Posted in New Jersey Market | Posted on 05-20-2015 | Written by Metrostudy News
- New home starts in 1Q15 were up 11.5% from 4Q14, but down 14.8% from 1Q14
- Median closing prices for single-family homes stand at $452k, down 4.4% YoY, even as condo sales prices have risen 30% in the same period.
- We have seen a 11.9% rise in lot deliveries, an encouraging sign for new home starts in the coming summer months.
May 2015 – Metrostudy’s 1Q15 survey of the housing market in the Central/Northern New Jersey & NY Suburbs region shows that new home construction has been constrained by the limited amount of buildable land in the region. The limited supply in desirable locations has kept a cap on new home construction activity. In parts of Hudson County as well as parts of Bergen, condo sales are driving the market.
“Overall the market has its challenges, but there are two distinct demographics that are looking to make a home in both Central & Northern NJ,” said Quita Syhapanya, Regional Director for Metrostudy’s Northern New Jersey & New York Suburbs market. “You have 55+ groups looking at towns in Central NJ and the millennial group looking to rent rather than buy. Thirty percent of the closings in Central New Jersey can be attributed to the various active adult communities being offered in this market.”
Our survey shows that this market had 756 new home starts in 1Q15, a 11.5% increase from 4Q14. Year over year, starts for the 1st Quarter showed a 14.8% decrease from an fairly decent 1Q14. Quarterly closings for the market also showed declines in activity. For the 1st Quarter there were 1,112 closings, a 2.4% decrease from 4Q14. Year over year saw a 10.3% decrease in buyers moving into their new homes. 1Q15 closings are close to the average since Metrostudy started tracking the Central/Northern New Jersey & NY suburbs in 2Q13.
The annual pace of starts and closings for a rolling 4 quarters saw a decrease of 5.9% in annual starts and a 2.6% decrease in annual closings. Annual starts for the 1st Quarter came in at 3,727 versus the 4,744 annual closings. These indicators will be important to monitor in the 2Q and 3Q when activity is at its highest.
Total housing inventory ended the 1st Quarter with 6,704 units, a 5% decrease from 4Q14. Year over year also saw a drop off by 10.8%. Units that are under construction stand at 3,356, a 2.7% decrease from 4Q14. Year over year looking at the 1st Quarter also saw a 12.4% downward swing from this time last year when there was 3,835 units under construction. Finished vacant inventory decreased by 7.4% to 3,074 from the 3,322 vacant standing units in 4Q14. Year over year it is a decrease of 12.4% which is one indicator that shows some improvements to the market. Total Inventory months of supply for the 1st Quarter is at 17 months which decreased from 17.4 months from the prior quarter. The months of supply has decreased the past three quarters and is at its lowest level since Metrostudy started tracking the market. The market is still on the high side in regards to housing inventory months of supply only because of the condo units that are in the market that still have unoccupied units.
The median closing price for a new home closed in the Northern New Jersey/NY Suburbs for the 1st Quarter was $429,200, a 2.8% decrease quarter to quarter. Year over year for the 1st Quarter saw a 10.5% increase in the median sale price of a new home. The median closing price for a single family home for 1Q15 was $452,200, which is a 4.4% decrease year over year and an 8.2% decrease from 4Q14. Condo sales prices have strengthened, with demand driving condo prices up 30% year over year.
For 1Q15 there are 9,156 Vacant Developed Lots (VDL) in the market, a .5% decrease in developed lots in the region from 4Q14. From the 1st quarter of this year versus the 1st quarter of last year there has been a 3.7% increase in developed lots. With an annual starts rate of 3,727 it would take 29.5 months to go through the remaining lots at this pace. The months of supply increased 1.2 months from last quarter. The slow-down in starts due to some weather related issues at the tail end of the quarter contributed to the increase in VDL months of supply. A healthy market supply level for equilibrium would be between 24 to 30 months. The Northern New Jersey/NY Suburban market remains in equilibrium, but is teetering on being slightly over supplied in finished lots.
“There were 714 lots delivered into the market,” said Syhapanya. “A nice uptick from the prior quarter by 11.9%. An encouraging indicator can be seen in the year over year lot deliveries where a 61.1% increase can be seen from 1Q14. There is very limited land available for new development in the market so a 61.1% year over year increase is a very good sign for possible new home starts in the summer months ahead.”
Central New Jersey has been the most active market in the region. Central NJ had 415 starts in 1Q15 which is a 32.5% jump from 4Q14. Year over year had a decrease of 11.7% in starts activity. Closings for 1Q15 showed tremendous progress with 694 closings, the most since Metrostudy started tracking the market. Big condo projects are planned for 2015 and beyond with many apartments coming online in the very near future as well. Developers are able to take advantage of the demand for housing across the Hudson from New York City to build large scale projects.
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