PHOENIX 2Q15 HOUSING: Market Expansion Continues; Labor Constraints are Holding Back Even Stronger Growth

Posted in Phoenix - Tucson Market | Posted on 08-14-2015 | Written by Metrostudy News

 

  • 2Q15 New Home Starts numbered 3,726 – the highest number of quarterly starts since 3Q08
  • Growth will likely be limited by a constrained labor supply
  • Metrostudy is revising its 2015 forecast upwards from 11,800 starts (up 8%) to 13,000 starts (up 20%).

AUGUST 2015 – Metrostudy’s survey of the Phoenix housing market shows that annual home starts, attached and detached, in the Phoenix area numbered 11,103 through 2Q15. Closings numbered 10,516 during the same time frame. The positive news is that Q2 starts numbered 3,726 which is the highest starts count we have seen since Q3 2008. We expect annual starts to finish out the year around 13,000 (attached and detached). The lag in closings is clear indication of our labor constraint. Closings have seen growth of 8% Q2 vs Q1 and as expected we are now seeing an increase to build times. Even with the increased build times closings are expected to finish out the year around 12,000 units.

“Starts have begun to outpace closings, which is a leading indicator of an expanding market,” said Rachel Cantor, Metrostudy’s Regional Director of the Phoenix region. “With current labor constraints, though our growth will most likely be limited for the remainder of the year. The large 30% growth we have seen in Q2 will likely taper off in the last two quarters of the year unless we find a solution to our existing labor shortage.”

MLS single family detached monthly sales are showing solid 19% growth year over year up to 8,200 during the month of June. Annual sales year over year are now showing positive numbers as well, up 3% to 76,296. As sales continue to increase inventory continues its own downward trend. Down 21% from a year ago, inventory months of supply is at 2.9 which is similar to what the market had seen in 2013. With sales on the rise and median MLS single family pricing seeing a solid increase of 10% the market vibe is positive. The continued solid price appreciation is a good sign and should support some price increases on the new home side which is right around the corner.

The condo market has also seen solid improvement of 12% growth in annual sales up to 4,959. Median sales price growth has been 10% and currently holds 3.3 months of supply which is slightly higher than the detached resale market. Overall the resale market has held steady and though inventory is a watch list item there are no major concerns at this time.

Q2 2015 starts showed an increase of 1,161 starts over Q1 2015. Submarket share increase was shared equally across all markets. All parts of the valley shared in consistent growth. The SE Valley still remains the strongest driver of starts for the market. As the Phoenix market continues to have a more stabilized recovery price appreciation will come along with that more normalized market. For those expecting incentives to disappear we do not foresee that occurring in our market.

Inventory is also an indication of build times. In the form of finished vacant (FV) units saw an 11% decrease down to 2.4 months with a total unit count of 2,061. Units are not moving into the finished vacant category which means closings are happening as soon as the home is completed and ready to occupy. Slightly below our market equilibrium of 3 months, we will continue to monitor to gauge the full impact of labor constraints. At this point it seems to be impacting builders in varying degrees and only seems to have shifted build time about 20-45 days. We have our wonderful weather, though hot, to thank for our small build time shift. It is one less worry about any loss days due to rain or snow.

The overall inventory of vacant developed lots (VDL) rose in Q2. The total of 57,484 vacant lots includes all product types. The increase in starts though did move the needle on the months of supply we are now looking at 62.1 months versus the 66 months we witnessed last quarter. When we break down the numbers into subdivisions by quartile we are able to show that for example in the first quartile the top 50 subdivisions have 19 months of supply. The second quartile is top 51- 150 subdivisions which have 18 months of supply. The third quartile is 151 -300 subdivisions with 33 months of supply. Then we have the remaining active subdivisions and dead subdivisions that have months of supply off the chart.

Overall we have some solid indicators in the Phoenix market, and are starting to see more qualified buyers in the market, as it appears that more of the buyer drive is from consumer confidence. With continued solid economic growth in the form of jobs and hopefully wages to follow then the growth will be sustainable. I have adjusted my previous forecast (8%) from 11,800 starts to (20%) 13,000 starts. Now I do believe that we could see higher numbers if we are able to come up with some solutions on the labor shortages.

