NASHVILLE 2Q15 HOUSING: With Home Starts at Record Highs since the recession, Depressed Inventory Levels continue to push prices higher

Posted in Nashville Market | Posted on 09-01-2015 | Written by Metrostudy News

SEPTEMBER 2015 – Metrostudy’s 2Q15 field survey found that the Nashville MSA experienced 6,645 residential construction starts over the past 12 months ending in June 2015, up 8% year over year from 2Q14 levels. This marks a new record high for construction starts for the region since the Great Rescission of 2009. Annual Closings as of 2Q 2015 came in at 6,095 new homes sold during the past 12 months, up 10% YoY from 2Q14.

Although builders have ramped up their construction activity, housing inventory remains low. “Perhaps the most important metric used to measure the health of housing inventory levels is the Finished but Vacant housing inventory months of supply (FV MOS),” said Eugene James, Director of Metrostudy’s Nashville region. “The region’s finished housing supply declined by another 14% year over year to 686 units and the FV months supply is at a record low of 1.4 months. Equilibrium had been about 2 to 2.5 months of finished housing supply thus an under-supply of finished homes exists.

Metrostudy analysis of the resale market shows 31,504 single family detached used and REO properties sold over the 12 months ending in 2Q15, 5% more than one year ago. 10% of these closings were REO sales (one year ago it was 14%) thus distressed sales are far from being a major issue in the region. The 2Q15 median sales price was $198,000 which is 9% above the year over year median sale price of $181,000. June single-family listings (inventory) moved downward by 13% YoY to 9,179 but rose 1% above last months inventory. The resale months’ supply is below normal levels at about 3 months. Normal levels would be closer to 6 months “thus an undersupply of resale homes are available for purchase as well.

“Strong sales and depressed inventory levels of both new and resale product will continue to push prices higher,” said James. “However, home prices have already climbed to an all-time record high in the region at a very rapid pace. The same pace would be unhealthy and unsustainable so we expect home price increases to slow.”

For information contact:
Eugene James @ 404.510.1080
email ejames@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.  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, LLC is the premier media, event, information and strategic marketing services company serving the residential, commercial design and construction industries. Through its operating platforms, the company produces award-winning digital and print publications, Newsletters, websites, marquee trade shows and events, Market Intelligence data and strategic marketing solutions.

 

San Francisco Bay Area 2Q15: Entering Uncharted Territory – With Demand and Prices Rising, the Region Still Faces a Lot Shortage

Posted in San Francisco Market | Posted on 08-26-2015 | Written by Metrostudy News

  • Annualized new home starts through 2Q15 are down 4% over 2Q14 levels
  • Starts Activity is concentrated in the higher price ranges – 25% of new home starts are priced over $1 million
  • With prices at or above peak pricing, potential buyers may decide to rent: still, the average apartment rental rate has increased 61% since 2010.

AUGUST 2015: Metrostudy’s 2Q15 survey of the San Francisco Bay Area housing market shows annualized new home starts are DOWN 4% compared to 2Q14, while closings are UP 11%. Quarterly new home starts were up 11%, while closings are DOWN 31% compared to 2Q15. Annual starts have been outpacing closings since 1Q13. As a result, total inventory levels that were once below equilibrium are now at the highest level since 2009. By the end of 2013, the annual start pace had significantly outpaced the annual closing pace mostly due to Condominium starts. Over the past year, total new home inventory has risen 18%.

“Start activity has increased in the price ranges between $400K and $700K as builders adjust pricing to offset increased construction and land costs by offering smaller and slightly more affordable product, primarily in Eastern Contra Costa County and in Solano County” said Greg Gross, Director of Metrostudy’s Northern California region. “This quarter we are seeing starts increase in the $600-$800K range as activity is moving further out to secondary submarkets. 25% of new home starts are priced above $1 million. At this point the Sacramento market is more attractive where 35% of the starts are under $400K vs. 5% in the Bay Area. Finished inventory of housing has been steadily decreasing over the past three years. With 1,322 Finished Vacant homes, the market has 2.4 months of supply. Single Family Detached product comprises of 441 finished vacant; a 1.3- month supply. The inventory level of Attached product is 881 finished and vacant units, a 4.2- month supply and another 4,847 units under construction.”

Screenshot 2015-08-26 14.46.30

Our average “offer to build” base price for new Single Family detached homes is down .7% over a year ago to $753K as builders may begin to see moderate demand and higher inventory levels as prices increase and also changing product mix. The average price for Attached homes is $842K; an increase of 18%. The first quarter brought more gradual price appreciation over the past year and few more moderately priced new communities in the suburbs.

