Twin Cities New Home Growth Showing Signs of Slowing as Affordability Weakens

Posted in Twin Cities Market | Posted on 01-29-2014 | Written by Metrostudy News

(Minneapolis, MN – January 29, 2014) Strong fundamentals across the Twin Cities area have pushed new home construction up 31% over 2012. 2013 finished up the year strong with builders pushing out new homes at a very healthy clip. 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.

According to Metrostudy’s quarterly survey, 1,387 new homes were started in the 4th quarter, down -25.6% from last quarter, but up +7.4% from 4Q12 when 1,292 homes were started. “The drop-off in activity is normal for the 4th quarter as the school year begins and temperatures plummet. While typical, the pullback is slightly lower than we were expecting raising concerns regarding the impact the economy, price increases and rate increases are having on the market,” said Ryan Jones, director of Metrostudy’s Twin Cities Market.

“The majority of new activity remains strong throughout those top tier market areas, with the top 20 submarkets experiencing a 24% jump in starts compared with 2012. However, as lots prove scarce and increasingly costly throughout the “A” & “B” markets activity is picking up throughout Otsego, Rogers, Savage, Chaska, Farmington, Waconia, Ramsey and Hudson as builders expand their footprint across the metro,” said Jones.

At the end of December 2013 there were 2,596 new housing units in inventory, down 154 from last quarter. Of that total, 1,969 units (76%) are under construction, 419 (16%) are finished vacant inventory and 208 (8%) are model homes. Housing supply fell compared to last year remaining very healthy at 5.5 months. Increased closings over the past twelve months helped push down our year end supplies to slightly below equilibrium. Equilibrium for housing inventory months of supply is between 6-7 months. Low housing inventory or more specifically low finished vacant inventory is one of the best indicators of the health of a housing market. These units which have been completed but remain vacant at the time of our survey currently sit at just 419 finished vacant units on the ground. Finished inventory months of supply sits at slightly below one month, which is actually below equilibrium, considered to be between 1.5-2.0 months. These numbers should come up a little over the next couple months as more housing units near completion and sales slow.

There are currently 22,274 vacant developed lots throughout the Twin Cities, representing a decline of 9.6% compared to last year. (10,900 vacant developed lots throughout the metro seven counties, a decline of 9.9% compared to last year). 4Q13 represents the lowest supply number since early 2007. The recent increase in new home demand has created a run on desirable vacant developed lots located throughout the metro. Lot supplies across the seven county metro area are down to just 26.9 months, down below pre-housing boom figures. As activity continues to increase we will need to see substantial lot deliveries across the metro in order to meet demand. “Lot pricing and availability is a concern throughout the top tier markets as land prices are quickly rising. Demand will continue to push outward in 2014 into our second and third tier market areas. Builders are increasing their land supply and should be able to capitalize on the growth that will occur in the coming years,” said Jones.

“The Twin Cities economy looks to remain strong and the new home market is positioned to grow right along with it. While our pace could slow a little in 2014 we expect continued growth in new home activity throughout the year. Price increases may need to be adjusted if the economy weakens or rates change dramatically. Proceed with caution this year as sales might not come as easy as 2013. Stay tuned,” said Jones.

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.

The Twin Cities housing market continues to grow in the third quarter

Posted in Twin Cities Market | Posted on 10-30-2013 | Written by Metrostudy News

(Minneapolis, MN – October 30, 2013) Strong fundamentals across the Twin Cities area have pushed new home construction up another 40% over recent years. 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.

According to Metrostudy’s quarterly survey, 1,875 new homes were started in 3Q13, up +10.8% from 2Q13, and +33.9% from 3Q12 when 1,400 homes were started. For the second straight quarter the Twin Cities housing market surpassed 1,500 new home starts for the quarter. “With winter quickly approaching housing production will continue to see solid growth over the next couple months, before pulling back come January,” said Ryan Jones, director of Metrostudy’s Twin Cities Market.