“The items on my watch list for the remainder of the year include concerns about the ability of our trade base to sustain larger starts,” said Cantor. “Though it is clear they are hiring can they find the talent and meet demand. Also, price increases have already begun and with such a large number of starts in one submarket will they turn down work in other submarkets. MLS inventory is also a concern. With listings and months of supply reaching pre-recession levels are we running the risk of creating another false run-up due to lack of supply. With the way items stand today I think 15% growth should be expected for 2016 and 2017.”

For information contact:
Rachel Cantor
480.588.1585
rcantor@metrostudy.com

About Metrostudy

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.

Phoenix Housing 1Q15: 2015 Starts Strong; Economic Consistency is Key

Posted in Phoenix - Tucson Market | Posted on 05-18-2015 | Written by Metrostudy News

  • Sales have been positive – when will the price appreciation begin?
  • Consistency in job growth and wage increases hold the key to maintaining and improving starts numbers
  • Builders optimistic but cautious about 2015 closings – is the subcontractor base large enough to meet current demand?
  • Metrostudy’ s forecast remains unchanged: 8% starts growth in 2015

May 2015 – According to the Metrostudy 1Q15 survey, home starts, attached and detached, in the Phoenix area numbered 10,160 over the last four quarters. 4Q14 annual starts were down significantly year over year at 14%. This was not unexpected as builders were much more pessimistic going into 2015 than 2014. Due to the 2014 decrease we did not see much improvement in the annual start numbers up only 1% annually. This raises a few questions if you have been watching sales numbers during the first quarter.

MLS single family monthly sales have seen solid growth showing 16% growth year over year up to 7,326 during the month of March. Annual sales year over year are still down 5% to 73,622. That is driven by the market contraction we started to see in March/April 2014. Though the annual sales number is still down it has steadily been improving 3% month over month, which substantiates that there are more buyers in the market for new homes and resales.

“With sales on the rise and median MLS single family pricing seeing a solid increase of 7% the market vibe has cautious but positive vibepositive,” said Rachel Cantor, Director of Metrostudy’s Phoenix region. “The solid price appreciation seen in the resale market is a good sign. The plan is this price appreciation will be felt on the new home side late Q2 2015. MLS inventory did raise some questions as it has seen a solid decrease over the past quarter down 16% from March 2014. The Phoenix resale market is still below the equilibrium currently holding 3.4 months of supply and days on market has seen a slow increase to 93 days. With inventory continuing to drop we may begin to see a supply issue that could push buyers to new homes and sellers to the market. It is only a watch item at this time.”

As always the highs and lows of the market are driven by the SE Valley. With a major gain in SE Valley 1Q14 to 1Q15 (starts up 26.8%) we can see the market improvement. One submarket does not make the entire market so though the growth is definitely notable more of a shared starts growth is needed before we start projecting larger growth than the projected 8% for the Phoenix metro area. Low starts growth can be attributed to less spec building. If we look back at 1Q14 builders were just starting to pull back on starts as the market was retracting. Another question mark is do we have the subcontractor base in place to support larger growth. The SE Valley is now driving 40% of starts for the market so builders may be searching for contractors in the other submarkets which could also be leading to the slower starts. With increased sales, most builders are still providing some type of incentive but it appears that the war on incentives has become less volatile.

Annual closings showed a slight decrease year over year down 1.8% (45 closings). As we watch the SE Valley again leading the closings charge with 17.6% increase (152 closings). The NE Valley also showed a 26% improvement with 32 additional closings year over year. Closing increases definitely spark our interest because at the end of the day that is how builders make their money.

Inventory in the form of finished vacant (FV) units saw a slight decrease down to 2.8 months with a total unit count of 2,394. It is within the market equilibrium and builders have been careful managing the unit count. The overall inventory of vacant developed lots (VDL) continued to rise in Q1. The slight increases indicate that we are bringing slightly more inventory to market than is being absorbed. Since the market boom, the Phoenix market has held a larger than typical VDL count and months of supply are driven by start changes. Phoenix is carrying about 25,000 D lots “dead lots” across the market. These lots have streets completed but are currently in undesirable locations for the builder and not completely finished in some cases. .