The San Francisco Bay Area market has enjoyed robust economic conditions for more than four years. Job growth may have slowed recently from the highs of 2013, but still remains among the best in the nation. While most areas of California have experienced job growth, the Bay Area has been especially impressive. San Jose added 55,700 jobs followed by San Francisco; 41,800 and Oakland; 20,000. These three MSA’s are responsible for 90% of all jobs created in the region. The Bay Area has created 27% of all new jobs in California.

For comparison, the all time peak employment level in the Bay Area was just prior to the “Dot Com” collapse; In December 2000 there were 3,652,400 people employed. Currently there are 3,715,100 employed, 62,700 more than the all time high. We are officially in “uncharted territory.”

Lot delivery in the Bay Area has increased substantially over the past year, yet lot inventory remains low. In 2014; 4,042 new lots were developed, and 3,187 new lots were delivered during the first half of 2015. Months of supply continues to fall, now at 17.4 months. The supply of vacant lots continues to be rapidly absorbed; even with more 5,500 new lots being added in the past 12 months.

Metrostudy is tracking about 110,000 Bay Area future Single Family lots with 8,511 lots being developed now; a very small number considering the size and potential demand of the Bay Area. Considering the barriers to development, the market continues to face a lot shortage.

The Bay Area experienced a strong first half of 2015. Job growth is strong, housing demand is strong and the general economics in the region is strong. Demand is stabilizing, prices have increased rapidly, and affordability limits are being pushed in almost all sub-markets.

“Metrostudy expects demand to remain steady through 2015,” said Gross. “While job growth is strong in the Bay Area, the overall cost of home ownership is outpacing household income growth in most areas. With prices at or above peak pricing in most sub-markets, buyers may begin to rethink their home-buying decisions and decide to rent. The average apartment rental rate has surpassed $2,400 per month; an increase of 61% since 2010. Apartment rental rates in the Bay Area range from a low of $1,339 in Antioch to a high of $3,524 in San Francisco.”

Given the above, Metrostudy does not expect the housing market to weaken, but experience more of a stable period of supply and demand through 2015 as the economy continues to improve and the market adjusts to the rapid increase in home prices. The East Contra Costa, Sacramento and Stockton regions will likely benefit from the expanding Bay Area economy, as homebuyers seek more affordable homes outside of the Bay area.

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 2Q15: With Lot Supply at Record Low Levels, Rising Prices are forcing First Time Buyers Out of the Market

Posted in Las Vegas Market | Posted on 08-24-2015 | Written by Metrostudy News

  • Quarterly starts are 22% higher compared to 2Q14 as builders remain confident in the market.
  • Production under $200K represents only 4% of all housing starts for the quarter compared to 2Q14 when 13% were under $200K.
  • Our median “offer to build” price for all Single Family Detached active projects is $307K – 9.6% higher than one year ago.

AUGUST 2015 – Metrostudy’s 2Q15 survey of the Las Vegas housing market shows that annual single-family new home closings were 5,912, down 3% from 2Q14. Quarterly closings were 23% higher however. Quarterly starts are 22% higher compared to 2Q14 as builders remain confident in the market. The annual start pace increased by 13% YoY. All of these numbers are indicative of both increased demand, low levels of finished inventory, and very tight lot supply.

“Pricing in the resale market has improved rapidly,” said Greg Gross, Director of Metrostudy’s Las Vegas Region. “Average sales price for Single Family Homes increased 8.1% this year with median sales price also increasing 10.1%. Compared to June 2014, the average asking price of for-sale homes is 14% higher at $352k. Production under $200K represents only 4% of all housing starts for the quarter compared to 2Q14 when 13% where under $200K. The market is beginning to see more slightly affordable attached product entering the market.

Screenshot 2015-08-24 15.05.55

Our median “offer to build” price for all SFD active projects is $307K; 9.6% higher than one year ago. Total Finished Vacant housing inventory has decreased 3% this year. Builders needed to replenish their vacant inventory to satisfy demand, yet these inventories are being effectively managed. Single Family product – which represents 74% of all inventory – has only 1.7 months of Finished Vacant home supply at current pace.

“There is less than 19 months of supply of Attached finished and vacant product,” said Gross. “However annual closings of condos have improved dramatically during the past 2 years which lowered the condo supply considerably. Entry and mid-level product will be opportunistic as the market continues to improve. The attached home market has seen the median sales price increase more than 5% this year.”

Total finished lot supply has fallen considerably over the past five years and lot deliveries have remained slow. With only 8,451 Finished SFD lots today, that’s only 15 months of supply, even with a 21% increase in lot deliveries since 2Q14.

The net absorption of lots highlights the dearth of deliveries as we continue to deplete the supply even as 8,131 new lots were added during the past four quarters, we started 6,686 new homes. There are now 15,145 lots in development compared to 2Q14 when 14,089 lots under development, and immediate production capacity is still healthy for the next year. The majority of the new lots in development are in Summerlin, Inspirada, Cadence and the general Southwest Valley. It is worth noting that this number of finished lot supply remains near record low levels, lowest since Metrostudy began counting in 2002.

