders to pay more for future lots, which may pressure affordability which is already worrisome. As long as the job recovery continues, most indicators suggest 2015 will outpace 2014.

“Builder confidence in the market continues to strengthen as the market is at 2008 levels,” said Gross. “The new normal will be steady absorptions, increased construction costs and a tightened labor supply.  Metrostudy expects demand to remain steady as 2015 begins. Nevada is once again to top relocation destination, and more companies are beginning to consider Nevada. The Tesla announcement earlier this year has re-energized economic development for the state.”

For information contact:
greg gross @ 916-231-9370
email ggross@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Single-Family New Home Sales Up Year-Over-Year in January

Posted in National Housing Market | Posted on 02-25-2015 | Written by Metrostudy News

Sales of new single-family houses in January were at a seasonally adjusted annual rate of 481,000, according to estimates released today by the U.S. Census Bureau. This is 0.2% below the revised December rate of 482,000, but is 5.3 percent above the January 2014 estimate of 457,000. Metrostudy’s Brad Hunter breaks down sales expectations for 2015.

 

Sales of new single-family houses in January 2015 were at a seasonally adjusted annual rate of 481,000, according to estimates released today by the U.S. Census Bureau.  This is 0.2% (±22.2%)* below the revised December rate of 482,000, but is 5.3% (±22.1%)* above the January 2014 estimate of 457,000.

nhs jan

Read the Full Article on Builder 

 

 

In Tepid Housing Market, Builders Cater to Desires of Well-Off

Posted in National Housing Market | Posted on 02-25-2015 | Written by Metrostudy News

25million1-web-superJumbo

NEWTOWN SQUARE, Pa. — Lisa Gray spent a few months searching for a home that would span the generations, one where her two sons would want to bring friends throughout their teenage years and that her aging parents could navigate with ease.

She settled on a two-story house here tailored to include a game room for the boys and a first-floor guest bedroom to avoid the need for climbing stairs. The cost of most homes in this new development? Roughly $1 million — and up.

“I thought I would just build and make it exactly like I want,” said Ms. Gray, a managing partner at a venture capital firm, who moved into her gray-speckled-stone home three months ago.

Read Full Article from The New York Times

Atlanta Jobs Move Housing Closer To Full Recovery

Posted in Atlanta Market | Posted on 02-24-2015 | Written by Metrostudy News

  • The Atlanta region is showing strong job growth and strong levels of single-family home permits
  • Annual Single Family Home Starts are up 15% in North Atlanta, and up 28% in South Atlanta
  • Inventory Levels are low, and the difficulty of finding a replacement home is keeping many people from listing their existing home.

February 2015: The Atlanta employment statistics through December 2014 show that the region has experienced positive job growth through 4Q 2014. Net jobs in Atlanta through December 2014 increased by 67,400 positions, up 2.6% year over year. Atlanta ended the year as the eighth most populous MSA in the country, seventh for job growth and ranked third highest for single family building permits. Foreclosure activity has hit a twelve year low and resale inventory remains low. All key metrics point towards stronger housing growth for 2015.

“There were 73,099 single family detached used and REO properties sold over the past 12 months ending in 4Q 2014,” said Eugene James, Regional Director for Metrostudy.  “21% of these closings were REO sales (one year ago it was 25%). The 4Q14 median sales price was $166,900 11% above the year over year median sale price of $150,000. Pre- foreclosure activity continues to decline and is at a twelve year low, resulting in fewer foreclosed homes and additional upward pressure on home prices. December single- family listings moved upwards by 9% YoY to 15,700 but the months supply remains very low (and declined this quarter) to 3.8 months. Equilibrium or a normal month’s supply of resale inventory for the region is about 6 months. The difficulty of finding a replacement home is keeping some people from listing their existing home.”

Collectively the Atlanta region saw annual construction starts increase by 18% (as forecasted) to 16,437 and new home closings increased by 23% to 14,806 units closed (move-ins). Metrostudy expects slow but steady growth in 2015.

ATLANTA:

Metrostudy’s 4Q14 survey of the Atlanta housing market shows that there were 16,437 Annual Single Family Housing Starts in Metro Atlanta, up 18% from 4Q13. The fourth quarter 2014 Quarterly Starts of 3,993 were up nearly 18% as well, from 4Q13. Single Family annual Closings reached 14,815 units at the end of 4Q14, up a whopping 22.6% from 4Q13. 4Q14 Quarterly Closings of 4,087 are up 19% from the 4Q13.

