Top 10 Markets: Percent Growth in New Residential Construction

Posted in National Housing Market | Posted on 08-26-2014 | Written by Brad Hunter

We often talk about markets in terms of the total volume of starts, and that cuts some of the smaller markets out of the discussion.  Measured by percent-change, some second-tier markets gain notice.

The graphs below show Metrostudy’s data for detached single-family starts.

NRC2

 

And, below, we show the Top Ten markets, ranked by the percentage increase in single-family starts between the 2nd quarter of 2013 and the 2nd quarter of 2014.

 

StartGrowthQ2

redo

New Home Sales Fall, But Outlook Still Positive

Posted in National Housing Market | Posted on 08-25-2014 | Written by Brad Hunter

brad hLast month’s miserable reading for New Home Sales (as measured by government trackers in June) was revised upward as we expected, but the July number fell 2.4%.  This decline is relatively modest, and the stated confidence interval for the 2.4% drop was plus or minus 11.9%, which means that the government isn’t sure whether new home sales actually rose or fell.

In order to understand what is going on, let’s take a look at what we are hearing around the country.  Builders were mostly unimpressed by the spring selling season, which we predicted would be “good, but not great.”  The summer was equally disappointing.  Our weekly surveys of hundreds of builders nationwide show that in many markets “traffic” is strong, but traffic “conversions” are low.  In everyday parlance:  people are coming in to the builders’ showrooms, but many of them are hesitant to sign on the dotted line.  This time of year was slow last year for conversions (depressed by the “taper talk” and an uptick in rates), but consumer confidence seems to be slightly worse this year.  Of course, new home prices are significantly higher than this time last year.  (The “sticker shock” we have been talking about for 12 months now is still a deterrent).

What do the next few months hold?  Job growth is improving, and we are seeing signs that some 30-year-olds living with their parents are going off and getting their own place, but that mostly affects the rental market, at least for now.  Retirees are showing more interest in buying, and many of them clearly have the cash to get the home that they want.  What is needed, though, in order to get significantly improved new home sales numbers, is increased activity in the entry-level new-home market.  And as you think about this segment, remember that entry-level does not mean only first-time home buyers.  An entry-level NEW home might be a move up from a resale home.

Our forecast is still for gradual improvement in new home demand through the rest of this year, picking up more momentum as we head into 2015.

Metrostudy’s Top 10 “Outlook and Market Health” Ranking

Posted in National Housing Market | Posted on 08-25-2014 | Written by Brad Hunter

Metrostudy’s Top Markets by Outlook Ranking

top ten new home sales aug

 

The Villages, FL – The most successful MPC in history is its own MSA, but it is starting to run short on land.  This is generating a lot of stir amongst developers who want to create “the next The Villages.”

Orlando-Kissimmee-Sanford, FL – More than just “The Mouse,” Orlando attracts a diverse set of home-buying groups, and can grow along multiple directions/corridors.

Cape Coral-Fort Myers, FL – Rapid growth in demand in a Florida market where there is still land left, and some affordable areas for new home construction.

Raleigh, NC – Demand is strong, but builders are bunching up too much in the $400,000+ Move-up segment.

Denver-Aurora-Lakewood, CO – Denver is booming.  New home production is rising 15% this year, and forecast to repeat this growth rate in 2015.

Naples-Immokalee-Marco Island, FL – A country-club paradise, new home demand is now taking off in the newly-developing inland areas.

San Francisco-Oakland-Hayward, CA – Demand is still very strong, pushing further into the remote suburban locations in pursuit of relative affordability.

Phoenix-Mesa-Scottsdale, AZ – Phoenix weakened in the last 12 months due to the price run up of 2013, but migration trends of retirees and Californians will support demand going forward.

Miami-Fort Lauderdale – West Palm Beach, FL – If you own land in this market, you are sitting pretty.  Land is in short supply in the coastal areas, but fundamental demand is extremely strong.