“One of the most challenging issues over the past year was the availability of lots and the impact on land prices,” said Gross. “Over the course of 2014, the total number of lots in development declined but that reversed during the first half of 2015 as projects are seeing much more rapid development. Builder confidence in the market remains strong as the market is at 2008 levels. However affordability may be reaching a point which may begin to force first time buyers out of the market for new homes especially now that investors are realizing the opportunity in Southern Nevada.”

For information contact:
Greg Gross – 916.231.9370
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, LLC 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, visithanleywood.com.

 

Rio Grande Valley 2Q15: The Recovery Continues – Job Growth will be Key to Future Market Strength

Posted in Rio Grande Valley Market | Posted on 08-24-2015 | Written by Metrostudy News

  • The Annual Starts rate through 2Q15 stands at 1,745, down 2% from 2Q14
  • New Home Inventory Continues to Decline and is at the lowest level in a decade
  • The recovery continues in the Rio Grande Valley and job growth will be the most important factor as to how much this market can improve over the next few years

AUGUST 2015 – Metrostudy’s 2Q15 drive survey of new home construction in the Rio Grande Valley shows an annual rate of 1,745 starts, down 2% from the 2Q14 rate of 1,788. There were 486 starts and 486 closings in the Rio Grande Valley in 2Q15. The annual rate of new home closings currently stands at 1,917, up 7% from a year ago.

“Metrostudy’s 2Q15 analysis found the level of new home inventory continued to decline and is now resting at its lowest level in about a decade,” said Jack Inselmann, Director of Metrostudy’s Rio Grande Valley region. There were a total of 1,117 homes in inventory (Models, Finished Vacant and Under Construction) at the end of 2Q15, which represents a 7.0 months of supply based on the annual closings rate of 1,917.

In the 2nd quarter of 2015 Metrostudy counted 13,686 vacant developed lots in the Rio Grande Valley market. Based on the current annual starts rate of 1,745, this lot total represents a 94.1 months of supply of lots, well above what is considered a healthy range.

It is important to note that the Top 57 most active subdivisions ranked by annual starts [8+ annual starts] ave 3,012 developed lots, a 34.4 months of supply. This is a much healthier level by far when compared to the overall 94.1 months supply. This is important as it supports the discussion of a small group of active subdivisions and large group of fairly inactive subdivisions. The Top Subs group has a starts rate of 1,051 and annual closings of 951.

“The recovery continues in the Rio Grande Valley and job growth will be the most important factor as to how much this market can improve over the next few years,” said Inselmann. “The market has come a long way in the last couple of years and even though it still has a ways to go the progress so far is notable.”

For information contact:
Jack Inselmann
210.710.3635
jacki@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, LLC 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, visithanleywood.com.

Twin Cities 2Q15: Rising New Home Prices Limiting Growth – First Time Buyers Unable to Enter Market

Posted in Twin Cities Market | Posted on 08-19-2015 | Written by Metrostudy News

  • Through 2Q15, the annual rate of new home starts stands at 5,440 – down 4.7% from 2Q14’s rate. Still, for the first time in five quarters, both the annual rate of new home starts and closings increased from the prior quarter, indicating a strong second quarter
  • In many markets and submarkets, the gap in price between an existing home and a newly constructed home continues to widen, ranging from $125,000 to $225,000.
  • During peak construction years, 45% of new home starts were priced under $250k – today just 17% of new home starts are priced under $250k.

AUGUST 2015 – Metrostudy’s 2Q15 survey of the Twin Cities housing market shows that during the most recent twelve-month period, there were a total of 5,440 new housing units started (including single-family detached homes, townhome units, and duplex units), a decline of 4.7% compared to the 2q14 annual rate. The 1,588 units started in the second quarter of this year represents an increase of 7.7%, however, compared to the 2q14 starts total. The annual rate of closings is at 5,343 units, down 4.7% compared to the 2q14 annual rate. For the first time in five quarters, both the annual rate of new home starts and closings increased from the prior quarter, indicating a strong second quarter (due in some part to the effect of the Parade of Homes).

“Even in the face of positive job growth numbers, very low unemployment, and recent income growth, the uptick in construction activity in 2015 is still below 2013 levels,” said Chris Huecksteadt, Director of Metostudy’s Twin Cities region. “In many markets and submarkets, the gap in price between an existing home and a newly constructed home continues to widen, ranging from $125,000 to $225,000. Although the size of a new home is typically significantly larger than that of an existing home, it may still be a bit much for the consumer to swallow, especially for the first time buyer or younger family that cannot afford a new home.”

