Posted in Charlotte Market | Posted on 02-21-2014 | Written by Metrostudy News
(Charlotte, NC – February 21, 2014) Charlotte’s new housing market will continue to experience moderate growth in 2014 but there will be some bumps in the road to be mindful of, 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.
For the fourth quarter ending December 2013, Charlotte’s quarterly starts for all product types were 2,068, down from last quarter’s 2,891. Quarterly starts are historically lower in the fourth quarter. The 4Q13 starts were 23.5% higher than the 1,675 starts from a year ago in 4Q12. Charlotte’s annualized starts (rolling four quarters) for 2013 increased to 9,194 a 38.7% increase over 2012. 4Q13 Closings totaled 2,219 units, down 440 from last quarter’s closings. New Home Closings are being affected by low finished inventory numbers—‘You can’t close them if they’re not finished’. Compared to one year ago, Charlotte’s 4Q13 closings increased by 28.7%. The 8,465 homes closed in 2013 for all product types represented a 29.1% increase over 2012.
Total Inventory of new homes (detached, town homes, and condos) in all stages of construction (Model Homes + Finished Vacant + Under Construction) decreased to 4,457 in 4Q13 from last quarter’s 4,608. Total Inventory fell to a 6.3-month supply, the lowest in five years. Simply said, inventory months of supply will fall when we close more than we start. South Mecklenburg had the lowest total inventory at a 5.1-month supply. A 7-8 month supply of inventory is considered to be in equilibrium.
“When viewed relative to Annual Closings, the 1,190 units of Finished Vacant Inventory for all product types, was at a 1.6-month supply. This was unchanged from last quarter and remains the lowest ever recorded in Charlotte.. Completing the almost 3,000 under construction homes will be high priority in first quarter, but challenging due to winter conditions when construction schedules are typically longer,” said Bill Miley, Regional Director of Metrostudy’s Charlotte market.
The total number of Vacant Developed Lots in the market at the end of 4Q13 was 28,322. Relative to starts, this represented a 37.0-month supply, a huge and needed absorption from the 82.2-month supply just two years ago. 2,068 Vacant Lots were consumed in starts while 1,860 new lots were delivered. Union County and North Mecklenburg showed the least supply of vacant lots at 20.0 and 25.1 months respectively. Equilibrium supply levels are typically 24-30 months. “As starts continue to increase, Vacant Developed Lots are being absorbed via starts faster than we put new ones on the ground in many locations that are already experiencing lot shortages.” said Miley.
Future lot numbers have decreased slightly over the past two years, primarily due to the expiration of permits. These paper (approved-not developed) lots in the process throughout the Charlotte market at the end of 2013 represent a 68 month supply. “Many of these properties are in locations that were just beginning to experience growth in 2007.. They are simply too far out but may become the only alternative for buyers and builders seeking affordable opportunities. Consumers are now facing the realization that new homes will cost much more on closer in lots not yet developed. Combined with higher labor, development and material costs the Sticker Shock will be real,” said Miley.
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
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