Provo-Orem, UT – This second-tier market has attracted a lot of attention from builders and developers, our studies show.

Reno – a Phoenix in Nevada

Posted in Reno Market | Posted on 08-22-2014 | Written by Metrostudy News

  • Annual new home starts are up 43% YoY, Quarterly starts are up 35% YoY
  • Start activity has shifted to higher price ranges; starts below $300k have dropped dramatically
  • Average base price for new homes stands at $361k, up almost 10% from one year ago

August 2014: Metrostudy’s 2Q14 survey of the Reno housing market showed that while growth in the Reno job market has cooled somewhat, annual new home starts and closings continue to rise. Annual new home starts through 2Q14 were 1,387, up 43% over 2Q13. Annual starts are an indicator of future new home closings, and annual closings are 1,407, 67% more than one year ago. Increased demand continues to drive builders to start new homes. Quarterly new home starts were 35% higher than in 2Q13.

Our average “offer to build” base price for new homes in active projects INCREASED to $361K, up nearly 10% from one year ago. This is good news for home sellers that have been faced with negative equity. The average price has increased steadily since 2012 and now, builders are pricing their product to the competing resale and foreclosure market which are both improved.

“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 Northern California and Nevada division.  “This quarter we are seeing starts fall substantially 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, 64% of all new home starts were under $300k; this year 36% were priced below $300k.”

PRICE DISTRIBUTION OF QUARTERLY STARTS

Reno price range

With 139 Finished Vacant Single Family homes, the market has less than 1.2-months 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; these inventories are actually below the equilibrium level for this size market. Finished Vacant Homes make up 18% of total housing inventory which is considered a healthy level.

“Single family lot delivery has virtually ceased in the Reno market, but with lot absorption outpacing lot deliveries for nearly four years, lot Inventory continues to shrink,” said Gross. “The greater Reno market has 5,103 Finished and Vacant single family lots which equates to less than 4-years of supply, based on current start pace. Only 3 years ago we had 14 YEARS of lot supply!”

There are only about 800 lots various stages of development now; as we are beginning to see some projects begin to show signs of life.

As 2014 is half over, it is clear that the Reno housing market demonstrated signs of stabilization. Builder confidence in the market continues to strengthen as the market is at 2008 levels. The new normal will be steady absorptions, increased construction costs and a tightened labor supply.

For information contact: greg gross @ 916.231.9370
Email ggross@metrostudy.com

About Metrostudy

Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. 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; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Las Vegas Housing : Prices Hit 2008 Levels; Finished Lots at Lowest Levels since 2002

Posted in Las Vegas Market | Posted on 08-22-2014 | Written by Metrostudy News

August 2014: Metrostudy’s 2Q14 survey of the Las Vegas housing market showed builder confidence in the market strengthening as price levels approach 2008 levels. New home demand remains strong as the Valley continues to enjoy steady in-migration; however affordability may be reaching a point which may begin to force first time buyers out of the market for single family homes and into different product lines.

“One of the most challenging issues over the past year for the Las Vegas market has been the availability of lots and the impact on land prices,” said Greg Gross, Regional Director of Metrostudy’s Las Vegas Market. “2013 marked a turning point as land development increased 81%. The second quarter of 2014 is no exception as lot development has increased 76% compared to 2Q13.”

New home prices have risen dramatically this year, and pricing in the resale market is improving rapidly. Average sales price for Single Family Homes increased 9% this year with Median sales price also increasing 14%. Compared to June 2013, the average list price of for-sale homes is 17% higher at $309k.  Production under $200K represents only 13% of all housing starts for the quarter compared to 2Q13 when 14% where under $200K. Our median “offer to build” price for active projects is $279K; 5% higher than one year ago.