County comparisons in terms of year to date starts activity is mixed in the Twin Cities market. Of those markets with a significant amount of activity, Anoka, Hennepin, and Washington saw the largest increases, up 13.7%, 4.5%, and 5.7% respectively. Other markets saw a decline through the first six months of this year, including Carver, Dakota, Scott, and Wright counties. The low levels of lot supply in some markets and submarkets have had the impact of restricting demand and increasing prices at a time when demand has declined and prospective buyers are price sensitive.

With the very recent uptick in the pace of new home construction (the rate of lot absorption), and a static level of vacant developed lot inventory, the months of supply for lots in the Twin Cities has, since the prior quarter, declined. The current overall supply of lot inventory stands at 44.2 months, down from the 47.0- month supply of the prior quarter. If we consider only the metro-7 counties, the months supply of lot inventory is a very low 27.9 months. Builders and developers are both feeling the squeeze from a lack of quality lots in desirable locations, leading to more acquisition and development activity. While the overall market shows a slight oversupply of lots, lots in many of the most desirable locations are becoming more and more scarce, leading to builders to seek land and lot opportunities in those markets (driving up the price of land) as well as some secondary markets.

Nearly all of the fundamentals for a strong housing market are in place, and certain aspects of the housing industry are benefiting. Apartment vacancy rates continue to hover in the 3.5% range, with rental rates inching upward toward $1,500 per month. Resale activity as reported through MLS saw a significant increase year to date when compared to 2014, up 15.8%, with resale prices also up 4.7% June over June.

“The question remains as to how big a slice of the pie will the new home market be able to cut,” said Huecksteadt. “During peak construction years, The Twin Cities market reached 18,000 new home starts, with 45% of the activity priced under $250,000. Today, just 17% of new home starts are priced under $250,000. The bigger numbers are in the lower price ranges. Rising home prices due to increase construction costs, land and lot price increases, and rising development costs have forced new home prices above levels that could maximize absorption. The new home market is unable to reach what could be the largest pool of potential buyers that are out there.”

Metrostudy does expect the new home market to grow slightly in the second half of 2015, if the economy continues to perform and grow at a faster pace than it is currently. The current forecast for construction in the Twin Cities market is at 5,500 units, which would represent only a slight increase over 2014 (less than 1%).

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

 

Metrostudy Releases Q2 2015 Residential Remodeling Index (RRI) — RRI Beats Previous Expectations, Reaches Full Recovery in Second Quarter

Posted in In The News, National Housing Market | Posted on 08-18-2015 | Written by Metrostudy News

WASHINGTON, D.C. (August 18, 2015) — Metrostudy, a Hanley Wood company, announced today the release of its second quarter 2015 Residential Remodeling Index (RRI) detailing activity in the remodeling and replacement industry.

The national RRI Activity Index beat previous expectations by reaching full recovery (a reading of 100.0 or more) in second quarter 2015. The index grew by a strong 5.5 percent year-over-year to reach 100.8 in second quarter. This bested previous calls for recovery of the remodeling and replacement industry to occur in third quarter 2015, and demonstrates the continued firming of demand fundamentals across the country. The RRI has now posted thirteen consecutive quarters of positive year-over-year gains since the industry hit bottom at the end of 2011.

Second quarter’s RRI measure also showed a gain of 1.5 percent over first quarter’s revised reading of 99.3, which now represents fourteen consecutive quarter-to-quarter increases. Additionally, the near term forecast for remodeling activity has strengthened over forecasts made in previous RRI releases.

“We saw a really good uptick in the Residential Remodeling Index in second quarter 2015. Not only did the index beat previous estimates for reaching a point of recovery in the remodeling industry, but growth through the first two quarters of 2015 is much stronger than what was observed in 2014, when the overall housing market had cooled,” says Brad Hunter, Chief Economist at Metrostudy. “A big driver of recent remodeling activity has been solid job gains, but the industry stands to benefit even more over the next year from existing home sales hitting an eight-and-a-half year high at the end of second quarter. Stronger resales benefits remodeling activity, as recent homebuyers typically spend more on home improvements than other homeowners. Continued home price appreciation is also encouraging people to put money into their homes.”

Metrostudy produces the RRI to provide the industry visibility into local market remodeling activity, forecasted future activity, and potential demand.  According to the company’s second quarter report, 355 out of 381 Metropolitan Statistical Areas are expected to see year-over-year growth in remodeling and replacement projects in 2015, with average growth of 5 percent.

For more information on accessing the full quarterly report, please email RRI@hanleywood.com.

About the Residential Remodeling Index

The RRI is a quarterly measure of the level of remodeling activity in 381 metropolitan statistical areas (MSA) in the U.S., with the national composite reflecting the national level of activity. “Activity” includes home improvement and replacement projects, but does not include maintenance or projects of less than $1000. The seasonally adjusted index shows the relative level of activity in the geography specified (MSA or national composite) compared to 2007 (the baseline year). A number above 100 indicates a level of remodeling activity higher than the level of activity at the beginning of 2007, which was the peak of remodeling activity in the prior decade.