Total housing inventory – a figure that includes houses under construction, model homes and finished but vacant or unsold houses, is at or below equilibrium levels and the months supply declined to 7.9. One year ago it was an 8.1 month supply.  The most important housing inventory metric to pay close attention to is the Finished
Vacant inventory (homes completed but unsold or still vacant) months supply which is at 2.9. Normal for the region is about 3.5 months.

According to Metrostudy the Atlanta metro area’s new home prices continued to climb higher this year closing out 2014 at a median price of $271,700, up 4% from the prior year and marks the fifth consecutive year that new home prices have increased year over year.

“The Atlanta metro area is creating jobs at a healthy pace, up 2.6% year-over-year and has averaged above 2.3% growth for the past two years. With 2.51 million people now employed, Atlanta has set a new record for total people employed. Despite good job growth, unemployment was relatively high due to migration into the region thus expanding the labor force faster than the economy could absorb. But solid job growth has spurred consumer confidence which is helping to move the housing market toward a stronger recovery. 2015 should be another good year for housing in the Atlanta region”, said James.

4q ATL

For information contact
Eugene James
404.510.1080
ejames@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com

Sequestration made for a Weak 2014; Indicators for 2015 are Up

Posted in Northern Virginia Market | Posted on 02-24-2015 | Written by Metrostudy News

  • 2014 was a lackluster year for Northern Virginia housing – New Home Starts were down 7% from 2013
  • Resale inventory remains low, so home values should continue to rise.  The median MLS home price in this region is now $394k, up 4.9% YoY
  • Metrostudy anticipates a 10% increase in starts this year for Northern Virginia.

February 2015: According to Metrostudy’s quarterly survey of the Northern Virginia housing market, home starts, attached and detached, in Northern Virginia numbered 8,100 during 2014, down 7% from 2013. Expectations for last year were much higher, but the toll of sequestration on housing carried through all of last year. Annual new home closings were also down as builders closed 8,355 units in 2014, a decline of only 1.4%, but the market should pick up this year if the local economy continues to improve.

“In the resale home market, supply is down due to seasonality, but it is up from one year ago,” said Ben Sage, Director of Metrostudy’s Mid-Atlantic Region. “December resale listings in Northern Virginia numbered 9,653 units – attached and detached – up 24% from a year ago. Despite this sizeable increase, resale inventory corresponds to only 3 months of supply, which is very low. Nationally, 6 months is considered normal, so home values should continue to increase.”

In 2014, Northern Virginia MLS sales numbered 38,691 units for the year, which is down 6 percent from the previous year. The median price of a home sold through the MLS in this area reached $394,000 in December, which is up 4.9 percent from one year ago.

Northern Virginia 4Q14 Annual Starts by Market Area

4q nva

Loudoun County remains the most active market area in Northern Virginia, generating 3,484 starts last year, down 8% from the previous year. The Loudoun County housing market has been a major beneficiary of defense-related jobs in Northern Virginia, but the weakness in the Scientific/Technical employment sector has adversely affected builders in this area. Affordability is another issue, as the median new- home price has grown from $428,500 in 4Q11 to $524,600 in 4Q14, a 22% increase in only three years. Loudoun furthermore suffers from a shortage of lots, as vacant developed lot inventory measures only 17 months as of 4Q14.

Prince William County is the second most active
area with 1,355 annual starts, which is also down
from one year ago – minus 5 percent. In fact, of
the six most active counties in terms of starts, only two generated an increase in annual starts
from one year ago. The 160 starts in Culpeper
are up 43 percent, and the 280 starts in Frederick
are up 8 percent.

The overall inventory of vacant developed lots (VDL), or finished lots, numbered 22,880 at the
end of 2014, up 7% from the
previous year. This is for all product types, including attached product as well as custom lots.
With starts down, the supply of VDL has grown to 34 months up from 30 months at the end of 2013. This is above normal for the area, but supply varies greatly by market area. Supply is generally smallest in the counties with the most starts: Fairfax (11 months), Loudoun (17 months), and Prince William (21 months). Higher lot supplies persist in Caroline, Warren, Orange, and King George Counties.

Given the relative weakness in the demand indicators, it becomes increasingly important to monitor new-home supply. Finished vacant new homes in Northern Virginia number 1,149 units, which is up 6 percent from the previous year. Current inventory would last only 1.7 months at the 2014 closings pace. This is up from 1.5 months at the end of 2013, but it is still quite low. It has been a challenge for builders to sell homes of late, but incentives have been effective at moving product and keeping inventory under control.