Through 2Q14, annual single-family new home closings were 6,124. That’s 3% LESS than in 2Q13. The annual closing pace slowed slightly, as did the quarterly start pace. We counted 1,565 new home starts during the 2nd quarter of 2014 which is 24% less than the 2Q13 starts. The annual start pace decreased by 12% YOY. All of which can be indicative of both slightly weaker demand and very tight lot supply.

Top Ten Builder Rankings for 2Q14

Rank Builder 2Q14 Starts Mkt. Share
1 D.R. Horton 252 14.8%
2 Lennar 215 12.6%
3 Ryland 166 9.7%
4 Richmond American 135 7.9%
5 KB Home 131 7.6%
6 American West 112 6.5%
7 Pardee   99 5.8%
8 Century Communities   70 4.1%
9 Toll Brothers 66 3.8%
10 William Lyon 64 3.7%
Top Ten Total 1,310 76.9%

 

Total Finished Vacant housing inventory has declined 21% this year. Single Family product which represents 32% of all inventory, has only 1.1 months of supply at current pace. Attached finished and vacant inventory is 1,200 with months of supply at 22. However annual closings of condos improved dramatically during 2013 which lowered the condo supply considerably.

“The high rise market has seen a significant flurry of activity this year as investors have realized the value of Las Vegas,” said Gross. “Entry and mid-level product will be opportunistic as the market slide ends. The attached home market has seen sales prices increase 10% this year.”

The lot inventory level has eroded steadily since the first quarter of 2008. “Class A” positions have quickly become in short supply over the past two years. Total finished lot supply has fallen considerably over the past year and lot deliveries have remained slow. Months of supply stands at 14 and supply has decreased 18% since 2Q13. The net absorption of lots highlights the dearth of deliveries as we continue to deplete the supply even as nearly 1,100 new lots were added during the second quarter.

The overall supply of finished SFD lots is declining and development opportunities for delivery in the next 4 years must be considered today. The majority of the new lots in development are in Summerlin, Inspirada and Cadence. It is worth noting that finished lot supply is the lowest level since Metrostudy began counting in 2002.

Metrostudy expects demand to remain steady yet the year may end slightly lower than 2013. The tightened lending standards, lower FHA limits, rising home prices and interest rates and the expected increase in resale homes entering the market, are all factors which may cause new home buyers to rethink their home-buying decisions during 2014.

For information contact: greg gross @ 916.231.9370
Email ggross@metrostudy.com

About Metrostudy

Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. 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; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Naples Metrostudy 2Q14 Survey: Strong Employment Growth Continues to Fuel Housing Demand

Posted in Naples - Ft. Myers Market | Posted on 08-22-2014 | Written by Metrostudy News

August 2014: Metrostudy has released results from its 2Q14 survey of the Naples/Fort Myers housing market, and for the twelfth consecutive quarter we have seen an increase in the annual starts rate. The quarterly starts rate in Naples/Ft. Myers rose 15% to 1,032, and was up 14% when compared to the second quarter of 2013. The annual starts rate increased only 1.4% to 3,511 over the previous quarter, but is up 21% from the second quarter of 2013.  The annual pace has slowed a bit when compared to previous quarters, so we may be seeing a leveling out of starts in Southwest Florida, as we have in South Florida.  Price increases and lot/labor shortages may be beginning to take their toll on the growth rate of starts.

naples 2q

The annual closing rate was up 25% from a year ago, which extends this upward trend to nine consecutive quarters. Finished, vacant home supply continues to be constrained. Lee’s supply increased slightly from 0.7 months of supply last quarter to a 0.9 months supply. Collier’s rate increased from 1.6 months of supply to 1.9 months of supply. Labor and lot constraints have prevented builders from creating an oversupply of homes.

“Both of these rates are well under the three months of supply that Metrostudy considers the high end of normal,” said David Cobb, Regional Director for Metrostudy’s Naples Market. “With 47 consecutive months of job growth in the state, we are continuing to see tremendous demand for new product.  Almost every home under construction has been sold.”