At the end of September 2013 there were 2,766 new housing units in inventory, up 234 from last quarter. Of that total, 2,085 units (75%) are under construction, 430 (15%) are finished vacant inventory and 251 (10%) are model homes. Housing supply fell compared to last year remaining very healthy at 6.1 months. Low housing inventory or more specifically low finished vacant inventory is one of the best indicators of the health of a housing market. These units which have been completed but remain vacant at the time of our survey currently sit at just 430 finished vacant units on the ground. Finished inventory months of supply sits at slightly below one month, which is actually below equilibrium, considered to be between 1.5-2.0 months. “These numbers should come up a little over the next couple months as more housing units near completion and demand remain strong,” said Jones.

There are currently 22,446 vacant developed lots throughout the Twin Cities, representing a decline of 12% compared to last year. (10,909 vacant developed lots throughout the metro seven counties, a decline of 18.1% compared to last year). 3Q13 represents the lowest supply number since early 2007. Lot supplies across

the seven county metro area are down to just 27.2 “As activity continues to increase we will need to see substantial lot deliveries across the metro in order to meet demand. Lot pricing and availability is a concern throughout the top tier markets as land prices are quickly rising,” said Jones.

“The Twin Cities economy looks to remain strong and the new home market is positioned to grow right along with it. We will likely end 2013 up right around 6,000 new home starts, 30% higher than 2012 and twice the amount from 2011. Stay tuned,” said Jones.

For information contact:
ryan jones @ 952.426.0754
email ryanj@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 Twin Cities housing market maintains growth in the second quarter of 2013

Posted in Twin Cities Market | Posted on 07-17-2013 | Written by Metrostudy News

(Minneapolis, MN – July 17, 2013) The Twin Cities economy looks to be very strong and the new home market is positioned to grow right along with it. 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.

The Twin Cities current employment estimates indicate that employers added approximately 49,500 new jobs to their payrolls over the past 12 months.  “Education and Health Care related firms remain one of the strongest and fastest growing employment sectors adding (+12,700) new jobs in the last year,” said Ryan Jones, director of Metrostudy’s Twin Cities division. The local unemployment rate continues to remain one of the lowest in the country, amongst major metropolitan areas, currently sitting at 4.7%.

According to Metrostudy’s quarterly survey, 1,730 new homes were started in 2Q13, up +54.3% from last quarter, and +46% from 2Q12 when 1,184 homes were started. “While the rate of growth in new construction over the past twelve months was likely being held back by the lingering impacts of the stagnant economy, the next twelve months will present new challenges as lot and labor shortages will likely constrain the new home construction market,” said Jones.

At the end of June 2013, there were 2,765 new housing units in inventory, up 13% from last quarter. Of that total, 2,139 units (77%) are under construction, 395 (14%) are finished vacant inventory and 231 (8%) are model homes. Housing supply fell compared to last year remaining very healthy at 6.7 months. Finished inventory months of supply sits at slightly below one month, which is actually below equilibrium, considered to be between 1.5-2.0 months. “These numbers should come up a little over the next couple months as more housing units near completion and demand will remain strong,” said Jones.

There are currently 22,882 vacant developed lots throughout the Twin Cities, representing a decline of 12% compared to last year. (10,812 vacant developed lots throughout the metro seven counties, a decline of 18.1% compared to last year). “Lot supplies across the seven county metro area are down to just 28.2 months, down below pre-housing boom figures. As activity continues to increase we will need to see substantial lot deliveries across the metro in order to meet demand,” said Jones.

“Those in the housing industry need to continue planning for the next 5 – 10 years so that the market can grow successfully from within.  We will likely end 2013 up over 6,000 new home starts, twice the amount from 2011. Challenges exist, but the Twin Cities trend will continue to remain positive,” said Jones.

For information contact:
ryan jones @ 952.426.0754
email ryanj@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.

