Rising Rents Could Be Key to Return to Housing

Posted in New Jersey Market | Posted on 11-12-2014 | Written by Metrostudy News

  • 3Q14 New home starts are down 10% from 2Q14, and 32% from 3Q13
  • Home prices are stabilizing with a slowing rate of increase: the median closing price for a new home is now $419k, up 3% YoY
  • Multi-family development is the leading driver in the market; rising rents may drive buyers into new homes

November 2014: The Northern New Jersey/NY Suburbs region recorded 1,252 observed closings for 3Q14, a 10% increase from 2Q14. Monmouth, Middlesex, Ocean, and Orange counties had the largest numbers of closings for the region. These four mentioned counties closed over 100 units in the Northern New Jersey/NY suburbs market for the 3rd quarter, accounting for over 50% of the suburbs region observed closings.

“New home construction for starts and closings for the third quarter has slowed down on an annualized basis,” said Quita Syhapanya, Regional Director of Metrostudy’s Northeast region.  “The region recorded 1,138 new home starts in 3Q14, down 10% from 2Q14. Year over year comparison from 3Q13 versus 3Q14 saw a significant drop off in new home starts activity by 32 percent.  Breaking it down by product type shows that detached closings increased 10% to 562 from 508 the prior quarter, an increase of 1% over 3Q13. Starts increased by 2% to 581 units in comparison to the 566 closed in 2Q14, but saw a decrease of 3% compared to 3Q13. Attached homes saw a decrease in starts to 557 units from the 708 in 2Q14 which is a 21% decrease and a 48% decrease compared to this time last year. Closings saw a 9% increase to 686 from the 629 from the prior quarter, but saw a significant drop off by 35% in comparison to 3Q13.”

Total housing inventory is at 8,493 units, a 1% decrease from 2Q14. It is a slight uptick from the 2nd quarter of 2013 looking at the data at this time last year, by 2% when inventory was at 8,273. Units that are under construction stand at 3,878 and show a 2.9% decrease from the prior quarter. Year over year looking at the 3rd quarter saw an 18% positive swing from this time last year when there were 3,267 units under construction. Finished vacant inventory increased to 4,320 from the 4,289 vacant standing units in 2Q14. Total Inventory months of supply for the 3rd quarter is at 21.6 months which increased from 20.3 months from the 2nd quarter.

The median closing price for a new home closed in the Northern New Jersey/NY Suburbs for the third quarter was $419,400, up 1% from 2Q14 and 3% since 3Q13. The median closing price for a single family home for 3Q14 was $482,600, which is a 5% increase year over year and a 1% increase from 2Q14. Pricing for new home construction has slowed down for 2014 and is expected to continue with moderate increases.

For 3Q14 there are 8,954 Vacant Developed Lots (VDL) in the Northern New Jersey/NY Suburbs market, a 2% decrease from 2Q14. From the 3nd quarter of this year versus the 3rd quarter of last year there has been a 7% decrease in developed lots. This region has 22 months of supply of vacant developed lots remaining. With an annualized starts rate of 4,762 it would take 22.6 months to go through the remaining lots at this pace. This is a two month increase from the months of supply last quarter where there was 20.8 months. A healthy market supply level for equilibrium would be between 24 to 30 months. The Northern New Jersey/NY Suburban market remains under supplied when it comes to finished lots.

There were 891 lots delivered into the market. This is a 27% decrease in lot deliveries from the 1,226 that was delivered in 2Q14. Most of the lot deliveries in the second quarter were due to the catch up in demand in the market from 1Q14 and some from 4Q13. Year over year the lot deliveries is actually up by 8% from the 824 delivered in 3Q13.

The rental market in Northern New Jersey is on fire right now and much of the development is occurring along the Gold Coast in the multi-family product. There are some who are looking at this product type in this market as being ripe for a bust. With the rental market being as strong as it is developers seem to still be very bullish on multi-family even with warnings of some trouble in the near future. There is a strong preference for multi-family development, but there are signs that for sale new home construction is still on the mends and moving in the right direction.

Currently there are 71,977 lots sitting in the pipeline in various stages of the entitlement process in 3Q14. That is a decrease from the 72,877 lots in the futures pipeline for 2Q14. The pipeline is getting replenished and has actually increased 15% year over year.

Overall the pace of new home construction in the Central/Northern New Jersey & New York Suburbs market has slowed down. This is due to many factors including the significant increase in 2Q14 spurred on by developers and builders playing catch up due to stalled construction during the 1st quarter going back to the end of the 4th quarter of 2013. On a rolling four quarters there was 4,762 new homes started ending 3Q14. To end the 2nd quarter the pace was at 5,311 new home starts. It was a 10% decrease in pace annualized. The same can be said in the annualized closings number where there was a 7% decrease from the 5,084 ending 2Q14 to the 4,713 ending 3Q14.