This finished-vacant months-of-supply metric is the number of finished-vacant homes divided by the number of move-ins over the last four quarters, then multiplied by twelve. Metrostudy has observed over the years that when this number rises above 3.0 and stays there, builders tend to reduce prices or make concessions, so this indicator is closely observed each quarter for emerging trends.

Vacant, developed lot (VDL) inventory remained flat at 11,660 lots in the second quarter. This represents 39 months-of-supply, down from 91 months-of-supply recorded two years ago in the second quarter of 2012. VDL months-of-supply is calculated by dividing the number of developed lots by the current annual starts pace, and then multiplying by twelve.

Below are the top 10 communities in the Naples/Ft. Myers market, ranked by annual starts:

Rank Community

1       Riverstone (Collier)

2       Preserve Corkscrew (Lee)

3       Ave Maria (Collier)

4       Pelican Preserve (Lee)

5       VillageWalk Bonita (Lee)

6       VeronaWalk (Collier)

7       Plantation (Lee)

8       Bonita Isles (Lee)

9       Reflection Isles (Lee)

10     Moody River Estates (Lee)

“GL Homes, Pulte, Lennar, and WCI are the market leaders in Southwest Florida this quarter,” says Cobb. “Riverstone by GL Homes continues to impress as the overall market leader, while Preserve at Corkscrew by Pulte and Lennar is nearing build-out after a very successful run. Ave Maria moves up the list again to third place, and WCI’s active-adult Pelican Preserve remains a top five contender. DiVosta’s VillageWalk and VeronaWalk continue to see sales successes as well.”  Plantation by Pulte, Bonita Isles by Minto, Reflection Isles by Lennar, and Moody River Estates by DR Horton round out the top ten.

Separated by County:

Lee County: Quarterly starts were up 21%, while quarterly closings were down 16% from 1Q14. The annual starts rate is up 13%to 1,808, and annual closings are up 29% from one year ago. Housing Inventory remains well below normal. Nine months of supply (MOS) is considered normal, but Lee’s housing MOS is the lowest in Metrostudy’s eight-county South Florida Region at only 5.6 MOS. The supply of VDL inventory declined 3% quarter- over-quarter to 6,899, a 44 month supply. There were 321 lot deliveries in the quarter. Future lot inventory remains stable at 48,766.

Collier County: Quarterly starts in the second quarter rose 11%, while quarterly closings jumped 28% from the previous quarter. The annual starts rate is up 13%, and annual closings are up 21% from a year ago. The annual starts rate has risen for twenty consecutive quarters, from a low of 399 in early 2009, to 1,703 in the current quarter.

Housing Inventory is slightly above normal at 10.1 MOS. VDL inventory rose 4% quarter-over-quarter to 4,685, a 33-month supply. There were 669 lot deliveries in the quarter, and future lot inventory declined 3%, to 23,058.

In both Lee and Collier counties, future lot supply remains sufficient in the near term, as there are over 11,000 lots under development in the two counties.

For now, it’s steady as she goes in Southwest Florida.  Mortgage rates remain low, inventory is below equilibrium, job growth is positive, and the cities of Fort Myers and Naples continue to be a desirable place to live.

For information contact: David Cobb @ 813-443-6504
Email dcobb@metrostudy.com

About Metrostudy

Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide.  Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day.  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; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

 

St. George/Mesquite 2Q14 Survey: Rising Prices Keep Entry Level Buyers on the Sidelines

Posted in St. George - Mesquite Market | Posted on 08-22-2014 | Written by Metrostudy News

August 2014: According to Metrostudy’s quarterly survey, there were a total of 361 new homes – both attached and detached – started during 2Q14 in the St. George market, up 16% compared to 2Q13, and up 2% from 1Q14. New home closings totaled 319 during the second quarter, which is 13% more than last year at this time, however 10% fewer than last quarter. Annual new home starts have increased 33% compared to last year’s pace, for a total of 1,549 homes. Annual closings totaled 1,390 as of June, which is an increase of 27% compared to the pace last year.

