Posted in Chicago Market | Posted on 01-29-2014 | Written by Metrostudy News
(Chicago, IL – January 29, 2014) 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. This is 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.
Including single-family detached units, townhouse units and duplex units in the twelve county Chicagoland region, there were a total of 4,996 new units started in the twelve month period ending with 4Q13, an increase of 31.9% compared against the previous year. The 1,267 units started in the fourth quarter of this year represents an increase of 12.0% over the 4Q12 starts total. This number is slightly lower than the 3Q starts total, indicating the market is returning to normal seasonal characteristics. The number of homes closed in 4Q13 also saw a significant improvement, up 18.5% compared to the 4Q12 total. There were 1,333 new homes closed in the fourth quarter of 2013, compared to 1,125 units closed in the fourth quarter of 2012. “As the economy continues to improve in the Chicagoland area, Metrostudy expects growth in both starts and closings to continue into 2014 and beyond. The lack of quality resale inventory available in many submarkets will also contribute to growth in new home demand throughout,” said Chris Huecksteadt, Regional Director of Metrostudy’s Chicago Market.
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 fell to 3.0 months for single-family detached and attached homes in4Q13. These are the lowest levels of new home inventory in over six years in the Chicago market. Will and Kane Counties saw finished vacant inventory drop by a combined 7.8% during the past year. “The inventory of units under construction has continued to rise through the fourth quarter, indicative of increased demand and shrinking inventory. Not only is the amount of new home inventory low, but as mentioned earlier, the low levels of resale supply will continue to bring buyers to the new home market,” said Huecksteadt.
The months of supply of lot inventory are at its lowest level since early 2009. 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 120 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. 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,” said Huecksteadt.
“It is likely that the housing market will see somewhere from 5,500 to 6,000 housing starts in 2014. This forecast and outlook is dependent on continued improvement in the local economy,” said Huecksteadt.
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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