Lack of Inventory and Rising Prices Dampen Demand Growth

Posted in Raleigh - Durham Market | Posted on 08-13-2014 | Written by Metrostudy News

August 2014: Metrostudy’s 2Q14 survey of the Triangle’s housing market shows a return to a more normal operating environment, a positive direction for growth in the coming months.  For the second quarter ending June 2014, the Triangle started construction on 2,344 new homes, down 4.9% from 2Q13. Quarterly Closings – previously unoccupied new homes that now are occupied – totaled 2,163 units, a 0.4% decline from 2Q13.

The survey showed 8,821 annual starts through the end of 2Q14, a 6.6% gain from the same period a year ago. The annual closings figure of 8,557 was 12.8% more than the 7,583 observed in four quarters ended 2Q13.

“An unusually cold and wet winter delayed not just housing starts, and lot development, but also froze housing demand and kept traffic levels below normal into the spring,” said Jay Colvin, Director of Metrostudy’s Raleigh-Durham region. “The result has been a flat market through the first two quarters of 2014, but there are signs that the market is getting back on track. Year-to- date, starts are up 3% over 2013, and closings are up 10%, but even with a strong summer and fall activity, 2014 is expected to finish below our previous expectations from a volume perspective.”

Total inventory – models, finished vacant unoccupied new homes, and new homes under construction – equaled 5,034 units in 2Q14, up almost 6% over the inventory surveyed in 2Q13. Under Construction inventory now stands at 3,244 homes (4.5-months’ supply), which is 7% higher than 2Q13. Finished Vacant inventory now stands at 1,575 homes (2.2 months’ supply). At current closing pace Total Inventory (Models, Finished Vacant, and Under Construction homes) represents a 7.1- months’ supply of homes, in-line with historical averages for the market.

See the Top 10 Communities List, ranked by annual starts based of Metrostudy’s 2Q14 Survey Findings

Raleigh top 10

Triangle townhome builders started construction on 446 Townhomes in 2Q14, up 6.4% over 2Q13. Annual starts of 1,846 townhomes were 9.9% greater than 2Q13. Townhomes currently make up 20.9% of total Triangle new home construction, up slightly from a 20.3% market share in 2Q13.

Triangle townhome inventory of 939 units in 2Q14 represents a 6.6-months’ supply. 664 Townhomes were under construction, a 27% increase from 2Q13. Current under construction inventory represents 4.6 months-of-supply.  The 2,940 vacant developed lots available for townhome product in 2Q14 represent 19.1 months-of-supply, a decrease from the 2Q13 figure of 26.2 months-of-supply.

“Triangle new home construction and sales continue to show a bias towards higher priced homes,” said Colvin.  “While new homes with base prices of $200k-$299k are capturing 35% of all new home demand, homes priced between $400k and $499k showed the highest percentage gain in closings.  Construction on homes priced below $200k continues to shed market share. Construction has decreased 11% from 2Q13 – closing pace has decreased 8%. This price range was affected harshly during the downturn, and has been slow to recover, but will be critical to the overall market’s return to previous levels of volume.”

The 19,766 vacant developed lots in the Triangle in 2Q14 represent a decrease of 3,175 lots from 2Q13. At the current absorption rate, these lots represent a 26.9- months’ supply – the lowest since 1Q08. Metrostudy considers 18-24 months to be normal, as on average that is the amount of time it takes to entitle and deliver new home lots to the market. Not all lots share equal demand. In Triangle submarkets with the highest demand, lot supplies are well below equilibrium, and in some municipalities the entitlement timeline is significantly longer than 18 months.

Over the last 4 quarters 5,646 new lots were developed in the Triangle, which is 15.7% more lots than were delivered through the end of 2Q13. There were 1,961 lots delivered to the market in 2Q14, which is 61% more than were added to the market in 2Q13. The current pace of lot deliveries is 64% of the absorption rate (annual starts), which indicates that overall lot supplies will continue to decrease, however this trend may be nearing an end as lot development activity has begun to increase at a higher pace.

The Triangle housing market was directly impacted by delays in construction and development. An already tight lot supply was exacerbated by the exceptionally wet and cold winter/spring, which kept lot development professionals on the sidelines and in turn delayed the release of those lots for home construction and subsequent home sales. The lack of inventory – whether that be home or lot – continues to be cited as the primary culprit among on-site sales professionals. While eather cannot shoulder all the blame, prices have risen dramatically over the past year, with several communities seeing double digit and above price appreciation.

