Posted in Central California Market | Posted on 05-08-2013 | Written by Metrostudy News
(Roseville, CA – May 8, 2013) As 2013 begins, the Central Valley continues to demonstrate economic improvement. Job growth remains positive so far this year and improving in most areas, which appears to strengthen the demand for homes, according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.
The total number of non-farm jobs reached a level not seen since June 2009, standing at 1.095 million. The region added 17,500 new jobs over the past 12-months. The total numberof employed people is increasing with 1.6% more people employed than in February of 2012, again, signs pointing to stabilization. “It’s been more than four years since we have seen job growth in any of the Central Valley markets, and in February, all of the 8 counties we track had positive job growth,” said Greg Gross, regional director of Metrostudy’s Northern California, Central California, Reno and Las Vegas markets. The Central Valley unemployed population has increased to 15%; erasing the improvements made in 3Q12. Compared to the State level of 9.7%, the Central Valley unemployment rates have exceeded state and national averages, but improving nonetheless.
Annual housing starts are UP 55% to 4,904 from 1Q12 in the Central Valley, while closings are UP by 26% to 4,400. This has brought inventory levels closer to equilibrium and it appears we have reached the bottom of the market as paces are stabilizing and both quarterly starts and closings increased during 1Q12. “Builders are starting more homes to meet demand as inventories are low,” said Gross. Compared to 1Q12, quarterly new home starts increased 137% in Kern County and 68% in San Joaquin County, 92% in Stanislaus and 30% in Fresno County.
Finished inventory of homes has retreated impressively from the highs reached in 4Q06. With 876 finished vacant homes this quarter, the market has 2.4-months of supply. The finished inventory in this market is now below equilibrium, and we will continue to see production fluctuate slightly to meet the slight increase in demand expected over the next year. “Builders will be hesitant to add to their speculative inventory this year, but with their cautiously optimistic attitude, new home starts will steadily increase,” said Gross.
Vacant developed lot inventory continues to recede, as starts surpass new lot deliveries again this quarter. Months’ of supply has fallen substantially to 59 (5 years) with the increase in annual starts. We counted 24,095 finished lots throughout the Greater Central Valley. “This is the lowest level since 2006. The number of vacant developed lots has slowly declined over the past two years as lot production has all but ceased,” said Gross. There are an additional 17,569 lots in the pipeline with 13,513 lots being excavated now, with overall development 18% lower than a year ago.
“Metrostudy expects the Central Valley housing market slowly improve over the course of the year with stronger signs of improvement by the end of 2013. Kern, Fresno and San Joaquin Counties will be most stable and consistent housing markets in all of Central Valley through 2012 and will continue to lead the Central Valley growth during 2013,” said Gross.
For information contact:
greg gross @ 916-231-9370
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
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