The Twin Cities housing market continues to grow in 2013

Posted in Twin Cities Market | Posted on 05-03-2013 | Written by Metrostudy News

(Minneapolis, MN – May 3, 2013) The last twelve months have been very positive for homebuilders and we anticipate seeing more of the same throughout 2013 and 2014, 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 Twin Cities current employment estimates indicate that employers added approximately 42,800 new jobs to their payrolls over the past 12 months. “Education and Health Care related firms remain one of the strongest and fastest growing employment sectors adding (+17,900) new jobs in the last year,” said Ryan Jones, director of Metrostudy’s Twin Cities division The local unemployment rate continues to remain one of the lowest in the country, amongst major metropolitan areas, currently sitting at 5.5%.

According to Metrostudy’s quarterly survey, the Twin Cities area started 1,135 new homes in 1Q13, down 13% from 4Q12, but up +53% from 1Q12 when just 740 homes were started. “For the fourth straight quarter the Twin Cities housing market surpassed 1,000 new home starts for the quarter, “said Jones. The rate of annual new home starts for single-family and townhome units across the Twin Cities area is at 5,022 new units. This is an increase of 56% compared to 2012 and represents the highest annual starts pace since 2008. “The new home market is continuing to show consistent growth with annual increases in new home demand occurring in each of the last seven quarters,” said Jones.

At the end of March 2013 there were 2,461 new housing units in inventory, up 7% from last quarter. Of that total, 1,625 units (66%) are under construction, 547 (22%) are finished vacant inventory and 289 (12%) are model homes. Housing supply fell compared to last year remaining healthy at 6.5 MOS. “Increased closings over the past six months helped push down our year end supplies to right within equilibrium,” said Jones.  Equilibrium for housing inventory months of supply is between 6-7 MOS.

There are currently 24,559 vacant developed lots throughout the Twin Cities, representing a decline of 9% compared to last year. (12,052 vacant developed lots throughout the metro seven counties, a decline of 13.7% compared to last year). 1Q13 represents the lowest supply number since late 2007. The recent increase in new home demand has created a run on desirable vacant developed lots located throughout the metro. Lot supplies across the seven county metro area are down to just 33.4 MOS, down below pre housing boom figures. “As activity continues to increase we will need to see substantial lot deliveries across the metro in order to meet demand,” said Jones.

“While inventories remain tight, homebuilders will need to start looking to increase production in order to meet the growing demand. Look for the Twin Cities housing market to ramp up substantially over the next sixth months building up supplies of both housing and lot inventories. The market needs to stop worrying about next year and start planning for the next 5 – 10 years. The Twin Cities new home market is positioned to grow at a steady pace over the next twelve months baring any major setbacks. Early indications point towards continued improvement on home prices and demand. It would be surprising to not see home prices and starts up double digits in 2013. Stay Tuned,” said Jones.

For information contact:
ryan jones @ 952.426.0754
email: ryanj@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.  http://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.

Weathering the Housing Market

Posted in Twin Cities Market | Posted on 04-22-2013 | Written by Ryan Jones

Today’s forecast in Minneapolis calls for a high of 35 degrees with a 90% chance of rain/sleet/snow/terribleness… oh and probably 4-6 inches of snow.  Last year at this time it was a sunny with a high of 62 degrees.

So you probably know where I’m going.  Using the weather to segue into how the housing market can be so different from one year to the next, how original… I hope to make up for my lack of originality by dazzling you with some amazing housing figures.

Across the Twin Cities new housing starts are up 56%. Impressed? We have built almost 2,000 more homes over the past twelve months versus the previous twelve months. Our annual rate toped 5,000 for the first time in over five years! While this is great news, the ups and downs over the past decade have weakened my ability to truly enjoy the ups, so I remain tempered with my excitement.

“Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it;” an instant classic written by John Hughes for Ferris Bueller.

