Posted in Las Vegas Market | Posted on 06-01-2015 | Written by Metrostudy News
- 1Q15 New Home Starts are up 45% YoY and at the highest fist quarter level since 1Q07;
- Entry and mid-level product will be opportunistic as the market continues to improve. The median price for Single Family product is up 7.4% YoY.
- Lot supply remains at record low levels – the future of the home building industry in Southern Nevada may just rest in the hands of the BLM.
June 2015 – Metrostudy’s 1Q15 survey of the Las Vegas housing market shows that new home starts are 45% higher compared to 1Q14 as builders remain confident in the market. In fact the first quarter of 2015 saw the highest number of first quarter starts since 1Q07. The annual start pace increased by 7% YOY. Through 1Q15; annual single-family new home closings were 5,639, 14% less than in 1Q14. Quarterly closings were 5% higher however. All of which can be indicative of both slightly weaker demand and very tight lot supply.
Total Finished Vacant housing inventory has decreased 12% this year. Builders needed to replenish their vacant inventory to satisfy demand, yet these inventories are being effectively managed. Single Family product which represents 45% of all inventory; has only 1.7 months of supply at current pace. However annual closings of condos improved dramatically during the past 2 years which lowered the condo supply considerably.
“One of the most challenging issues over the past year was the availability of lots and the impact on land prices,” said Greg Gross, Director of Metrostudy’s Las Vegas region. “Over the course of 2014, the total number of lots in development declined but that reversed during the first quarter as projects are seeing much more rapid development. The future of the home building industry in Southern Nevada may just rest in the hands of the BLM.”
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.
Pricing in the resale market has improved rapidly. Average sales price for Single Family Homes increased 7.4% this year with Median sales price also increasing 5.1%. Compared to March 2014, the average asking price of for-sale homes is 12% higher at $335k.
“Production under $200K represents only 7% of all housing starts for the quarter compared to 1Q14 when 12% where under $200K,” said Gross. “The market is beginning to see more slightly affordable attached product entering the market. Our median “offer to build” price for all SFD active projects is $304K; 7.4% higher than one year ago. 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 14% this year.”
The net absorption of lots highlights the dearth of deliveries as we continue to deplete the supply even as 6,895 new lots were added during the past four quarters, we started 6,400 new homes. 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 at record low levels, lowest since Metrostudy began counting in 2002.
For information contact:
Greg Gross – 916.231.9370
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.