Posted in Reno Market | Posted on 08-22-2014 | Written by Metrostudy News
- Annual new home starts are up 43% YoY, Quarterly starts are up 35% YoY
- Start activity has shifted to higher price ranges; starts below $300k have dropped dramatically
- Average base price for new homes stands at $361k, up almost 10% from one year ago
August 2014: Metrostudy’s 2Q14 survey of the Reno housing market showed that while growth in the Reno job market has cooled somewhat, annual new home starts and closings continue to rise. Annual new home starts through 2Q14 were 1,387, up 43% over 2Q13. Annual starts are an indicator of future new home closings, and annual closings are 1,407, 67% more than one year ago. Increased demand continues to drive builders to start new homes. Quarterly new home starts were 35% higher than in 2Q13.
Our average “offer to build” base price for new homes in active projects INCREASED to $361K, up nearly 10% from one year ago. This is good news for home sellers that have been faced with negative equity. The average price has increased steadily since 2012 and now, builders are pricing their product to the competing resale and foreclosure market which are both improved.
“Start activity has shifted over last year into the price ranges above $300K as builders adjust pricing to offset increased land and construction costs,” said Greg Gross, Director of Metrostudy’s Northern California and Nevada division. “This quarter we are seeing starts fall substantially in the range below $300K. Lot costs are also increasing as lot supply dwindles. Affordability remains a concern as home prices are rapidly increasing. Last year, 64% of all new home starts were under $300k; this year 36% were priced below $300k.”
PRICE DISTRIBUTION OF QUARTERLY STARTS
With 139 Finished Vacant Single Family homes, the market has less than 1.2-months of supply at current absorption pace. The number of Finished Vacant Homes is at the lowest level since Metrostudy began tracking the Reno market in 2006; these inventories are actually below the equilibrium level for this size market. Finished Vacant Homes make up 18% of total housing inventory which is considered a healthy level.
“Single family lot delivery has virtually ceased in the Reno market, but with lot absorption outpacing lot deliveries for nearly four years, lot Inventory continues to shrink,” said Gross. “The greater Reno market has 5,103 Finished and Vacant single family lots which equates to less than 4-years of supply, based on current start pace. Only 3 years ago we had 14 YEARS of lot supply!”
There are only about 800 lots various stages of development now; as we are beginning to see some projects begin to show signs of life.
As 2014 is half over, it is clear that the Reno housing market demonstrated signs of stabilization. Builder confidence in the market continues to strengthen as the market is at 2008 levels. The new normal will be steady absorptions, increased construction costs and a tightened labor supply.
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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