The Mesquite market area started 41 new homes during the second quarter of 2014 which is up from 22 starts during 2Q13. Annual starts as of June totaled 210, which is an increase of 49% compared to this time last year when there were 141. Quarterly closings totaled 71 during 2Q14, up 97% from the 36 closings in 2Q13. Annual closings totaled 217, which is a 55% increase compared to the pace last year at this time.

“Escalating home prices are continuing to keep many entry level buyers out of the market, as fewer consumers are able to qualify for a home,” said Eric Allen, Director of Metrostudy’s Utah/Idaho Region. “Rising prices are keeping would-be buyers in a rental holding pattern. The median price for a new detached home in the St. George market is $349,400, up 16% from a year ago. The median price for an attached unit is $137,900, up 5% from last quarter. The median new home price in Mesquite is currently $211,100 which is up 5% from last year at this time.”

As of June, there is a 5.7 month supply of single family detached homes in the St. George market, which is up from 5.1 months recorded at this time last year. Under construction inventory for detached homes increased 25% compared to last year at this time, however dropped 3% from last quarter. This total calculates to a 3.8 month supply, which is down from 4.0 months recorded last quarter. There are 168 finished vacant homes on the ground, an 83% increase from 2Q13, and 30% above last quarter.

“Despite the increase in inventory, the supply remains healthy at 1.6 months, up from 1.1 months in 2Q13,” said Allen.  “So far, closings have kept pace with the market, resulting in a healthy level of finished vacant homes, however it will be imperative to monitor as we push into the second half of the year.”

New detached inventory in Mesquite increased 6% from a year ago, however down 4% from last quarter. The current total calculates to a 5.8 month supply, which is considered to be within equilibrium. Under construction inventory decreased from a 1.7 month supply recorded last quarter, to a current supply of 1.3 months. There are currently 25 finished vacant homes on the ground, which is a 1.2 month supply, down from 2.6 months in 2Q13.

Inventory of vacant developed lots (VDL), or finished lots, in the St. George market have increased 10% since last year and 1% from last quarter. Despite the slight increase in overall lot inventory, absorption (starts) has also increased, which has caused the supply to drop. Based on the current pace of absorption, there is a 42.8 month supply, down from 51.7 months recorded at this time last year, and down from 44.6 months last quarter. While the overall supply of lots is above healthy equilibrium levels, there are areas and specific projects in the market that continue to have a negative effect on this supply. There have been 2,054 new lots delivered to the market over the past year, while builders have absorbed 1,549, resulting in a net increase of 505 lots. Vacant developed lot inventory in Mesquite decreased -8% from last year. At the current pace of absorption, this calculates to a 90 month supply, which is down from 145.3 months recorded in 2Q13.

While we do not expect the St. George market to expand at the same pace as 2013, the momentum is expected to continue into the rest of 2014.

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

About Metrostudy

Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide.  Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day.  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; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Boise 2Q14 Survey: Prices Rising; Production of Entry Level Homes Dropping

Posted in Boise Market | Posted on 08-21-2014 | Written by Metrostudy News

August 2014: Metrostudy’s 2Q14 survey of the Treasure Valley market showed that activity and prices in the region are increasing even as the supply of new homes coming to market at the lower price points is dropping.  There were 837 new homes (both attached & detached) started during the second quarter of 2014, down 21% from 2Q13, however increased 22% from last quarter. New home closings totaled 739 during the quarter, and decreased 18% from last year at this time however increased 19% from last quarter. New home starts for the first half of 2014 are down 14% compared to the first half of 2013. Annual new home starts have been increasing between 40-70% since 2Q12, however have begun to level off. Annual starts have increased 4% compared to last year’s pace for a total of 3,239 and annual closings are up 5% to 3,102.