The index is produced through a statistical model that leverages detailed data on remodeling activity, including household level remodeling permits, and consumer-reported remodeling and replacement projects. Quarterly historical results for the national composite and for each of the 381 Metropolitan Statistical Areas in the U.S. are available back to 2004. In addition, Metrostudy also produces annual estimates of project counts and expenditures as well as forecasts of the quarterly RRI and annual projects and expenditures.

About Metrostudy

Metrostudy, a Hanley Wood company, is the largest provider of comprehensive research and insight for the real estate industry. Builders, developers, banks, manufacturers, retailers and many other industries all rely on Metrostudy’s data and analytics to support strategic business decisions at the local, regional and national market level. 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.

DENVER HOUSING 2Q15: Market is at Historically High Levels; Rising Home Prices are Squeezing Buyers

Posted in Denver - Colorado Springs Market | Posted on 08-18-2015 | Written by Metrostudy News

  • 2Q15 New Home Starts are up 13% from 2Q14 levels
  • The number of starts in the second quarter is the highest figure of any quarter since 3Q07.
  • The main threat to continued growth is rising home prices: nearly a third of all new home starts are in the $400-499k range. For the first time, half of all homes started in Denver have a base price of $400k or more.

AUGUST 2015 – Metrostudy’s quarterly lot-by-lot field survey of the Denver market shows 2,470 homes were started in 2Q15, up 13% from 2Q14. A very wet spring, which caused delays across an industry already stressed to deliver homes due to tight trade labor issues, pushed many home starts into the second quarter. Builders have started 8,152 homes in the last 12 months, a 13% increase from 2Q14 and the first time we have seen over 8,000 annual starts in 29 quarters.

“Regardless of the reason, the number of starts in the second quarter is the highest figure of any quarter since 3Q07,” said John Covert, Director of Metrostudy’s Denver region. “Builder traffic remains very strong year-to-date, as does sales contracts, which are up 20% and 33% respectively, compared to the first six months last year. As a result, Metrostudy believes that housing starts will push higher the 2nd half of the year as builders continue to play catch up.”

Builders also closed 2,237 units in the second quarter, an increase of 28% from 2Q14. Expect similar increases in closings in the 3rd quarter as many of the homes started in the 1st and 2nd quarters will finally be delivered. Annual closings in 2Q15 increased to 7,510 units, up 16% from 2Q14.

“Along with trade labor shortages, the other major impediment to housing growth in 2015 and beyond are rising home prices,” said Covert. “Strong demand for move up buyers combined with rising costs have placed more emphasis on higher priced product over the course of the last several years. The most prominent change in the past year has been in the $400,000-$499,999 price band where now nearly a third of all homes started are concentrated. And for the first time, half of all homes started in Denver have a base price of $400,000 or more, a trend that won’t likely reverse anytime soon. With demand shifting to move-up product and only 12% of the new home market priced below $300,000, the average sales prices are skewed higher, now at $468,564 for the trailing 12 months ending in June, which has now exceeded the previous high in December 2007.”

Despite the increase in home starts, vacant developed lot (VDL) inventory in the Denver Market has increased 14% since 2Q14 to 11,459 lots for a 21 month supply. Metrostudy considers 18-24 months of lots to be equilibrium for the entire market, a range that varies from one jurisdiction to another. Lot deliveries, which have outpaced starts recently, are up 43% from a year ago. But, too few lots are materializing in prime submarkets, especially for homes priced below $400,000, where only 3,200 lots exist for a 12 month supply.

“There are another 1,723 attached (condo, townhome, duplex) units in total inventory, up from 1,685 units in 2Q14, an increase of 2%,” said Covert. “Over two thirds of attached inventory is either townhome or paired product, which has quickly become a viable solution for both suburban and urban in-fill buyers offering a fairly diverse product offering.”

Since annual closings continue to grow, months of supply of finished vacant inventory has remained tight, now at 1.3 months, the same as it was this time last year. Finished vacant inventory remains incredibly thin for all price points below $400,000, declining 31% in the last year to 0.9 months of supply collectively. At the same time, finished vacant inventory has increased for all price points above $400,000, most notably the $400,000-$499,999 segment which has doubled in the last year. However, annual closings for this segment have increased 48% in the last year, so months of supply while slightly higher, remains well below two months.

While annual housings starts have increased for 14 consecutive quarters and Metrostudy expects starts to increase 15% in 2015, many builders will fall short of expectations coming into the year due to weather delays, lot shortages, and tight trade labor. Intense demand for housing and a historically thin supply of available listings continues to put extreme pressure on prospective buyers, especially those relocating to Denver in need of a home. Sales are likely leveling off in recent months due to low inventory levels and higher prices. As a result, sales prices have reached all-time highs of $362,000 for single family detached resales in Denver, an increase of 15% over last year.