Q2 2015 will really set the market for 2016 – 2017 as builders will have to make the decision on their expected growth. Planning for future growth of 15-20% is not a realistic expectation based on what we have seen historically. It is also not clear that we can build them if we sell them. If we can continue to see consistent job growth like we have seen in the trade base then I would feel more comfortable that we can meet the larger demand.

“Overall we have some solid indicators in the Phoenix market,” said Cantor. “It was expected that we would see some growth from those exiting the penalty box this year, but it appears that more of the buyer drive is from consumer confidence. Also it appears that buyers are more qualified – also another bonus for homebuilders. With continued solid economic growth in the form of jobs and hopefully wages to follow then the growth will be sustainable. My previous forecast of 8% starts growth (11,800) remains in place. “

For information contact:
Rachel Cantor
480.588.1585
rcantor@metrostudy.com

About Metrostudy

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.

Relieved Builders Say Goodbye to Lackluster 2014 and Hello to Consumer Segmentation in 2015

Posted in Phoenix - Tucson Market | Posted on 03-02-2015 | Written by Metrostudy News

  • Despite high expectations, 2014 New Home Starts were down 14% from 2013
  • Affordability is a concern as new communities come on line at higher prices; it is not clear if condos and infill will be the affordable solution but the market should be watched
  • Builders should not expect much organic growth through the market and should be focusing on the consumer if they want to larger share of the starts

March 2015: According to the Metrostudy 4Q14 survey, home starts, attached and detached, in the Phoenix area numbered 10,140 over the last four quarters, down 14% from 2013.  This was a disappointment as initial expectations were for a substantial increase for 2014. The largest declines (25.7%) continued in Pinal County, followed by the Southeast Valley that saw a 15.9% decrease. The competition in the Southeast contributed to the decrease as more competitors have entered this area in hopes of gaining more market share. The Northeast Valley continues to see the strongest starts growth year over year with an increase of 15.3% (820 starts). Closings over the last four quarters are also trending down to 10,329; though we had hoped that closings would remain flat for the year we finished out with a 10.6% decrease.

MLS single family listings have started a slight downward trend down 8% to a total of 21,484 when looking at December over December. Though still higher inventory numbers than we saw through most of 2013 it appears that sellers are still in the market as sales ended the year up 9%. The market is currently holding 3.6 months of supply and days on market have been holding steady at 88 days over 4Q 2014. With room to grow in the resale market the undersupply of homes has been under our equilibrium of 5-6 months since 2009.

Annual New Home Starts and Closings

Phoenix 4q14

For 2014, single family annual MLS sales numbered 72,402 units, down 11% from one year ago, but it still represents a large volume of transactions. The median price of a single-family home sold through the MLS rose slightly reaching $204,000, a 3% increase from twelve months ago. Despite what was expected median price did increase slightly from the previous quarter. Condo sales are on the watch list though annual sales were down 5% and inventory is also down slightly. We did see strong median price appreciation up 13% to $129,400.

“With new homebuilders entering the market in the next year it will be interesting to see what occurs in the infill market and what effect that will have on resales specifically condos,” said Rachel Cantor, Director of Metrostudy’s Phoenix market. “We expect to see strong numbers coming from projects in the Central Valley and Scottsdale area. But the question is will buyers be able to pay the higher prices we expect to see in these new communities and how deep is the pool of buyers interested in the product.”

SE Valley is still drawing a majority of the starts and the competition landscape already filled to capacity will see more additions in 2015. The upside is that buyers are still in the market. The first two weeks of 2015 has seen traffic and sales in the Gilbert market come in very strong and we are currently tracking traffic at the same pace we saw in the beginning of 2014 which makes us cautiously optimistic. The competition is constantly changing and builders should now begin looking and start thinking about replacement projects as well as consumer segmentation. With little growth expected in 2015 market share will be gained by beating out the competition.

As we see the SE Valley is drawing the largest amount of starts and carrying only 18% of VDL supply for the market. The overall inventory of vacant developed lots (VDL), or finished lots, continued to rise in Q4. The total of 55,136 vacant lots includes all product types. Though VDL inventory has seen minor growth year over year currently up 6% from last year it has been a consistent growth throughout the year. Through most lots are in the outlying areas of Pinal County and the SW Valley reviewing existing positions and timeline for lot deliveries is going to be critical in 2015. Planning lot deliveries and subdivision close-outs in highly competitive areas like the SE Valley will help builders begin to review purchases for lots in 2016 and 2017.