“Now that 2014 is in the books, and it was a
lackluster year to say the least, there is hope for
this year,” said Sage. “The national economy is gaining steam, and the DC Metro job market finally has a
pulse. Resale inventory is low, as is new-home
inventory, which are major pluses given the
mediocre demand. Assuming the forecasted job
growth materializes, Metrostudy anticipates a 10percent increase in starts this year for Northern
Virginia. Affordability remains an issue, and high
land prices will not help that problem, but
population growth created by new jobs will have
to be accommodated.”

For information contact
Ben Sage
703.574.8429
bsage@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com

Sequestration Hangover led to a lackluster 2014; Modest Growth Expected in 2015

Posted in Maryland Market | Posted on 02-24-2015 | Written by Metrostudy News

  • Our 4Q14 survey shows 2014 annual new home starts down 1.1% from 2013
  • Strength in the DC Condo market is offsetting weakness in the Maryland housing market
  • Maryland is one of the most land constrained markets in the country, and the overall inventory of vacant developed lots is down 3.5% from 2013

February 2015: According to the Metrostudy quarterly survey, home starts, attached and detached, in Maryland
– which includes nearly the entire state save the
Eastern Shore south of Queen Anne’s County –
numbered 9,111 during 2014. This is
down 1.1% from the previous year, but we
do include The District in our Maryland territory. The housing market has been strong in DC, so
Maryland starts alone declined 6%. This
was not expected, but the effects of the 2013 sequestration appear to have carried over into the housing market last year despite an expanding Baltimore economy.

“The median price of a home sold in Maryland through the MLS reached $259,000 in December, a 1.6% increase from $255,000 12 months prior,” said Ben Sage, Director of Metrostudy’s Mid-Atlantic Region.  “The median price in Suburban Maryland is $285,000, which is up 6.4 percent from one year ago, while Baltimore – at $230,000 – is down slightly. Median price is not the best indicator of home price appreciation. According to Clear Capital’s repeat-sales index for 4Q14, home values are up 4.3% year over year in the DC Metro area and up 0.2% in Baltimore.”

In the resale home market, supply is growing while sales are increasing, both of which are signs of confidence in the housing market at this stage of the cycle. December single family resale listings in Maryland numbered 20,059 units, attached and detached, which is up 16% from a year ago even though it is down in recent months due to seasonality.

In terms of starts activity, Maryland is led by
Montgomery and Prince George’s Counties in DC
Metro and Howard and Anne Arundel in Baltimore
Metro, combining for 52% of Maryland’s
annual starts. Thanks to a fair amount
of new condominium construction, The District is
now generating almost as many starts as Howard
County, which is down due to a shortage of lots.

The overall inventory of vacant developed lots (VDL), or finished lots, numbers 12,692, which is down 3.5% from last year. This is for all product types, including attached product as well
as custom lots. The corresponding months of
supply has remained steady for the last 6 quarters. Current supply of 17 months
is quite low, as this is one of the most land
constrained markets in the country. The supply
of VDL varies by county, but it is generally lowest
in the most active submarkets and in infill areas: Washington DC (3 months), Howard (7 months),Montgomery (9 months), and Baltimore (12
months). Higher lot supplies persist in Cecil, Calvert, Baltimore City, and more recently in Harford County where starts have fallen off.

With Maryland being such a land-constrained market, much attention is focused on future lot supply. Metrostudy follows and reports on the entitlement of over 200,000 future lots in the state, but only 24,789 of these are recorded at the counties. Currently, Prince George’s County has the most capacity to meet current and near-future demand needs.

As new-home demand has declined slightly, it appears that builders remain disciplined with spec inventory. Finished vacant new homes number 1,944 units in Maryland, which would last 2.7 months at the current closings pace. Single family and townhome product accounts for 90 percent of Maryland starts, and their combined months of supply measures only 1.5 months. While this is up from 1.25 months one year ago, it is still quite low.

“Despite some momentum in The District due mainly to condo construction, Maryland experienced a very lackluster year for new homes in 2014,” said Sage. “While Baltimore generated some jobs last year, the Washington DC economy appears to be holding the entire region back. Assuming a turnaround from the sequestration hangover, Metrostudy expects Maryland housing starts to grow a modest 5% this year.”

