Posted in Maryland Market | Posted on 02-24-2015 | Written by Metrostudy News
- Our 4Q14 survey shows 2014 annual new home starts down 1.1% from 2013
- Strength in the DC Condo market is offsetting weakness in the Maryland housing market
- Maryland is one of the most land constrained markets in the country, and the overall inventory of vacant developed lots is down 3.5% from 2013
February 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 9,111 during 2014. This is down 1.1% from the previous year, but we do include The District in our Maryland territory. The housing market has been strong in DC, so Maryland starts alone declined 6%. This was not expected, but the effects of the 2013 sequestration appear to have carried over into the housing market last year despite an expanding Baltimore economy.
“The median price of a home sold in Maryland through the MLS reached $259,000 in December, a 1.6% increase from $255,000 12 months prior,” said Ben Sage, Director of Metrostudy’s Mid-Atlantic Region. “The median price in Suburban Maryland is $285,000, which is up 6.4 percent from one year ago, while Baltimore – at $230,000 – is down slightly. Median price is not the best indicator of home price appreciation. According to Clear Capital’s repeat-sales index for 4Q14, home values are up 4.3% year over year in the DC Metro area and up 0.2% in Baltimore.”
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. December single family resale listings in Maryland numbered 20,059 units, attached and detached, which is up 16% from a year ago even though it is down in recent months due to seasonality.
In terms of starts activity, Maryland is led by Montgomery and Prince George’s Counties in DC Metro and Howard and Anne Arundel in Baltimore Metro, combining for 52% of Maryland’s annual starts. Thanks to a fair amount of new condominium construction, The District is now generating almost as many starts as Howard County, which is down due to a shortage of lots.
The overall inventory of vacant developed lots (VDL), or finished lots, numbers 12,692, which is down 3.5% from 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 6 quarters. Current supply of 17 months is quite low, as this is one of the most land constrained markets in the country. The supply of VDL varies by county, but it is generally lowest in the most active submarkets and in infill areas: Washington DC (3 months), Howard (7 months),Montgomery (9 months), and Baltimore (12 months). Higher lot supplies persist in Cecil, Calvert, Baltimore City, and more recently in Harford County where starts have fallen off.
With Maryland being such a land-constrained market, much attention is focused on future lot supply. Metrostudy follows and reports on the entitlement of over 200,000 future lots in the state, but only 24,789 of these are recorded at the counties. Currently, Prince George’s County has the most capacity to meet current and near-future demand needs.
As new-home demand has declined slightly, it appears that builders remain disciplined with spec inventory. Finished vacant new homes number 1,944 units in Maryland, which would last 2.7 months at the current closings pace. Single family and townhome product accounts for 90 percent of Maryland starts, and their combined months of supply measures only 1.5 months. While this is up from 1.25 months one year ago, it is still quite low.
“Despite some momentum in The District due mainly to condo construction, Maryland experienced a very lackluster year for new homes in 2014,” said Sage. “While Baltimore generated some jobs last year, the Washington DC economy appears to be holding the entire region back. Assuming a turnaround from the sequestration hangover, Metrostudy expects Maryland housing starts to grow a modest 5% this year.”
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