Posted in Maryland Market | Posted on 05-18-2015 | Written by Metrostudy News
- Our 1Q15 survey shows new home starts up 2% YoY, caused mainly by a resurgence of mid to high-rise condo activity in the District and Bethesda;
- We are seeing the highest rate of starts in Anne Arundel county, which is up 34% YoY; the Washington DC rate is also up 23%
- There is more upward pressure on home prices in Suburban Maryland compared to Baltimore, which is more balanced.
May 2015 – According to the Metrostudy quarterly survey, home starts, attached and detached, in Maryland – which includes nearly the entire state save the Eastern Shore south of Queen Anne’s County – numbered 9,466 during the year ending 1Q15. This is up 2 percent from the previous year, but we are seeing a resurgence of mid to high-rise condo activity in the District and Bethesda. Excluding this product type, annual starts numbered 8,869, which is essentially flat compared to a year ago. (NOTE: Metrostudy includes The District in our Maryland territory.)
In the resale home market, supply is growing while sales are increasing, both of which are signs of confidence in the housing market at this stage of the cycle. March resale listings in Maryland numbered 19,706 units, attached and detached, which is up 10 percent from a year ago – even though it is down since September 2014 due to seasonality. Resale inventory now measures 4.1 months of supply, which is similar to one year ago and just below normal by historical standards. This figure is a little higher in Baltimore at 4.6 months and lower in Suburban Maryland at 3.6 months. There is more upward pressure on home prices in Suburban Maryland compared to Baltimore, which is more balanced.
During the year ending in March, Maryland MLS sales numbered 57,800 units, which is up 6 percent from one year ago. Annual sales in Baltimore Metro are up 8 percent, a larger increase perhaps because it has more supply compared to Suburban Maryland.
“The median price of a home sold in Maryland through the MLS reached $255,250 in March, a 1.9% increase from a year ago,” said Ben Sage, Director of Metrostudy’s Mid-Atlantic Region. “The median price in Suburban Maryland is $277,500, which is up 2.3% from one year ago, while Baltimore – at $230,000 – is up 1.1%. Median price is not the best indicator of home price appreciation. According to Clear Capital’s repeat-sales index for 1Q15, home values are up 2.9% year-over-year in the DC Metro area but down 1.8% in Baltimore.”
In terms of starts activity, Maryland is now led by Anne Arundel, which surpassed Montgomery and Prince George’s thanks to a surge of starts in the first quarter. Anne Arundel’s 1,425 starts over the past year represent a 34 percent increase from a year ago. Washington DC is also expanding, as the 923 annual starts in that area represent a 23 percent increase from this time last year. Furthermore, Baltimore County, Charles, and Frederick all registered notable gains of 12 to 19 percent. Among the counties that lost market share, Howard gave up the most ground. The 854 starts represent a 29 percent decline from a year ago. This is largely due to an under-supply of lots, as Howard remains a desirable destination. Last quarter we noted the return of mid to highrise condo construction in the District, and it should be noted that Bethesda is a hot spot for this product type as well.
The overall inventory of vacant developed lots (VDL), or finished lots, numbers 12,845, which is essentially even with last year. This is for all product types, including attached product as well as custom lots. The corresponding months of supply has remained steady for the last 7 quarters. Current supply of 16 months is quite low, as this is one of the most land constrained markets in the country. The only market area with more than enough lots is Cecil.
As new-home demand has declined slightly, it appears that builders remain disciplined with spec inventory. Finished vacant new homes number 1,932 units in Maryland, which would last 2.6 months at the current closings pace. Single family and townhome product accounts for 88 percent of Maryland starts, and their combined months of supply measures only 1.4 months. While this is up slightly from 1.3 months one year ago, it is still quite low.
While starts in Maryland (excluding mid and highrise condos) are flat, builder feedback has been generally positive. In Metrostudy’s weekly builder survey, builders are reporting an average of 2.5 sales per month per subdivision so far this year, which is up from 2.3 per month over the same time last year. Given the continued low mortgage rates and lower gas prices, we might have expected more sales activity, but Maryland is on target for our forecasted 5 percent increase in starts this year.
For information contact
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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.