“2015 is currently the year of watching population, wages, jobs, and migration very closely,” said Cantor.  “Any changes in these areas could make or break our housing industry. With little to no affordable housing left it is not a surprise that apartment and condo growth seems to be on the rise, though it is not yet clear if apartments or condos will become how we now define affordability. Phoenix is not alone in the quest for affordable product – several higher permit producing markets like Texas and Florida are beginning to see the slow erosion of their affordability market and increasing land prices leading them to wonder how they will be changing in the next few years. Locally, I question how deep the pool of clients that want this type of product is and how much can they afford? I am not yet convinced that condos and infill are the new affordable solution but never say never.”

For information contact:
Rachel Cantor
480.588.1585
rcantor@metrostudy.com

About Metrostudy

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.

With Fading Affordability & Fence sitting Millennials, 2014 may be a year builders will be ready to forget

Posted in Phoenix - Tucson Market | Posted on 11-19-2014 | Written by Metrostudy News

  • Metrostudy’s 3Q14 survey of the Phoenix market shows starts down 10% for the year; closings are also trending down
  • We continue to see the strongest growth in the Northeast Valley
  • As affordability begins to fade and millennials content to wait it out it is expected that 2014 will be a lackluster year and one that some builders will be ready to forget.

November 2014:  According to the Metrostudy 3Q14 survey, home starts, attached and detached, in the Phoenix area numbered 10,755 over the last four quarters. Starts saw a larger decrease for the quarter down 10% for the year with the largest decline (23%) expected in Pinal County. The Northeast Valley continues to see the strongest starts growth year over year with an increase of 37.4% (860 starts). Closings over the last four quarters are also trending down to 10,891; though we had hoped that closings would remain flat for the quarter we are now trending down 5.9% for the year.

MLS listings continue to remain flat for the year with 23,195 listings in September. We are seeing higher listings than 2013, up 13%. Though sales have been down 13.86% from June 2014, we are still way below a normal resale market of 5-6 months of supply. The market is currently holding 3.9 months of supply. Days on market have been holding steady at 84 days since the beginning of 2014. In September of 2013, the days on market were 61 days.

For the four quarters ending in 3Q14, single family annual MLS sales numbered 71,972 units, down 14.8% from one year ago. The median price of a single-family home sold through the MLS dropped slightly in September reaching $199,000, a 4.7 percent increase from twelve months ago. The average price per square foot is trending down as well at $125.83 as reported by the Cromford report. Just as we are seeing in the new home market, it is no longer a seller’s market.

“The story remains much the same in the SE Valley, which is outpacing other submarkets by leaps and bounds,” said Rachel Cantor, Director of Metrostudy’s Phoenix Region. “Nine of the top 25 master planned communities in the Phoenix market are located in the SE Valley which includes The Bridges, Morrison Ranch, Eastmark, and Adora Trails. Though the starts look good, most builders that are sitting in subdivisions such as Eastmark or The Bridges are not currently feeling the wonders of being in the top 25 communities. The competition is constantly changing as builders fight to meet their end of year numbers and move specs in these communities. Buyers are attracted to this market for a number of reasons and though builders may not be happy in these subdivisions now is the time to start thinking about replacement projects. Price pressure is expected through the end of the year and builders should start looking at 2015 and 2016 projects to ensure proper product placement and pricing.”

The overall inventory of vacant developed lots (VDL) continues to rise in Q314. The total of 54,309 vacant lots includes all product types, including attached product as well as custom lots. Though VDL inventory has seen minor growth year over year currently 5% from Q3 2013 it has been on an upward trend. Through most lots are in the outlying areas of Pinal County and the SW Valley, reviewing existing positions and timeline for lot deliveries is going to be critical in 2015. Planning lot deliveries and subdivision close-outs in highly competitive areas like the SE Valley will help builders begin to review purchases for lots in 2016 and 2017.  As builders continue to struggle with sales across the valley we have expected to see more finished vacant inventory on the ground this quarter. We actually tracked only 1 percent growth Q3 over Q2. The number of newly built finished vacant units totals 2,550, which is up 20 percent from one year ago.