Ada County started 605 new homes during 2Q14, which is down -27% compared to 2Q13, however increased 14% from last quarter. Annual starts increased 1% from last year to 2,403. There were 548 new home closings during 2Q14, down -27% compared to last year, however up 17% from last quarter. Canyon County started 223 new homes during 2Q14, which is down -.4% compared to last year, however up 52% from last quarter. Closings during the second quarter increased 29% over last year, and 22% from last quarter, for a total of 185. Annual new home starts increased 12% over the pace last year to 819 and annual closings are up 31%, for a total of 789.

“Affordability concerns and escalating prices continue to limit options for first time buyers, as fewer consumers can qualify for higher priced homes,” said Eric Allen, Director of Metrostudy’s Utah/Idaho region.  “The median price for a new home in Ada County is $275,000, up 20% over last year and 8.5% above last quarter. The median price in Canyon County has increased 18% over last year to $177,600 and up 2% from last quarter.  Less product is being produced at the lower price points and this will continue to squeeze lower income buyers.”

eric 2q

As of June, there is a six month supply of new single family detached homes in the Treasure Valley market, up from 5.8 months recorded at this time last year, and from 5.3 months last quarter. Inventory for homes under construction declined 1% compared to last year at this time, and is nearly unchanged from last quarter. This total translates to a 3.3 month supply, down from 3.6    months in 2Q13. There are 594 finished vacant homes on the ground, a 29% increase from 2Q13. Despite the increase, the supply remains healthy at 2.4 months, up from 2.0 months in 2Q13. So far, closings have kept pace with the market,     resulting in a healthy level of finished vacant homes, however it will be imperative to monitor as we push into the second half of the year.

There is a 12.9 month supply attached homes on the ground. Of this, under construction inventory represents a 7.0 month supply, along with a 5.5 month supply of finished vacant units.  Ada County currently has a 6.2 month supply of new detached inventory on the ground, up from 5.3 months last quarter. Currently there is a 2.4 month supply of finished and vacant homes on the ground, which, and a 3.5 month supply of under construction inventory. Canyon County has a 5.5 month supply of new home inventory. Under construction inventory sits at 2.9 months, and finished vacant inventory represents a 2.4 month supply.

Inventory of vacant developed lots (VDL), for both attached and detached homes in Ada Count is down -.2% from last year, and -4% from last quarter. Lot supply now sits at 22.9 months, down from 23.1 at this time last year. Vacant developed lot inventory in Canyon County is down -14% from last year. Based on the current pace of absorption, there is a 52.9 month supply, which is down from 69.2 months recorded in 2Q13. There have been 2,618 new lots delivered over the past year, while builders have absorbed 3,239, for a net decrease of -621 lots.

The Boise/Treasure Valley housing market has enjoyed a strong recovery and rapid growth over the past couple years, which is partly due to the growing economy.  While the housing market may not be expanding at the same pace as last year, momentum is expected to continue.  The fundamentals of the economy remain strong, which will help keep housing moving forward.

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

About Metrostudy

Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide.  Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day.  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 analyticsdriven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Salt Lake City 2Q14 Survey: Affordability Continues to Have a Stronghold on the Market

Posted in Salt Lake City Market | Posted on 08-21-2014 | Written by Metrostudy News

August 2014: Metrostudy’s 2Q14 survey of the Greater Salt Lake market, annual new home starts  – both attached and detached – totaled 8,209 as of June 2014, up 9% from the annual pace last year at this time. Annual new home closings increased 8% compared to last year, for a total of 7,742. New home starts during the first half of 2014 have decreased 2% compared to the same time last year. Annual starts for Single Family detached homes have increase 6% compared to last year, however down -4% from the annual pace recorded last quarter (1Q14). New home closings have increased 7% over the pace last year. Annual starts for Attached (for sale) homes have increased 20% over last year’s pace, and annual new home closings are up 11% from a year ago.  While the sentiment regarding the housing market may be waning, evidence shows that the market remains strong.