For information contact:
John Covert – 720.493.2020 x 201
jcovert@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.

 

CHICAGO 2Q15 HOUSING: Strong Growth & Rising Prices Pushing New Homes out of Reach

Posted in Chicago Market | Posted on 08-17-2015 | Written by Metrostudy News

  • Through 2Q15, Annual New Home Starts in the Chicagoland region stood at 5,722, up 9.7% over 2Q14. This is the highest annual rate of new home construction since 4Q08.
  • Builders and developers are feeling the squeeze from a lack of quality lots in desirable locations. While the overall market shows an oversupply of lots, lots in many of the most desirable locations are becoming more and more scarce
  • During peak construction years, the Chicago market reached nearly 35,000 new home starts, with 45% of the activity priced under $250,000. Today, just 35% of new home starts are priced under $250,000.

AUGUST 2015 – Metrostudy’s survey of the twelve county Chicagoland region shows that – including single-family detached homes, townhome units and duplex units – there were a total of 5,722 new units started in the twelve month period ending 2Q15, an increase of 9.7% over 2Q14. This is the highest annual rate of new home construction since 4Q08. The annual rate of closings also increased in the second quarter, to 5,563 units, up 10.7% from 2Q14. This follows a slight decline in the annual rate of closings that occurred in the first quarter of this year.

“The 1,608 units started in the second quarter of this year represent an increase of 2.8% over the 2Q14 starts total – the most started in a second quarter since 2Q08,” said Chris Huecksteadt, Regional Director of Metrostudy’s Chicago market. “There were 1,560 new homes closed in 2Q15, up 27.9% over 2Q14 and the most of any quarter going back to 2008. Still, reports on buyer traffic in the past few weeks make the increased rates of construction appear unsustainable through the remainder of this year. With the slow disappearance of below market value lots, it is likely that the share of new home closings as compared to all home sales will begin to decline.”

Following years where the market expanded into the outlying counties of the Chicagoland area, the past five years have seen the market consolidate around Cook and the traditional collar counties. Cook, Kane and Will counties in Illinois, along with Lake County in Indiana accounted for the majority of activity in the Chicagoland region, with 64% of all new homes starts through the first six months of this year occurring in these four markets. The outlying portion of the Chicagoland market that saw explosive growth ten years ago, are beginning to slowly rebound, with Kendall County seeing an increase of nearly 25% in construction activity in the first six months of this year compared to the same time frame in 2014.

With the continued increases in construction activity, and the slowdown reported by builders of traffic, it is not surprising that inventory has risen over the past few quarters. Metrostudy expects the rate of construction to continue to remain flat, as traffic and contract activity has been lackluster. In fact, don’t be surprised if more incentives are offered to buyers by builders in an attempt to absorb the standing new home inventory and generate activity in the market place.

With a relatively consistent pace of new home construction (the rate of lot absorption), and a declining level of vacant developed lot inventory, the months of supply for lots in the Chicago market has fallen from a high of nearly 250 months in the third quarter of 2011, to a current level of 94.5 months (we’re below 100!!!). Increases in construction activity, even in the outlying areas of the market, have continued to drive the months of supply indicator downward. If Metrostudy excludes those lots in less desirable locations from the survey, the months of supply indicator drops even more sharply. Builders and developers are both feeling the squeeze from a lack of quality lots in desirable locations, leading to elevated levels of acquisition and development activity. While the overall market shows an oversupply of lots, lots in many of the most desirable locations are becoming more and more scarce.

Nearly all of the fundamentals for a strong housing market are in place, and certain aspects of the housing industry are benefiting. Apartment vacancy rates continue to hover in the 3.5% range, with rental rates inching upward toward $1,500 per month. Resale activity as reported through MLS saw a significant increase year to date when compared to 2014, up 15.8%, with resale prices also up 4.7% June over June. Homes are selling, and will continue to sell. There is job growth and people need a place to live. The question remains as to how big a slice of the pie will the new home market be able to cut.

“During peak construction years, the Chicago market reached nearly 35,000 new home starts, with 45% of the activity priced under $250,000,” said Huecksteadt. “Today, just 35% of new home starts are priced under $250,000. Rising home prices due to increased construction costs, land and lot price increases, and rising development costs have forced new home prices above levels that could maximize absorption. While many economists see the first time home buyer and the Millennials as an important component of the new home demand forecasts, many of our locations are priced above what these buyers can afford. The new home market is unable to reach what could be the largest pool of potential buyers that are out there.”