“As advised previously during the year, we advise builders to approach 2015 with caution,” said Cantor. “With mixed signals comings from buyers within the Phoenix market and no strong indicators for job growth or major mortgage changes it is time to prepare for only moderate growth of 10-15 percent until 2017. Though the lower down payment requirements will probably help some buyers with their purchase, I do not expect this to bring buyers out of the woodwork. With the increase in interest rates now being pushed until end of 2015 to early 2016 and millennials not expected to begin purchasing until 2017 micro awareness of your target buyer and segment is extremely important for builders over coming year. For now, as we wait for the year to close out, expect to see more incentives but very little changes in base pricing.”

For information contact:
Rachel Cantor
480.588.1585
rcantor@metrostudy.com

About Metrostudy

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, visit hanleywood.com.

A Year of Rebalancing Leaves Buyers on the Fence

Posted in Phoenix - Tucson Market | Posted on 08-12-2014 | Written by Metrostudy News

Metrostudy’s survey of the Phoenix housing market indicates that initial expectations for 2014 were overly optimistic, and we expect to see the market down 5% for the year.   Our 2Q14 survey shows that home starts, attached and detached, in the Phoenix area numbered 11,270 over the last four quarters. The Northeast Valley continues to see the strongest starts growth year over year with an increase of 53.3% (857 starts). Closings over the last four quarters are also trending down to 10,981, a slight decrease of 2.5%.

MLS listings are down to 23,099 listings in June when compared to our market a year ago we have seen listings increase and sales decrease.  These seems necessary in order to get a stronger resale market in June 2013 the market was sitting a 2.1 months.  Now we are seeing stronger numbers at 3.7 months. A normal resale market carries 5-6 months of supply. Just as the new home market has experienced, appreciation has start to slow with only a 2.5% increase in median price over the last quarter. Days on market have been holding steady at 82 days for the past 3 months.

“For the four quarters ending in 2Q14, single family annual MLS sales numbered 73,938 units,” said Rachel Cantor, Regional Director for Metrostudy’s Phoenix office. “This is down 12.7% from one year ago, but it still represents a large volume of transactions. The median price of a single-family home sold through the MLS reached $200,000 in June, a 7.1% increase from twelve months ago. Though listings are increasing and sales are decreasing we do feel that some of this is just due to market stabilization.”

The Top Ten Builders in Phoenix Hold 59% Market Share of Closings. See The Top Ten Phoenix Builders based of Metrostudy’s 2Q14 Survey Findings

10 ten builders phoenix 2q14

 

The SE Valley continues to dominate in starts with 3,901 for Q2 and with 35% of the starts coming from this market.  Though boasting larger start numbers more builders have initiated decreases in base selling prices and higher incentives to attract buyers to their communities. The competition is fierce in the master planned communities with multiple builders. Buyers are attracted to this market for a number of reasons and builders are looking to replace lots in this corridor. Land prices in this corridor have skyrocketed and though builders would like to stay in this submarket the land pricing has to adjust. With no appreciation expected for the remainder of the year builders are wondering how to make the next deal in this area work for them.  The Northwest and Northeast Valley continue to be strong markets but keep your eyes peeled on the Central Valley as builders start testing the waters of new product in this market.

“The hottest market is the Northeast Valley, where starts grew by 54% from June 2013 numbers,” said Cantor. “Closings are now feeling the impact of the slow spring selling starts for the year. Though only a 2.5% decrease being felt across the market with positive numbers being seen in Northeast and Central Valley.”

The overall inventory of vacant developed lots (VDL), or finished lots, continues to rise in Q2. The total of 54,177 vacant lots includes all product types, including attached product as well as custom lots. With the decrease in starts we are starting to see movement upward with the total market now sitting on 57 months of supply, well above equilibrium range of 24 months. A majority of the vacant developed inventory is in the Southwest Valley and Pinal County. With these two markets maintaining 29,369 lots, 54.1% of the total finished lots the market appears heavy in finished lots. Taking out these two markets, the finished lots count is more equalized. We are still slightly above equilibrium at 36 months of supply but it explains what builders are feeling. Finished lots in the more desirable locations are decreasing and replacement lots with higher costs and thus higher home pricing may not be possible with the low appreciation expected for the remainder of the year. The SE Valley has the lowest months of supply at 31 months.