“Development of the multi-family product in the Northern New Jersey market in particular has been the leading driver in the market,” said Syhapanya.  “Although this is not news to anyone there may be a point at which paying skyrocketing rents just doesn’t make sense. You have a variety of funds that are looking to add to their portfolio who no longer see any attractive play in the rental market. They are actually looking to put on the developer hat and will look to complete a building from beginning to end because of the high prices demanded for rental properties.”

The rental market being an attractive alternative for people looking for a place outside of Manhattan in the Northern New Jersey market was once a cost saving alternative. With rents rising as fast as they are this could be the key ingredient in getting home buying back in play in particular new home construction which according to the numbers is sluggish at best to end 3Q14.

If you exclude condo product new home construction numbers still show some positive headwinds. Closings are up by 15% quarter to quarter and starts are up 5%. Year over year both numbers decreased 7% and 1% respectively. Overall there are some signs that point north, but there are other indicators that point in the other direction. If the job market continues to improve so will housing.

For information contact
Quita Syhapanya
215.893.9890 x231
qsyhapanya@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.

Housing Indicators a Mixed Bag for 3Q14; It’s Not Great but it’s not bad either

Posted in Philadelphia - Market | Posted on 11-11-2014 | Written by Metrostudy News

  • Closings have picked up, but new home starts have slowed down since last quarter
  • Prices are stabilizing as the median new home price of $321k is slightly down from 2Q14
  • Demand for active adult housing is rapidly picking up in many areas; this group is currently underserved in new home construction and builders are responding.

November 2014: Metrostudy’s 3Q14 survey of the Philadelphia Region shows that new home construction is moving along with the ebbs and flows of the market. Closings have picked up, but starts have slowed down from 2Q14. The Philadelphia region recorded 2,830 observed closings for 3Q14, a 17% increase from 2Q14. Starts for the third quarter decreased to 2,669, down 6% decrease from 2Q14. Year over year numbers are also a shade off. The last quarter of 2014 will be more of the same with seasonality taken into account.

The Philadelphia MSA had 1,606 closings which were a big increase of 60% from the prior quarter and is just slightly behind the 1,686 observed closings in 3Q13. Starts increased for the MSA by 190 lots to 1,447 a 15% jump from the 2Q14. Year over year saw a 17% decrease from the accelerated starts of 3Q13. The Philadelphia MSA includes 4 counties in South Jersey that have pushed the MSA numbers lower for 2Q14, but for 3Q14 actually saw some positive signs. Observed closings increased by 183% in South Jersey. It is a 6% increase over 3Q13. Starts had also increased by 89% from the prior quarter. It is only slightly behind the amount of starts seen in 3Q13 when there were 314 starts.

“The Philadelphia Region has seen the pace of starts, closings, and lot being delivered slow down to close out the third quarter of 2014,” said Quita Syhapanya, Regional Director of Metrostudy’s Northeast Region. “Months of supply for both vacant developed lots and housing inventory remain in equilibrium range. Metrostudy’s housing indicators are a mixed bag for the third quarter, but overall the market is stable. It’s not great, but it’s not bad either.”

Total housing inventory (model homes, under construction units and finished vacant homes) for the Philadelphia region has decreased by 160 units, down 2% from 2Q14. The number of homes under construction decreased to 4,458 units compared to the 4,691 units under construction in the second quarter. Finished vacant inventory increased 3% to 2,799 for the third quarter.

The median closing price for a new home in the Philadelphia region was $321,300, a very small decrease from the $321,800 from the prior quarter. Year over year change was a 1% increase through the third quarter of 2014.  The median closing price for a single family home ended the third quarter at $353,200, a modest increase over the prior quarter and year over year the price for a single family home increased 4%. “Price increases have tailed off and we should expect prices to have modest increases moving forward,” said Syhapanya.

In 3Q14, there were 23,342 Vacant Developed Lots (VDL) in the Philadelphia Region. That is a very minimal increase from the 23,319 lots available in 2Q14. This is the second quarter in a row where VDL’s have increased since Metrostudy has tracked the Philadelphia Region starting 2Q13.

Vacant developed lots in locations that builders want to build and buyers want to live continue to be in short supply even with a slight increase in the overall finished lots for the region. At a high level including undesirable locations the months of supply for the entire region is at 27.8 months. A healthy market supply level for equilibrium would be between 24 to 30 months. At an annualized starts rate of 10,070 for a rolling 4 quarters it will take 27.8 months to go through the available finished lots in the entire market.

In the Philadelphia MSA there are only 8,362 finished lots available in the market, only 19.9 months’ worth of finished lots. The Philadelphia MSA continues to be in short supply of available finished lots. All five of the PA counties (Philadelphia, Montgomery, Chester, Bucks, and Delaware) that are included in the Philadelphia MSA are under 20 months of supply.  New Castle County is starting 1,054 homes on a rolling 4 quarter basis and is at 19 months. Bucks County which has the second most annualized starts at 884 is at only 20 months. Montgomery County started 769 and Chester is at 724 annualized starts. It would take only 15 months to burn through the available finished lots Montgomery and 19 months for Chester County at their current pace. Philadelphia County only has 8 months, but there isn’t a lot of subdivision building in that market. Most of the new homes being built are tear downs or in-fill and redevelopments in areas south of Washington Ave.