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

 

PHOENIX 2Q15 HOUSING: Market Expansion Continues; Labor Constraints are Holding Back Even Stronger Growth

Posted in Phoenix - Tucson Market | Posted on 08-14-2015 | Written by Metrostudy News

 

  • 2Q15 New Home Starts numbered 3,726 – the highest number of quarterly starts since 3Q08
  • Growth will likely be limited by a constrained labor supply
  • Metrostudy is revising its 2015 forecast upwards from 11,800 starts (up 8%) to 13,000 starts (up 20%).

AUGUST 2015 – Metrostudy’s survey of the Phoenix housing market shows that annual home starts, attached and detached, in the Phoenix area numbered 11,103 through 2Q15. Closings numbered 10,516 during the same time frame. The positive news is that Q2 starts numbered 3,726 which is the highest starts count we have seen since Q3 2008. We expect annual starts to finish out the year around 13,000 (attached and detached). The lag in closings is clear indication of our labor constraint. Closings have seen growth of 8% Q2 vs Q1 and as expected we are now seeing an increase to build times. Even with the increased build times closings are expected to finish out the year around 12,000 units.

“Starts have begun to outpace closings, which is a leading indicator of an expanding market,” said Rachel Cantor, Metrostudy’s Regional Director of the Phoenix region. “With current labor constraints, though our growth will most likely be limited for the remainder of the year. The large 30% growth we have seen in Q2 will likely taper off in the last two quarters of the year unless we find a solution to our existing labor shortage.”

MLS single family detached monthly sales are showing solid 19% growth year over year up to 8,200 during the month of June. Annual sales year over year are now showing positive numbers as well, up 3% to 76,296. As sales continue to increase inventory continues its own downward trend. Down 21% from a year ago, inventory months of supply is at 2.9 which is similar to what the market had seen in 2013. With sales on the rise and median MLS single family pricing seeing a solid increase of 10% the market vibe is positive. The continued solid price appreciation is a good sign and should support some price increases on the new home side which is right around the corner.

The condo market has also seen solid improvement of 12% growth in annual sales up to 4,959. Median sales price growth has been 10% and currently holds 3.3 months of supply which is slightly higher than the detached resale market. Overall the resale market has held steady and though inventory is a watch list item there are no major concerns at this time.

Q2 2015 starts showed an increase of 1,161 starts over Q1 2015. Submarket share increase was shared equally across all markets. All parts of the valley shared in consistent growth. The SE Valley still remains the strongest driver of starts for the market. As the Phoenix market continues to have a more stabilized recovery price appreciation will come along with that more normalized market. For those expecting incentives to disappear we do not foresee that occurring in our market.

Inventory is also an indication of build times. In the form of finished vacant (FV) units saw an 11% decrease down to 2.4 months with a total unit count of 2,061. Units are not moving into the finished vacant category which means closings are happening as soon as the home is completed and ready to occupy. Slightly below our market equilibrium of 3 months, we will continue to monitor to gauge the full impact of labor constraints. At this point it seems to be impacting builders in varying degrees and only seems to have shifted build time about 20-45 days. We have our wonderful weather, though hot, to thank for our small build time shift. It is one less worry about any loss days due to rain or snow.

The overall inventory of vacant developed lots (VDL) rose in Q2. The total of 57,484 vacant lots includes all product types. The increase in starts though did move the needle on the months of supply we are now looking at 62.1 months versus the 66 months we witnessed last quarter. When we break down the numbers into subdivisions by quartile we are able to show that for example in the first quartile the top 50 subdivisions have 19 months of supply. The second quartile is top 51- 150 subdivisions which have 18 months of supply. The third quartile is 151 -300 subdivisions with 33 months of supply. Then we have the remaining active subdivisions and dead subdivisions that have months of supply off the chart.

Overall we have some solid indicators in the Phoenix market, and are starting to see more qualified buyers in the market, as it appears that more of the buyer drive is from consumer confidence. With continued solid economic growth in the form of jobs and hopefully wages to follow then the growth will be sustainable. I have adjusted my previous forecast (8%) from 11,800 starts to (20%) 13,000 starts. Now I do believe that we could see higher numbers if we are able to come up with some solutions on the labor shortages.

“The items on my watch list for the remainder of the year include concerns about the ability of our trade base to sustain larger starts,” said Cantor. “Though it is clear they are hiring can they find the talent and meet demand. Also, price increases have already begun and with such a large number of starts in one submarket will they turn down work in other submarkets. MLS inventory is also a concern. With listings and months of supply reaching pre-recession levels are we running the risk of creating another false run-up due to lack of supply. With the way items stand today I think 15% growth should be expected for 2016 and 2017.”

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.