With nearly all of the finished lots in the more desirable parts of town under builder control, proper tracking of future lots is of utmost importance. As builders continue to struggle with sales across the valley we have expected to see more finished vacant inventory on the ground this quarter. The number of newly built finished vacant units totals 2,530, which is up 26 percent from one year ago. Months of supply grew from 2.01 months in 2Q13 to 2.76 months as of 2Q14. This is considered to be just above normal, and the upward trend is a concern that should continue to be monitored.

We should see a decrease to around 11,000 starts for 2014, 5% lower than the 2013 numbers.  The expectation is that what is occurring is a balancing within the market. Caution is advised as builders begin to make their plans for 2015. “With no strong indicators of changes in the Phoenix economy, my expectations for the next year will be moderate growth of 10-15% in starts up to 12,200 and price appreciation in the 2-4 percent range if we see the continued scale back in pricing for the remainder of the year,” said Cantor. “If interest rates start to rise, we could see some positives in the latter part of the year if buyers decide to get off the fence and buy.”

For information contact: Rachel Cantor @ 480- 588-1585
rcantor@metrostudy.com

About Metrostudy

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

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; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Lots of Catch-Up

Posted in Atlanta Market, Austin Market, Central Florida Market, Dallas - Ft. Worth Market, Denver - Colorado Springs Market, Houston Market, Inland Empire Market, Jacksonville Market, Las Vegas Market, Maryland Market, Naples - Ft. Myers Market, National Housing Market, Northern Virginia Market, Phoenix - Tucson Market, Raleigh - Durham Market, Sarasota - Bradenton Market, South Florida Market, Southern California Market, St. George - Mesquite Market, Tampa Market | Posted on 08-04-2014 | Written by Brad Hunter

brad hWe have been talking for years about the lot shortages that builders are facing.  Now, it’s time to talk about how many lots are being developed.  Builders and developers are now playing “catch-up,” with builders buying land and lots and developers/investors paving roads and putting in infrastructure to serve the builders’ needs at a frenetic pace.

The pace of lot delivery (completion, ready for the builder) has gone up 140% in the past two years, much faster than the pace of housing production has risen (+84%).  Despite this increased pace, lot development STILL lags the pace of home production nationwide.

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In some markets, the lot production machine is in full gear, and has caught up with demand.  This is a good sign for builders, and a vital turning point for home production in 2015 and beyond.

The TOP TEN states for lot production in 2Q14 are:

State       2nd Q.   Starts        2nd Q. Lot       Deliveries
Texas 19,714 18,931
Florida 12,416 10,974
California 10,050 10,219
North Carolina 4,866 3,168
Georgia 4,489 1,270
Colorado 3,985 3,276
Arizona 3,519 4,596
Maryland 2,436 2,122
Utah 2,328 2,498
Virginia 2,198 1,850

Note that lot production has caught up with new home production in California, Arizona, and Utah.   Florida development is woefully far behind demand for lots, hence the skyrocketing cost of finished lots there.

Metrostudy defines “future lots” as those that are in the pipeline (some are pre-entitlement), and Florida has the deepest pipeline.   Below are the top 10 states ranked by known future lots.

State Future Inventory
Florida 1,597,055
California 1,378,299
Arizona 1,213,476
Texas 651,413
Colorado 406,613
Georgia 316,956
Illinois 281,054
Nevada 227,121
Maryland 194,829
Virginia 183,613

 

Metrostudy Names Rachel Cantor Regional Director, Phoenix Market

Posted in National Housing Market, Phoenix - Tucson Market | Posted on 06-30-2014 | Written by Metrostudy News

Washington, D.C. – July 1, 2014: Metrostudy, a Hanley Wood company, announced today the appointment of Rachel Cantor as regional director for Metrostudy’s Phoenix market.

Cantor joins Metrostudy with over 10 years of residential and commercial real estate industry experience in the Phoenix market.  She has held senior level positions in acquisitions and development with national home builders in the area. She is most recently from J. P. Morgan Chase, where she focused on commercial site strategy for Card and Mortgage Banking services.  Her deep experience and relationships in the homebuilding and financial communities will continue the Metrostudy tradition of expert advice and insight to the Phoenix market.

