Posted in Chicago Market | Posted on 05-01-2014 | Written by Metrostudy News
May 1, 2014: Metrostudy’s 1Q14 survey of housing activity in the Chicago area revealed that despite the havoc weather played with the construction industry this season, the area is on target for the highest annual rate of new home construction since 2008. Including single-family detached units, townhouse units and duplex units in the twelve- county Chicagoland region, there were a total of 4,980 new units started in the twelve month period ending with the first quarter of 2014, an increase of 24.6% compared against the previous year.
The annual rate of closings surpassed 4,900 units in the first quarter, with a tally of 4,960 units closed over the past twelve months. This represents a 18.7% increase in the number of annual closings compared to the prior year.
“The double digit percentage increases represent the largest rate of growth in annual starts and closings since the early 2000’s,” said Chris Huecksteadt, Regional Director of Metrostudy’s Chicago Market. “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. The outlying counties within the greater Chicagoland area are still seeing very little in terms of new home construction.”
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 2.4 months for single-family detached and attached homes in the first quarter. These are the lowest levels of new home inventory in over six years in the Chicago market. Not only is the amount of new home inventory low, the low levels of resale supply should also contribute to bringing buyers into the new home market.
“The market is still a long way from levels seen over a decade ago, but 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,” said Huecksteadt.
The month’s supply of lot inventory is 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.
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 the remainder of this year and into next.
For information contact Chris Huecksteadt@ 847-651-9080
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.