“Affordability continues to have a stronghold on the market, limiting the number of consumers that are able to qualify for a home,” said Eric Allen, Regional Director of Metrostudy’s Utah/Idaho market. “Home prices have risen rapidly over the past year, which has pushed many first time home buyers to the sidelines, or in a rental holding pattern.  However, recent figures show that price increases across the market have been less dramatic than the past year or so.  The median price for a new Single Family home has increased 11% from last year at this time to about $325k, while up only 1% from last quarter.. The median price for a new Townhome unit is 7% higher than last year at this time to approximately $205k, and 1% above last quarter, and the median price for a Condo unit increased 8% from last quarter to $174k.”

As of June, there is a 6.6 month supply of single family detached home inventory in the Greater Salt Lake market, which is up from 6.3 months recorded at this time last year, however remains within equilibrium. Under construction inventory for detached homes rose 3% compared to last year at this time, however decreased -3% from last quarter; and currently sits at a 4.6 month supply. Finished vacant home inventory (or otherwise known as spec homes) has increased 49% from last year at this time, and up 18% from last quarter. Despite the increase, the supply remains healthy at 1.6 months, up from 1.1 months in 2Q13. So far, closings have kept pace with the market, resulting in a healthy level of finished vacant homes, however it will be imperative to monitor as we push into the second half of the year.

There is currently a 9.2 month supply of townhomes in the market, which is up from 8.3 months recorded in 2Q13.  Under construction inventory has increased 10% over last year, and remains within equilibrium with 6.8 months of supply.  Finished vacant inventory has increased 85% from last year, however the supply remains healthy at 2.0 months.  New home inventory for Condos currently sits at 26.3 months, a level considered above equilibrium.  Inventory of vacant developed lots (VDL), or finished lots, for single family detached homes declined 3% from last year, however increased 3% from last quarter to a total of 15,571. Based on current absorption, this is a 30.7 month supply.

“While the overall supply of lots appears to be above equilibrium, there are areas and specific projects in the market that continue to have a negative effect on this supply,” said Allen. “For instance, there are just over 5,500 vacant lots for homes priced above $500k, which represents an 80 month supply.  This compared to the 17.2 month supply of vacant lots for homes priced from $200k-$350K, a level considered to be below equilibrium.  Vacant developed lot inventory for townhomes decreased 6% from last quarter, which is a 16.8 month supply. There is also a 42.1 month supply of vacant lots for condos on the ground.  There have been nearly 7,700 new lots delivered to the market over the past year, while builders have absorbed 8,209, for a net decrease of 514 lots.”

The Greater Salt Lake housing market has enjoyed a strong recovery and rapid growth since 2011, and with that, improvements have occurred in the economy and consumer confidence. While the housing market may not be expanding at the same pace as last year, momentum is expected to continue.  The fundamentals of the economy remain strong, which keeps those in the housing industry optimistic about the future.

Top Ten Projects (based on new home starts / Attached & Detached)

Daybreak – 476

Rosecrest – 249

The Ranches – 205

Independence – 166

Foxboro – 161

Sleepy Ridge – 133

Bingham Junction – 131

Iroquois – 110

Herriman Town Center – 91

Stansbury Park – 88

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

About Metrostudy

Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide.  Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day.  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; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Winter Isn’t Coming: Chicago Housing Shakes off the Frost & Readies for Growth

Posted in Chicago Market | Posted on 08-21-2014 | Written by Metrostudy News

August 2014: Metrostudy’s 2Q14 survey of the Chicago housing market shows a market rebounding from both the harsh winter and the long fallout from the housing crash.  Including single-family detached units, townhouse units and duplex units in the twelve-county Chicagoland region, there were a total of 5,236 new units started in the twelve month period ending in 2Q14, up 21.8% against 2Q13’s rate. This is the highest annual rate of new home construction since 1Q09.  The annual rate of closings surpassed 5,000 units in the second quarter, with a tally of 5,045 units closed over the past twelve months, a 16.5% increase over 2Q13. The double digit percentage increases represent the largest rate of growth in annual starts and closings since the early 2000’s.