NAPLES / FT MYERS 2Q15: Growth Continues Strong – Annual Starts Rate is up for the 16th Consecutive Quarter

Posted in Naples - Ft. Myers Market, Naples Condo Market | Posted on 08-13-2015 | Written by Metrostudy News

  • New Home Starts in 2Q15 were up 9% over 1Q15, and up 11% over 2Q14
  • The annual starts pace is up 22% from 2Q14; this is the 16th consecutive quarter of increase in the annual starts rate.
  • We are seeing the strongest growth in Collier County, where starts are up 30% over 1Q15. Lee County actually saw quarterly starts decline 7% in the same period.

AUGUST 2015 – Metrostudy’s 2Q15 survey of the Naples/Ft. Myers market shows that the quarterly starts rate in Naples/Ft. Myers increased by 9% to 1,172 over 1Q15, and was up 11% when compared to 2Q14. The annual starts pace increased 3% over the previous quarter to 4,391, which is up 22% from the second quarter of 2014. The annual starts pace has increased for sixteen consecutive quarters in Naples/Ft. Myers.

Metrostudy’s Naples/Ft. Myers market data cover all of the new housing activity in Lee and Collier Counties, excluding scattered lot subdivisions such as Cape Coral, Lehigh Acres, and Golden Gate. Included in these data are single family detached and single family attached homes.

Screenshot 2015-08-13 09.50.48

The annual closing rate was up 14% from a year ago and 1% from the previous quarter, which extends this upward trend to thirteen consecutive quarters. Lee’s F/V rate remains low at 1.6 months of supply (MOS) while Collier’s F/V increased again to 3.4 MOS. The previous quarter’s F/V MOS was 1.2 for Lee and 2.7 for Collier.

“Vacant, developed lot (VDL) inventory increased 9% over the previous quarter, to 12,633 lots,” said David Cobb, Metrostudy’s Regional Director in South Florida. “Lot deliveries for the quarter stood at 2,206, an 88% improvement over the second quarter of 2015. For the past twelve months, lot deliveries totaled 5,358, more than enough to replenish the starts.”

2Q15 by County

Lee County: Quarterly starts were down 7% and quarterly closings down 31% from 1Q15. However, the annual starts rate is up 21% and the annual closings rate is up 14% from one year ago.

Quarter       Starts              Closings         Inventory

3Q14               671                  376                  1205

4Q14               455                  591                  1069

1Q15               598                  638                  1029

2Q15               555                  438                  1146

Annual            2279                2043                N/A

Housing Inventory remains below equilibrium in Lee County at 6.7 MOS. The supply of VDL inventory increased 3% quarter-over-quarter to 7,063, remaining nearly equal to the previous three quarters at 37 months of supply. Lee County is comprised of the Ft. Myers-Cape Coral MSA. Active master-planned subdivisions in Cape Coral and Lehigh Acres are included in our research, but scattered lot activity is not.

Collier County: Quarterly starts rose by 30%, while quarterly closings decreased 17% from the previous quarter. The annual starts rate is up 22%, and annual closings are up 15% from 2Q14’s annual pace. The annual starts rate has risen for twenty-four consecutive quarters, from a low of 399 in early 2009, to 2,112 in the current quarter.

Quarter        Starts              Closings         Inventory

3Q14               563                  299                  1434

4Q14               456                  462                  1428

1Q15               476                  432                  1472

2Q15               617                  358                  1731

Annual            2112                1551                N/A

Housing Inventory continues to be elevated at 13 MOS. Labor constraints and the above average size of these homes are partially responsible for the higher than normal inventory level. VDL inventory rose 19% quarter-over-quarter to 5,494, a 31 month’s supply. Lot deliveries jumped 165% over the previous quarter, to 1,482. Future lot inventory decreased 3% this quarter, to 32,631. Collier County is comprised of the Naples – Marco Island MSA. Active master-planned subdivisions in Collier County are included in this research, but the scattered lot activity, primarily in Golden Gate and Golden Gate Estates, is not.

====================================================================

Listed below are the top 10 single family communities in the Naples/Ft. Myers market, ranked by annual starts through the second quarter of 2015:

Rank          Community                                                                   Starts      Move-Ins

1                Ave Maria                                            Collier                  265      209

2                Riverstone                                           Collier                  223      168

3                Plantation                                               Lee                  146      158

4                Village Walk                                            Lee                  132      107

5                Bonita Lakes                                           Lee                  125      70

6                Isles of Collier Preserve                      Collier                  118      72

7                Pelican Preserve                                      Lee                  113      126

8                Quail West                                          Collier                  111      90

9                Corkscrew Shores                                   Lee                  105      49

10              Lely Resort                                          Collier                  105      70

Ave Maria remains at the top spot for the second consecutive quarter. Riverstone by GL Homes, Plantation by Pulte, Village Walk by DiVosta, and Toll Brother’s Bonita Lakes round out the top five. Corkscrew Shores makes the top ten list for the first time.

For information contact
David Cobb
561.228.8001 x505
dcobb@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.