The housing market is moving pretty fast right now and if we don’t stop and look around we could miss… or “mess” it up. See what I did there? Ok maybe a stretch, but I like the quote and I think it relates to the markets these days. Look at the multi-family market. Apartment development activity is at a 20-year high in the Twin Cities, with 1,100 units under construction today and another 4,885 units in the pipeline; that’s almost 6,000 new rental units that could be added to the market in a very short period. “Multi-family developers and experts don’t expect a bubble” Where have we heard this before? Do we tell them what happens when you overbuild?

At this time last year we had just wrapped up the worst year in new housing construction ever. Maybe not ever, but at least the last 50 years, and for me that seems like ever.  2011 ended with just 3,116 new homes built throughout the Twin Cities. Builders and developers were still trying to keep the lights on and the thought of developing new lots seemed ludicrous. Lot supplies were up over 100 months and builders wouldn’t take vacant developed lots if they were given to them for free. But what a difference a year makes.

As of 1Q13 vacant developed lot supplies have been cut in half compared to last year, and in some market areas there are fewer than 12 months of remaining inventory. Builders are raising prices in some developments to actually slow down sales, so they don’t run out of inventory before they can replace it. Slow down sales?!? Land and lot values have shot back up across the metro area and builders are overbidding to secure future positions. If we don’t stop and look around once in a while, we will mess this up.

We need to be cautious about pricing over the next couple years, because if we keep trending on this same pace, we will price buyers out of the market. If we price the very same buyers we need out of the market, what happens to the market? Today’s actions will impact tomorrow’s results.

The Twin Cities amongst Top 10 Increases in New Home Starts

Posted in Twin Cities Market | Posted on 02-04-2013 | Written by Metrostudy News

(Minneapolis, MN – February 4, 2013) Across the Twin Cities, new and existing home sales are at their highest levels in years. Home prices have stabilized throughout the Metro area, and several top sub-markets are experiencing 10% – 15% increases in home prices, 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.

According to Metrostudy’s quarterly survey, the Twin Cities area started 1,344 new homes in 4Q12, up +57% from 4Q11, when just 855 homes were started. “For the third straight quarter the Twin Cities housing market surpassed 1,000 new home starts for the quarter. This also marks the largest 4th quarter starts figure since 2007, piggybacking on the previous two quarters strong starts figure,” said Ryan Jones, director of Metrostudy’s Twin Cities division.

The rate of annual new home starts for single-family and townhome units across the Twin Cities area is 4,706 new units. This is an increase of 47% compared to 2011 and represents the highest annual starts pace since 2008. The new home market is continuing to show consistent growth with annual increases in new home demand occurring in each of the last six quarters.

At the end of 2012 there were 2,309 new housing units in inventory, up 25% from 3Q12. Of that total, 1,675 units (72%) are under construction, 435 (19%) are finished vacant inventory and 199 (9%) are model homes. Housing supply fell compared to last year remaining very healthy at 6.5 MOS. Increased closings over the past six months helped push down our year end supplies to right within equilibrium. Equilibrium for housing inventory months of supply is between 6-7 months.

There are currently 25,268 vacant developed lots throughout the Twin Cities, representing a decline of 9% compared to last year. (12,614 vacant developed lots throughout the metro seven counties, a decline of 12.7% compared to last year). 4Q12 represents the lowest supply number since late 2007. “The recent uptick in new home demand has created a run on desirable vacant developed lots located throughout the metro,” said Jones.

For information contact:
ryan jones @ 952.426.0754
email: ryanj@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com.

Housing: Anatomy of the Rebound

Posted in Atlanta Condo Market, Austin Market, Chicago Market, Denver - Colorado Springs Market, Las Vegas Market, Naples - Ft. Myers Market, Naples Condo Market, Nashville Market, National Housing Market, Northern California Market, Phoenix - Tucson Market, Raleigh - Durham Market, Tucson Market, Twin Cities Market | Posted on 01-31-2013 | Written by Brad Hunter

Metrostudy’s new study of housing in markets across the country puts hard numbers to the housing recovery, and provides a detailed look at differences in the trajectory among regions.  The data (collected at the end of calendar year 2012, and newly analyzed) indicate extreme variance among markets and submarkets, with some markets’ single-family production up 90% or more versus a year ago.