Much of this price growth is the result of cost increases, and not necessarily margin growth for the builder. At the same time interest rates have increased from a year ago – although this increase has been moderating over the past several months. The result has been a net increase in the cost to own for potential buyers. Metrostudy believes that the lack of inventory continues to be the biggest issue influencing the pace of home closings; however, as the cost of housing has increased the pace of demand growth has begun to moderate.

“The number of higher priced homes being built has continued to grow at a faster rate than the number of households with the ability to qualify for those homes,” said Colvin.  “For unit volume growth, more moderately priced homes will need to be produced in the Triangle. Right now, the realities of finding land, entitling and developing projects, while maintaining profitability present significant challenges.”

For information contact: Jay Colvin @ 919- 314-0420
Email jcolvin@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.

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

 

Is Activity in the South…Going South?

Posted in Atlanta Market, Central Florida Market, Charlotte Market, Dallas - Ft. Worth Market, Houston Market, Jacksonville Market, Naples - Ft. Myers Market, National Housing Market, Northern Virginia Market, Raleigh - Durham Market, Rio Grande Valley Market, San Antonio Market, Sarasota - Bradenton Market, Suburban Maryland Market, Tampa Market, The Triad Market | Posted on 08-04-2014 | Written by Brad Hunter

The brad hgovernment release on housing starts for June showed a sharp decline, concentrated in what the Census Bureau defines as “The South.”  Single-family starts were down in June by 9.0% from the previous month, and down 4.3% from twelve months earlier.  Within that number, almost all the decline was in the South, down 20.1% versus the previous month and down 14.5% versus a year ago.

Rumors of the South’s demise are greatly exaggerated.

Read Full Article and See Quarterly SFD Starts

 

 

 

 

Metrostudy Market Analysis: Raleigh, North Carolina

Posted in National Housing Market, Raleigh - Durham Market | Posted on 06-26-2014 | Written by J.W. Colvin IV

“Unless you want to compare notes about nepotism in real estate, or hear my life story, please skip to the 2:50 point in the video! What I was trying to lead up to was that North Carolina, and Raleigh/Durham (the Triangle to us “Locals”) in general is a great place to live, work and more importantly build and own homes. The local chamber has stated that much in just about every marketing publication and website for the last decade. Apparently, those efforts have paid off. Not only has the region rebounded from the Great Recession, but surpassed it, at least from an employment and population standpoint.

The new home market, has been a little more challenging. The positives that have driven people to the Triangle, have also attracted home builders. Lots and lots of homebuilders. The Triangle is one of the most competitive homebuilding markets in the country. The top 25 builders, only capture 62% of the demand. That Top 25 list is not just made up of the largest national home builders (13 of the largest market cap builders traded on the NYSE are here), but also by very large and competitive local and regional homebuilders.

Something that hasn’t been attracted to the market has been land developers, or at least in the traditional sense of the term, as most new development is either builder self-developed or fee-based development. There are very few retail/market lot developers in the region, meaning that the market is only replacing – or attempting to replace – what is already in short supply. Vacant Developed Lot supply is critically low in the region, and new lot development is not keeping pace with demand. This is in turn driving up prices on land and in turn homes, which is causing some prospective home buyers to remain on the side lines. The demand is here, and plenty of it. The supply, and the ability to increase supply, is not. This is the biggest challenge facing the Triangle’s and, in my opinion, the nation’s near-term future where housing is concerned.”

Raleigh is catching up to its pre-crash norms with just 25% of lot supply meeting housing demand this year. In this market overview from the 2014 Housing Leadership Summit, Metrostudy’s Jay Colvin explains that although this North Carolina market felt a similar downturn to the rest of the county with 65-70% decrease in volume, it has regained all jobs lost since the recession.



Metrostudy Markets Analyses at the 2014 Housing Leadership Summit

Posted in Dallas - Ft. Worth Market, Houston Market, Las Vegas Market, National Housing Market, Northern California Market, Raleigh - Durham Market, South Florida Market, Tampa Market | Posted on 06-02-2014 | Written by Metrostudy News

The housing recovery hasn’t been a one-size-fits-all proposition. In Northern California, affordability remains a constant hurdle, while Tampa, Fla., and Las Vegas are clawing their way back after dramatic losses during the recession. In Dallas and South Florida, the markets are so strong that builders are being forced to come up with creative ways to manufacture lots. Raleigh, N.C., is also experiencing shirking supply but has recovered all of the jobs lost during the recession. And in Houston, buoyed by the strong energy sector, home prices have risen 17%. These were just some of the observations that came out from Metrostudy’s regional directors at Hanley Wood’s Housing Leadership Summit in Dana Point, Calif., in May. Check out the videos from the discussion below.