“I am excited about this opportunity it is a chance to combine my passion for homebuilding and helping clients understand the real estate market.  Metrostudy’s changes to the Insight platform, our mobile tool, can’t be matched in the market and I am thrilled to be a part of this organization and plan our future,” said Cantor.  Rachel will oversee all operations for Metrostudy’s Phoenix market, including consulting with builders, developers and financial institutions regarding housing and economic market conditions.

About Metrostudy

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, visit hanleywood.com.

Phoenix – Get Mobile with Insight!

Posted in National Housing Market, Phoenix - Tucson Market | Posted on 06-12-2014 | Written by Rachel Cantor

Metrostudy’s Insight tool has a new look for 2014.  Now you can search, track, and validate numbers in the field all from your mobile device.  Want to know what is going on around your existing subdivisions? You can select radius searches and see information on starts, closings, and vacant developed lots all with the touch of a button on your mobile device.  Let’s take a look at Maricopa County.  You want to know the top 5 subdivision’s by starts.  Vistancia, Adora Trails, Eastmark, The Bridges at Gilbert, and Verrado round out the list.  You can search and pull reports by postal city, census place, school district, county, and zip code. Take a look a property analysis and find your next land deal at the push of a button.  Want to draw your own search area?  Now you can with our new drawing tools help narrow down your competition and see how they are trending in your defined search.  Save your reports while in the field so you can download and print when you return to the office.  See how this new tool can complement other services we now offer!

For more information on this exciting tool click here

Phoenix Housing Market Metrostudy 1Q14 Survey Results: Market Traffic Positive in 2014; Competition Driving Builders to Incentives

Posted in Phoenix - Tucson Market | Posted on 05-14-2014 | Written by Metrostudy News

May 14, 2014: Builders saw positive traffic during the Phoenix spring selling season, but competition has builders scratching their heads on how to keep their market share.  Price decreases occurred but only 8% of the 6,000 plans tracked by Metrostudy saw the decrease.  The price changes that did occur were less than 5% of the base price.   Builders are leaning on incentives to limit changes in base pricing.  Though most plans remained flat quarter over quarter there was still growth and builders did see price increases across 38% of plans in the Valley.

The Southeast Valley continues to dominate in starts but, despite its larger numbers, competition has been fierce in this market. Though home prices are still slightly on the rise it appears the market has reached the price threshold. The 4,006 home starts in 2013 are down 5.5% from the previous year. The Northwest Valley is the next most active market area with 2,352 annual starts ending 1Q14, up 1.7% over the previous year.  The hottest market is the Northeast Valley where starts grew by 374 units or plus 86.2 % from March 2013. Growth slowed in this submarket over the first quarter but still had positive growth of 22.7% over 4Q13. Closings improved across all markets except the Southeast Valley. As annual closings improved 2.4% over the same quarter last year the Southeast Valley was the only submarket to slip in closings numbers.

According to Metrostudy’s 1Q14 survey of the Phoenix housing market, home starts, attached and detached, in the Phoenix area numbered 11,734 over the last four quarters. Metrostudy expects the market to remain relatively flat for 2014 and though sales traffic has been up for the year the conversion rate was 3.79% through April as reported by builders.

In hopes of a strong spring selling season builders started more homes in 4Q 2013.  This push has resulted in a larger number of newly built finished vacant units.  The total of 2,473 is up 23 percent from one year ago and currently represents 2.6 months of supply.  Not a concern at this point just a watch item for builders in the upcoming quarters.

“Based on concern regarding future demand and high land prices, many builders have been renegotiating existing land deals or cancelling contracts,” said Rachel Cantor Regional Director of Metrostudy’s Phoenix-Tucson Market. “Though it is still a seller’s market, there is less room for land price growth as builders review their current land strategies. Increased competition and buyer qualification appear to be at the center of slower sales.”

The Phoenix economy, measured by job growth, is continuing to expand. Employment is up 2.2 from March to March, an additional 39,900 jobs during that time. Phoenix is still ranked in the top 10 among all metro areas in terms of year-over-year growth, with strong growth expected in the professional/business and health sectors. Unemployment as of March stands at 6.4% (not seasonally adjusted), slightly below the national unemployment rate of 6.7%.