Starts of detached homes rose by an impressive 46.9% from year-end 2011 to year-end 2012, and the rebound is starting a virtuous cycle, providing a much-needed boost to personal incomes, which in turn translate into still-higher demand for homes.

It is important to understand the forces that are driving construction activity higher as well as those that are restraining gains in some areas.  In some markets, there are land constraints that work to the advantage of the builders who have lot positions and ongoing projects in those submarkets, keeping the number of head-on competitors low.  Additionally, the builders that have lot positions in lot-constrained submarkets are able to push prices up much more easily, and they have a strong incentive to do so, because:  (1) they can make more profit by selling the homes at higher prices, and, (2) they don’t want to run out of lots too quickly.

Read the rest of this entry »

02/21/13: Builders and Remodelers Show

Posted in Events, Twin Cities Market | Posted on 01-09-2013 | Written by Ryan Jones

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For More Information about this Event Please Visit BRSonline

Please Register Online at BATConline

Visit Metrostudy’s Blog to Read Details on our Merge with Hanley Wood

The Twin Cities new home market is positioned to grow at a healthy pace

Posted in In The News, National Housing Market, Twin Cities Market | Posted on 10-23-2012 | Written by Metrostudy News

(Minneapolis, MN – October 23, 2012) Renewed optimism has returned to the new and existing home market and the outlook over the next year looks fairly promising, 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 Twin Cities current employment estimates indicate that employers added approximately 18,700 new jobs to their payrolls over the past 12 months. The Minneapolis-St. Paul MSA’s annual job growth through August ranks 23rd nationally, out of 365 MSA’s. The local unemployment rate continues to remain one of the lowest in the country, amongst major metropolitan areas, currently sitting at 5.7%.

According to Metrostudy’s quarterly survey, the Twin Cities area started 1,446 new homes in 3Q12, up +23% from 2Q12, and up +54% from 3Q11 when just 937 homes were started. “For the second straight quarter the Twin Cities housing market surpassed 1,000 new home starts for the quarter,” said Ryan Jones, director of Metrostudy’s Twin Cities division.

At the end of August there were 2,292 new housing units in inventory, up 20% from 2Q12. While housing inventory crept up a little, supplies remain healthy at 7.1 months as closings experienced a pretty substantial uptick through 3Q12. Equilibrium for housing inventory months of supply is between 6-7 months. “Low housing inventory or more specifically low finished vacant inventory is one of the best indicators of the health of a housing market,” said Jones.

There are currently 25,349 vacant developed lots throughout the Twin Cities, representing a decline of 9% compared to last year. (12,588 vacant developed lots throughout the metro seven counties, a decline of 13.8% compared to last year). 3Q12 represents the lowest supply number since early 2007. “As the market continues to improve we will likely see lot prices start to inch up along with increased raw land transactions,” said Jones.

For information contact:
ryan jones @ 952.426.0754
email ryanj@metrostudy.com

About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com

11/02/12: Metrostudy 3Q 2012 Twin Cities Executive Market Briefing

Posted in Events, Twin Cities Market | Posted on 10-11-2012 | Written by Ryan Jones

Please join us for an update on the Twin Cities Housing Market

WHEN: Friday, November 2, 2012
8:00 am Registration, Networking, Coffee
8:30 am Presentation
9:30 am Adjourn

WHERE: Golden Valley Country Club
7001 Golden Valley Road Golden Valley, MN 55427

This event is limited to subscribers to Metrostudy’s Quarterly Advisory Services. If you are not a current subscriber and you wish to attend the event, please contact Ryan Jones at ryanj@metrostudy.com