(Baltimore, MD – February 21, 2014) The Suburban Maryland homebuilding industry posted another solid year of improvement in 2013. 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 the Metrostudy quarterly survey, home starts, attached and detached, in Suburban Maryland were up 15 % from 2012, a very solid gain that saw output increase by 1,422 units. However, 4Q13 was a little soft with only 1,856 starts, a 7 5 decline compared to 4Q12. Annual new home closings, or “move-ins” by Metrostudy methodology, were up as builders closed 9,207 units during 2013. This represents an increase of 20 percent from the previous year. “In terms of starts activity, Suburban Maryland is led by the four contiguous counties located between the region’s two largest cities. Prince George’s and Montgomery in DC Metro and Howard and Ann Arundel in Baltimore Metro accounted for 53 percent of Suburban Maryland’s starts in 2013 (Figure 5). These counties also exhibited the largest increase in starts, increasing output by a combined 1,067 units, or plus 27%,” said Ben Sage, Metrostudy’s Regional Director of the Suburban Maryland Market.
The overall inventory of vacant developed lots (VDL), or finished lots, declined 7 % over the past year to 13,317. This is for all product types, including attached product as well as custom lots. The decline combined with an increase in starts has resulted in the supply of VDL to fall to 17 months. “This is quite low, and it is down from 26 months only two years ago. The supply of VDL does vary by county. Supply is generally smallest in the more active submarkets or in infill areas: Howard (6 months), Montgomery (9 months), and Baltimore (14.3 months). Higher lot supplies persist only in Cecil and Queen Anne’s Counties, which have 45 and 59 months, respectively,” said Sage.
The improvement in finished vacant housing inventory over the past three years validates the strengthening new-home market. Finished vacant homes number 1,744 units, which would last 2.3 months at the current closings pace. This is approaching normal, and it has improved from 3.5 months one year ago. Furthermore, finished vacant inventory is quite low for townhomes and single family, which measure 1.5 and 1.1 months, respectively, both being quite low. “Condo product only is oversupplied with finished vacant new-home inventory with 905 units corresponding to 9.2 months. This is much improved, though, from 14 months only one year ago,” said Sage.
“With the economy expected to continue to grow, Metrostudy looks for continued expansion of the housing market. A limited supply of resale homes will drive consumers to new-home communities and keep builders busy. The challenge, of course, is land availability, as the months supply of VDL here is one of the lowest in the country. Builders are paying premiums for land in a market that is already challenged by affordability. Revenues should grow this year, but margins will be squeezed as builders continue to strive for efficiency,” said Sage.
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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