“The first quarter of 2014 was a slow start but we have some positive indicators for the remainder of the year,” said Cantor. “We do not expect to see growth in 2014, as previously estimated starts will take a dip in 2Q14 as builders work through the standing inventory. Closings should remain flat as well but we should keep an eye of the positives occurring in the resale market. It is noteworthy that our market still carries fewer homes than we would expect in a normal market with only 3.8 months of supply based on current sales. With a drop in distressed indicators the expectation is sellers have equity and with that hopes to purchase new home. With strong increases in consumer spending and consumer confidence we can expect that new home sales will be next. Buyer financing is still the wild card and though no one likes higher mortgage rates; an increase could stimulate buyers to make a move.”

For information contact: rachel cantor @ 480.588.1585
Email rcantor@metrostudy.com

About Metrostudy

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

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; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Homebuilding activity ahead of last year, but below expectations

Posted in Phoenix - Tucson Market | Posted on 07-18-2013 | Written by Metrostudy News

(Phoenix, AZ – July 18, 2013) The Phoenix homebuilding market is improving and will continue to improve, but many in the industry expected more activity this year. This is 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.

Like the nation, the Phoenix economy is expanding at a consistent if not spectacular pace. Employment is up 2.6 % from June to June, or plus 44,200 jobs during that time. “This ranks Phoenix in the top 10 among all metro areas in terms of year-over-year growth, but we have recovered only 45 % of the jobs that were lost to the recession,” said Ben Sage, Regional director of Metrostudy’s Phoenix – Tucson Market. Unemployment as of June stands at 7.2% (not seasonally adjusted). This is down modestly from 7.6 % one year ago, but the labor force has grown since last year. More people entering the workforce is a positive sign.

According to the Metrostudy quarterly survey, annual home starts, attached and detached, in the Phoenix area numbered 11,773 ending 2Q13. This is up 35 % from a year ago, but the pace of improvement has slowed since starts increased 67 % during the calendar year 2012. Starts in 2Q13 alone numbered 3,225, which is up 4 % from 2Q12. “Builders are reporting an average of less than 4 sales per month year-to-date, which is right in line with last year on a persubdivision basis. For the most part, though, builders had higher expectations heading into 2013,”said Sage. Annual new home closings, or “move-ins” by Metrostudy methodology, were up as builders closed 11,246 units during the year ending 2Q13. This represents an increase of 30 % from one year ago, which is in line with the increase in starts.

The overall inventory of vacant developed lots (VDL), or finished lots, declined 11 % over the past year to 53,060. This is for all product types, including attached product as well as custom lots. The decline combined with an increase in starts has allowed supply of VDL to fall to 54 months. This is well above equilibrium range of 24 months, but it is down from 135 months two years ago. “This illustrates how quickly supply measures can drop when lot absorption increases. It is important to note that supply varies significantly by geography and product type,” said Sage.  For example, lot shortages exist in Chandler, Gilbert, Peoria, and Surprise.  Metrostudy has the only field-verified count of vacant developed lots, commonly referred to as finished lots.

Regarding new-home inventory, the number of finished vacant units totals 1,891, which is largely unchanged over the past four quarters. With closings on the rise, however, the relative supply of finished vacant units is down to 2.0 months, which is within equilibrium range. “There is evidence that builders constructed a few spec homes earlier in the year, but demand has been strong enough to keep builder inventory well under control,” said Sage.

“Metrostudy had forecast an increase in starts of 25 % in 2013, or about 14,000 units. With first-half starts up only 13 percent and the spring selling season behind us, it does not appear Phoenix will reach that level. Even so, our forecast will be one of the most accurate as most were expecting even larger increases. Sales to investors was part of last year’s surge, but builder price increases helped stem that tide. Now we are back to true demand, which is still well up from two years ago,” said Sage.

For information contact:
ben sage @ 480.756.9300
email bsage@metrostudy.com

About Metrostudy

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.

About Hanley Wood

Hanley Wood, LLC is the premier media, event, information and strategic marketing services company serving the residential, commercial design and construction industries. Through its operating platforms, the company produces award-winning digital and print publications, newsletters, websites, marquee trade shows and events, Market Intelligence data and strategic marketing solutions. The company also is North America’s leading publisher of home plans.