For information contact
Ben Sage
703.574.8429
bsage@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Strong Regional Growth is Fueling Housing Demand; Affordability is a Serious Concern

Posted in Charlotte Market | Posted on 02-20-2015 | Written by Metrostudy News

  • New Home Starts Ended 2014 slightly up over 2013
  • We are definitely seeing an affordability squeeze: the average price of a new home in 2014 was $295k, unaffordable for Charlotte’s average household income.
  • The rising cost of land and construction continues to impact entry level housing construction – new home starts below $200k are down 7% even as starts between $300-400k are up 18.6% YoY

February 2015:  Metrostudy’s 4Q14 survey of the Charlotte housing market shows that new home builders started construction on 2,058 homes, up 1% over 4Q13. Quarterly Closings – previously unoccupied new homes that now are occupied – totaled 2,325, up 5.5% YoY.  The 9,226 annual starts surveyed through the end of 4Q14 was 1.1% higher than 2013.  The annual closings figure of 4,046 was 7.4% more than 2013.

Charlotte continues to make headways – adding more jobs, and increasing housing starts. Tight land and lot inventories have constrained the pace of growth in recent quarters; however there are signs that this trend may be nearing an end.

“Starts of new homes priced from $300,000 to $399,999 were up 18.6% from 4Q13,” said Bill Miley, Metrostudy’s Regional Director in the Charlotte market.  “The rising cost of land and construction continues to impact entry level housing construction. Starts on homes priced below $200,000 are down 7% from 4Q13. Homes priced above $500,000 now represent roughly 6.6% of overall activity. This segment saw gains in both starts and closings – 16% and 39% respectively – but home inventory was up 8%. Homes priced between $150,000 and $249,999, which represent 38% of the market, continue to see the lowest supply of housing inventory with a combined 5 months’ supply. “

Total inventory – models, finished vacant unoccupied new homes, and new homes under construction – equaled 4,596 units in 4Q14, slightly above the amount recorded in 4Q13. At current closing pace Total Inventory (Models, Finished Vacant, and Under Construction homes) represents a 6.1-months’ supply of homes, down from the 6.3 months’ supply seen in 4Q13. This range of inventory has historically been a point of equilibrium for housing inventories – a sign that level construction rates will drive prices higher.

The 24,374 vacant developed lots in the Charlotte in 4Q14 represent a decrease of 3,630 lots from 4Q13. At the current absorption rate, these lots represent a 31.7- months’ supply, well above the high end of Metrostudy’s normal range. Not all lots share equal demand. In Charlotte submarkets with the highest demand, lot supplies are well below equilibrium, and in some municipalities the entitlement timeline has been significantly longer than the 18-24 month average.

Over the last 4 quarters 5,963 new lots were developed in the Charlotte region, which is 6.5% more lots than were delivered through the end of 4Q13. The current pace of lot deliveries is 64% of the absorption rate (annual starts). The development pipeline is beginning to fill, and Metrostudy believes this gap will continue to narrow over the course of 2015.

Of the 9,226 new homes started in 2014, townhomes made up 8.6% of all new home starts, up from 7.7% in 4Q13.  Despite the increase this remains well below the 14.3% historical average, and significantly below the pre-recession average share of 16%.  Charlotte townhome builders started construction on 210 townhomes (THs) in 4Q14, 34% more than 4Q13. The annual starts figure of 789 homes was 12.7% greater than 2013.

Charlotte’s economy has been gaining steam and this has translated to greater housing development. While prices have been rising – driven by land, labor and material cost – affordability has been maintained for average income families. Median income families however have begun to feel the squeeze. The average sales price of new homes sold in the greater Charlotte area in 2014 was $294,828 and the average household income was $73,393. This indicates that at least for families that are earning at or above the average rate, new homes are still affordable. The median price of new homes sold in 2014 was $267,000. With median household income hovering around $52,000, this price point of home does not fit within budgets, and will be difficult to find mortgage financing.

“This is a trend that is being experienced across the country, and so far the path of least resistance for homebuilders has been to shift operations towards higher income earners and thus higher priced homes,” said Miley.  “With the post-recession housing slowdown, virtually all price points were underserved, and the rebound in housing starts has been primarily driven by the relief of pent-up demand. This meant that even though builders were shifting to higher price points the rate of growth was able to accelerate.  The challenge for the local new home industry will be growing the overall pace of housing as the price point of homes continues to move higher and the impact of entry level buyers will continue to wane. This creates opportunities for builders to innovate, and the market is already seeing some builders adjust and seek out underserved market niches.”

For information contact
Jay Colvin
919- 314-0420
jcolvin@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.