(Northern California – May 8, 2013) 2013 begins with continued optimism, more so than in quarters past, according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.
The Bay Area region job market is stronger than most throughout the state. All areas of N. CA have experienced annual job. San Francisco added 33,000 jobs followed by San Jose (28,900), Oakland (21,000) Sacramento (14,000), and Sonoma (7,100) Solano (3,300) and Napa (2,900). “In all, growth was realized in 10 of the 12 sectors, with relatively small losses in Other Services and Government sectors,” said Greg Gross,” regional director of Metrostudy’s Northern California, Central California, Reno and Las Vegas markets. The Regional unemployed population dropped below 10% and now stands at 7.6% compared to the State level of 9.4%. Bay area and Sacramento are at 9.2% and 7.1% respectfully.
Northern California annual housing starts are UP 82% from 1Q12, while closings are UP 48%. Quarterly new home closings are UP 66% from 1Q12. The annual start pace is at the highest level since 3Q08 and the annual closing rate is nearly as high as 4Q10. Closings have been outpacing starts for more than four years now. As a result, inventory levels are now below equilibrium. “Start activity has shifted over last year into the price ranges above $400K as builders adjust pricing to offset increased construction costs,” said Gross.
Finished inventory of housing has been steadily decreasing over the past three years now. With 1,851 finished vacant homes, the market now has 2.7 months of supply. Single family detached product comprises of only 611 finished vacant; a 1.3-month supply. There are 311 units in Sacramento; a 1.5-month supply and only 300 in the Bay area; a 1.1-month supply. The inventory level of Attached product is 1,240 finished and vacant units, a 5.7-month supply and another 2,927 units under construction with the majority (2,818) being the Bay Area. “Both the Bay Area and the Sacramento market has seen fairly dramatic decreases in Finished New Home, and existing home inventories over the past year. All factors that will push pricing upwards,” said Gross.
Lot inventory has declined 14% over the past year and now stands at 19,184 and months of supply declined to only 35. “While seemingly high, these lots will go quickly as the market continues to improve, and not all of these lots are for sale, or in “A” locations. This slowdown of lot development will make finished lots more desirable and thus spur demand causing prices to rise. For example, the Roseville area has fewer than 8 months of lot supply base on current absorption pace,” said Gross. There are about 275,000 future lots in the pipeline with fewer than 15,000 lots being developed now; a very small number considering the size and potential demand of Northern California. Considering the barriers to development, the N. CA market may soon be facing a lot shortage.
“Home buyers are beginning to shop around and those who have suffered a foreclosure three years ago are beginning to enter the market once again. Given the above, Metrostudy expects the Bay Area housing market to continue improving through 2015 as the job situation continues improves and housing inventory shrinks,” said Gross.
For information contact:
greg gross @ 916-231-9370
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
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