Watch Full Videos Here

Rapids Ascent: Top 10 Cities for Raising Children

Posted in Raleigh - Durham Market | Posted on 03-05-2014 | Written by Metrostudy News

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What do you look for when raising a family? A 2014 study based on seven metrics (median income, cost of living, housing affordability, commuting delays, percentage of families owning a home, crime rate, and education quality) highlights the U.S. cities that are best for raising a family with young children. RealtyBizNews’ Brian Kline reports.

Read More Here

The Raleigh New Home Market Continues to Grow

Posted in Raleigh - Durham Market | Posted on 03-01-2014 | Written by Metrostudy News

(Raleigh, NC – March 1, 2014) The Triangle’s new home market has continued to recover, and is now moving into a more normal phase of development and construction activity. 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.

For the fourth quarter ending December 2013, the Triangle started construction on 1,988 new homes; a 1.6% increase over the number of homes started in 4Q12 (1,956). Quarterly Closings – previously unoccupied new homes that now are occupied – totaled 2,105 units a 6.4% gain over the 1,978 closings surveyed in 4Q12.

“New home construction has been driven by real demand as a result of job gains, population inflows and a relief of pent-up demand. The pent-up demand cycle is coming to a conclusion; moving forward the Triangle new home industry will need to focus on the tangible household creation events – focused on jobs – to drive further new home construction and sales gains,” said Jay Colvin, Regional Director of Metrostudy’s Raleigh market.

Total inventory – models, finished vacant unoccupied new homes, and new homes under construction – was surveyed at 4,932 units. This was an increase of 603 homes over the inventory surveyed in 4Q12, and 25% higher than the all-time low surveyed in 4Q11 of 3,940. Finished vacant inventory now stands at 1,494 homes (2.2 months’ supply). Under Construction inventory now stands at 3,200 homes (4.7-months’ supply), which is 24.1% higher than the 2,578 homes under construction in 4Q12.

The 22,620 vacant developed lots in the Triangle in 4Q13 represent a decrease of 4,086 lots from the 26,706 lots surveyed in 4Q12. At the current absorption rate, these lots represent a 31-months’ supply – the lowest since 2Q08. Metrostudy considers 18-24 months to be normal, as on average that, is the amount of time it takes to entitle and deliver new home lots to the market. “Not all lots share equal demand. In Triangle submarkets with the highest demand, lot supplies are well below equilibrium,” said Colvin.

“The Triangle housing market continues to show a lot of positives and signs of continued growth based on fundamental demand. These trends are expected to continue as the market moves out of the recovery mode and back into a traditional growth and pricing pattern,” said Colvin.

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.

North Carolina Triad Housing Market Rebounding

Posted in Raleigh - Durham Market, The Triad Market | Posted on 12-20-2013 | Written by J.W. Colvin IV

The Piedmont Triad in North Carolina has had a tough run the last decade. The region’s employment base has been hit hard by the move of textile and furniture companies – which drove the local economy for years – overseas. The lack of job creation has hit the housing market especially hard, but the lights are starting to flicker on.

Job creation is finally starting to perk back up. Over the twelve months ending in August, the three MSAs that comprise the area known as the Triad (Greensboro-High Point/Winston-Salem/Burlington) have added an astounding 11,200 jobs across. The gains have been spread across most sectors, with the largest gains in the Trade, Transportation, and Utilities sector. Unemployment has also made strides, now firmly below 10% at 9.1%. North Carolina’s state unemployment rate is 9.1% also.

Housing production has follow suit. Preliminary results from our proprietary third quarter market audit showed tremendous growth. Trailing four quarter starts are up 27% over the same period last year. Move-ins (observed closings) of new homes, which naturally lags starts, has increased 9% higher than last year. At the same time, finished vacant new homes, a key indicator of inventory health, has fallen 12% from the same time last year.

The increases in activity are concentrated in the highest demand pockets of the Triad, in communities with higher relative amenities within the best school districts as one would expect in this phase of a local market recovery, and builders in the market are still being very cautious about expansion in product and community offerings – a positive sign in this analyst opinion – but the signs of growth are certainly encouraging in a market that has been in hard times for a very long time.

The Triangle New Home Market Momentum Continues

Posted in Raleigh - Durham Market | Posted on 11-01-2013 | Written by Metrostudy News

(Raleigh, NC – November 1, 2013) The Triangle’s new home market continued to experience gains in construction and sales. 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.