“The 1,583 units started in the second quarter of this year represents an increase of 20.8% over the 2Q13 starts total,” said Chris Huecksteadt, Regional Director of Metrostudy’s Chicago market.  “This is nearly double the first quarter tally, indicating the market is returning to normal seasonal characteristics.  We also saw a significant improvement in closings, with1,205 new homes closed in 2Q14, up 9% from 2Q13. With the job growth experienced over the past eighteen months, we expect continued growth in both starts and closings through 2014.   The lack of quality resale inventory available in many submarkets will also contribute to growth in new home demand throughout the remainder of this year and into next.”

Nearly two-thirds of all new home starts in the Chicagoland market occurred in four counties: Cook, Kane, and Will in Illinois and Lake County in Indiana. Throughout the collar counties, a significant increase in construction activity occurred in the first half of this year compared to the first half of 2013.  The outlying counties within the greater Chicagoland area are still seeing very little in terms of new home construction.         Boone, DeKalb, Grundy, and Winnebago counties saw just 87 combined new home starts in the first half of this year (up, however, from 2013’s numbers).

Finished and vacant inventory has steadily fallen in the overall market, leading to the need for new home construction as demand continues to grow. The supply of finished and vacant inventory rose slightly to 2.5 months for single- family detached and attached homes in the second quarter.  “These are the lowest levels of new home inventory we have seen in over six years in the Chicago market,” said Huecksteadt. “The inventory of units under construction has continued to rise through the second quarter, indicative of increased demand and shrinking inventory. Not only is the amount of new home inventory low, but the low levels of resale supply should continue to bring buyers to the new home market.”

As the market has shown steady growth and an increase in demand, the mood among the homebuilding community has continued to improve.  We are now beginning to see previously dormant subdivisions become viable, new land/lot development being contemplated, and the potential for actual profits to be realized.  The months supply of lot inventory is at its lowest level since late 2008.

As the number of lots in the market has slowly declined, and the rate of new home construction has increased, the months of supply indicator fell to less than 115 months. The peak occurred in mid-2011, when there was a 256.5-month supply of lots in the market. “Of course the whereabouts of many of these lots is still a concern, with many lots considered to be in subpar locations: too far from transportation corridors and job centers and/or located in the wrong school district,” said Huecksteadt. “The biggest question will be whether these lots can be reconfigured and reintroduced into the market at a price that would enable the absorption of these lots.”

Nearly all indications are that the local housing market is on track to continue in recovery mode. This is not to indicate that there will be a quick return to the glory days.       Growth will likely be slow but steady. In addition there are still some concerns in the market, most notably the number of foreclosures that have occurred and are still likely to occur through the remainder of this year and the elevated level of unemployment.

On the positive side, according to MLS statistics, demand for single-family homes is at its highest point in over five years, while inventory is near record lows. There is currently a 5.1 month supply of inventory (single-family detached product) listed in MLS, up from prior quarters, but still very low. This increase in demand and relatively low level of inventory led to the first uptick in new home prices in several years. The median price of a home sold through MLS saw it’s first annual increase since March of 2008.

The improvement in the resale market, both in terms of increased demand and stabilizing home prices, should begin to make a new home purchase a more attractive and viable alternative for potential home buyers, many of whom have been leaning toward the resale market, perceiving a better value.       In fact, this has already begun, as evidenced by the significant increase in the rate of new home construction through the first quarter of this year. With little new home inventory available, and a declining amount of quality existing inventory, the rate of new home construction should continue to rise.

For information contact Chris Huecksteadt @ 847-651-9080
email chueck@metrostudy.com

About Metrostudy

Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide.  Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day.  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; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.