Posted in The Triad Market | Posted on 12-12-2014 | Written by Metrostudy News
- The region is seeing the strongest growth in years – YTD Housing Starts are up 15.6% over 2013 levels
- Oversupply of lots in many locations is allowing builders to keep costs in line with market demand
- Townhomes are showing increased strength in the Triad market, with 3Q14 construction up 26.7% over 3Q13
December 2014: Metrostudy’s 3Q14 survey of the Triad’s housing market shows that despite continuing signs of strength, the region needs continued strong job growth to reduce the excess supply of housing. Through 3Q14, Annual Starts (the sum of the past four quarters) of 2,323 were observed in the Triad, an increase of 14.4% from 3Q13. The 688 quarterly starts in 3Q14 was a 2.2% increase over 3Q13. The 587 quarterly closings in 3Q14 was a 11.6% decrease from the 526 homes closed in 3Q13.
“Looking at a year-to-date perspective, the Triad is up 15.6% in starts compared to 2013, and up nearly 20% in closings,” said Jay Colvin, Director of Metrostudy’s Triad region. “The strong upward trend so far this year indicates that the Triad will post the strongest growth it has seen in many years.”
Total inventory, which includes model homes, finished vacant homes (no visible sign of occupancy), and homes under construction, totaled 1,735 units in 3Q14. Based on the closing pace over the past 12 months, the Triad now has a 9.5 months-of-supply of new homes.The stable finished vacant home inventory is an indicator that the growth in construction activity over the past year has not been artificial.
The 10,957 lots on the ground in the Triad in 3Q14 is 10% less than the number of lots on the ground in 3Q13. This represents a 56.5 months-of-supply at the current start rate. Even though this figure is well above the range that Metrostudy considers normal for lot supplies, there are shortages of lots in the highest demand locations, and that has driven limited new lot production. 1,112 lots were delivered to the market over the past 4 quarters. Those lots have been added to currently active neighborhoods which have maintained or increased sales over the past few quarters.
“The oversupply of lots, many of which are bank owned or in the default process, has aided in resetting the price for lots, helping builders offer homes priced to reflect market demand,” said Colvin. “As higher activity neighborhoods near build out, existing lots offer a cost effective replacement alternative to new lot production, and allow builders to keep cost in line with market demand.”
Townhomes – following national trends – are showing increased gains in the Triad new home market. Construction on 474 townhomes started over the four quarters ending 3Q14, a 26.7% increase from 3Q13. 430 townhomes were closed on over the previous four quarters, which was a 25.7% increase from the 3Q13 figure. 114 townhomes were closed on in 3Q14, 28% more than 3Q13.
The 2,363 vacant developed lots available for townhome product, is down 10.7% from 3Q13. At the current pace of starts, the total number of lots represents a 59.8 months-of-supply. 191 new townhome lots were developed over the previous 12 months, a sign that well positioned townhome communities are seeing sustained demand.
Lot supplies are still high, but as with the overall trend, the most in-demand submarkets are seeing shorter supplies and the gains in lot development are expected to continue. The job gains that the region has experienced so far in 2014 are very important to the local housing industry. However, for a sustainable recovery, job growth needs to stay at this level and avoid the choppiness that the market has experienced over the past several quarters. In order for the excess housing supply to be reduced, the region will need to experience greater job growth rates, as well as increased rates of population growth.
For information contact:
Jay Colvin – 919- 314-0420
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
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