Over the twelve months, ending September 30th, the Triangle started construction on 8,748 new homes, which was a 35% gain from the same period a year ago, when the total was 6,479 starts. Closings were up 24.7% in that same period. “Construction growth has been strong, and even with more homes being built as specs [homes built without previously signed sales contract], inventory has held steady, and even decreased in some parts of the Triangle,” said Jay Colvin, Regional Director of Metrostudy’s Triangle operations, “That’s a great indicator of the strong demand for new homes in the region.”

Total Inventory (Models, Finished Vacant, and Under Construction homes) represents a 7.5-months’ supply of homes. Seven months’ of supply is the level Metrostudy considers equilibrium in the Triangle. From 4Q99 through 4Q04 the Triangle had an average months’ supply of 7.9- months’.

The 23,057 vacant developed lots in the Triangle in 3Q13 represent a decrease of 3,778 lots from the 26,835 lots surveyed in 3Q12. At the current absorption rate, these lots represent a 31.6- months’ supply – the lowest since 2Q08. “Finding available lots for new home construction is still an issue,” said Colvin, “add to that labor shortages in the construction industry, and you get higher prices…if you’re a buyer now is a good time to do so.”

“The Triangle housing market continues to show a lot of positives and signs of continued growth based on fundamental demand. These trends are expected to continue as the market moves out of the recovery mode and back into a traditional growth and pricing pattern,” said Colvin.

For information contact:
Jay Colvin @ 919.461.9618
jcolvin@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 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.

The Triangle New Home Market Gains Driven By Real Demand

Posted in Raleigh - Durham Market | Posted on 08-14-2013 | Written by Metrostudy News

(Raleigh, NC – August 14, 2013) The Triangle’s new home market has continued to experience the gains in the first half of 2013 that it has seen over the past several quarters.  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.

Unemployment continues its downward trend, which is helping to increase consumer confidence and spur home buyers to action. Consumer confidence is now at its highest level since before the market down turn that started locally in 2007.

For the Second Quarter ending June 2013, the Triangle started construction on 2,460 new homes; a 42.1% increase over the number of homes started in 2Q12 (1,731). Quarterly Closings – previously unoccupied new homes that now are occupied – totaled 2,177 units a 29.3% gain over the 1,684 closings surveyed in 2Q12. Annual closings and starts are the sum of the past four quarters. The 8,274 annual starts surveyed through the end of 2Q13 was a 39.2% gain from the same period a year ago, when the total was 5,943 starts. The annual closings figure of 7,573 was 21.5% more than the 6,235 observed in four quarters leading up to the end of 2Q12. “New home construction has been driven by real demand as a result of job gains, population inflows and a relief of pent-up demand,” said Jay Colvin, Regional Director of Metrostudy’s Raleigh market, “Our market auditors drive by all the new home construction in the Triangle every 90 days, and the homes that are being built are being moved into by families and individuals, also many of the lots where homes are yet to be built have a lot of ‘sold’ signs up. It’s a great sign that the market is getting back on solid footing.”

Total inventory – models, finished vacant unoccupied new homes, and new homes under construction – was surveyed at 4,766 units. Finished vacant inventory now stands at 1,481 homes (2.3 months’ supply) which is the 23rd quarter in a row that this measure of inventory is lower than the previous quarter. “Inventory for immediate need home buyers is very low historically,” said Colvin, “which is driving prices up, and in turn helping to boost up existing home owner equity.”

The 24,436 vacant developed lots in the Triangle in 2Q13 represent a decrease of 3,352 lots from the 27,788 lots surveyed in 2Q12. At the current absorption rate, these lots represent a 35.4- months’ supply – the lowest since 3Q08. Metrostudy considers 18-24 months to be equilibrium, as on average, that is the amount of time it takes to entitle and deliver new home lots to the market. Not all lots share equal demand. In Triangle submarkets with the highest demand, lot supplies are well below equilibrium. Over the last 4 quarters 4,922 new lots were developed in the Triangle. While that is 27.5% more lots than were delivered through the end of 2Q12, it is only 60% of the absorption rate (annual starts), which indicates that overall lot supplies will continue to decrease and prices for existing lots will continue to increase in the near term.

“The home building market locally is making strides, with extraordinary gains in construction activity and home sales; inventory levels have remained low, while selling homes with fewer incentives. Construction lending businesses are doing well, and the prospects for traditional development financing for new projects are getting better each day. The market is expected to continue to grow, while expanding offerings to more buyers,” said Colvin.

For information contact:
Jay Colvin @ 919.461.9618
jcolvin@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.