Metrostudy believes that household formations will continue to increase, but doesn’t expect to see normal levels any time soon. The most obvious reason are the millennials who are still living at home or are moving out, but taking in roommates while renting, who in turn make two possible household formations into only one. Household formations could easily double up because of their depressed rate and if the job market continues to show improvement that could push housing in the right direction as we close out 2014 and enter the unknown in 2015 and beyond. The price of land on the other hand will continue to be a challenge moving forward.

“Some positive signs for new home construction are that mortgage rates continue to remain low and will likely remain in that range to end the year,” said Syhapanya. “Hopefully some of the upward pressures to the rates will get some of the folks sitting on the fence off the fence. The job market both locally and nationally generally is improving, but we are still not maintaining growth at a monthly rate that will spur on momentum. The active adult market demand is rapidly picking up and should continue to forge ahead in many areas over the next couple of years. This group currently is undeserved in new home construction and many in the new home building industry are seeing the need for product for this group.”

For information contact
Quita Syhapanya
215.893.9890 x231
qsyhapanya@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.

Metrostudy Florida Markets: All Florida markets witnessed year-over-year price growth in 2Q14

Posted in Central Florida Market, Jacksonville Market, Naples - Ft. Myers Market, National Housing Market, Sarasota - Bradenton Market, South Florida Market, Tampa Market | Posted on 11-11-2014 | Written by Metrostudy News

FINAL 2Q Florida Release and Infographic_Page_01

 

Florida’s new-home market has been surprisingly resilient in coming out of the downturn. Despite massive numbers of foreclosure homes for sale all around the state, builders have managed to find increasing numbers of buyers, and starts activity has rebounded nicely. Prices moved up rapidly in 2011, 2012, and 2013, rising at a more moderate pace in 2014.

2q chart

 

 

Florida Market-by-Market

Tampa:

The Tampa market continues its slow recovery from the devastating recession. Home starts fell by 85% from the peak to the bottom. While some broad based indicators remain positive, like job growth and the local unemployment rate, they have not resulted in robust demand for new housing. As of mid-2014, the Tampa annual pace for new housing starts was 5,853 units.

While this was a 69% improvement from the 3,462 homes built in 2009, it represents just 26% of the peak starts (22,409 units for the twelve months ending March 31, 2006). Families that lost their homes by foreclosure, have difficulty in qualifying for a mortgage or can’t afford the rising new home prices have driven a greater portion of housing demand into rental apartments.

Tampa Closings Average Price $/SF
2Q13 1,510 $241,924 $102.29
3Q13 1,484 $251,058 $104.96
4Q13 1,642 $264,895 $107.68
1Q14 1,108 $272,419 $106.33
2Q14 1,304 $276,138 $106.82

 

Over the last year, single family detached home prices are up 12.7% for the five county Tampa market. Homes that closed during the second quarter of 2014 had an average price of $288,006 versus $255,491 in 2Q13. Not only are prices rising, but the average home size is growing. The 2Q closing records showed the average detached single-family home was 2,738 SF, up 227 SF over the 2Q13 average of 2,511 SF. During the second quarter of 2014, both home size and price were essentially flat.

We have seen prices also rise substantially over the last year in townhome and villa product. The average closing price in 2Q14 was $210,243 or 11.9% higher than the $187,881 average in
2Q13. Unlike the detached product, the average size of attached product is shrinking.

Tampa is a highly concentrated new home market as the Top 10 builders accounted for 60% of all annual housing starts in the second quarter of 2014. The list of top builders includes nine national builders and just one local builder. Lennar Homes dominates the list and built more homes than builders #2, 3 and 4 combined.

 

Tampa,
August 1, 2013 – July 31, 2014

Builder Closings
LennarHomes    1,100
DR Horton 409
Pulte Group 343
M/IHomes 314
TaylorMorrison 280
HomesbyWestBay 262
Standard Pacific Homes 235
BeazerHomes 213
Ryland Homes 189
K.Hovnanian 185
TOTAL 3,530

Sarasota:

The Sarasota market is less reliant upon job growth to create housing demand as the market has a strong reputation for retiree demand. That did not mean that Sarasota was immune to the recession. New home starts fell by 86% from 9,113 for the twelve months ending March 31, 2006 to 1,284 units built in 2009. Sarasota has recovered quicker than other Florida markets and as of June 30, 2014, the annual start pace was 3,839 homes (up 199% from the cyclical low).

As the recovery has taken hold, new home prices are rising. In fact, single-family detached homes sold for an average of $310,266 during 2Q14. This was a 22.5% increase over the $253,285 average price in 2Q13. A portion of the price increase was directly attributable to larger homes being bought. The average new home was 2,368 SF in 2Q14 versus 2,076 SF in 2Q13. Buyers are looking for a fourth bedroom or home office particularly in Manatee County.

Sarasota Closings Average Price $/SF
2Q13 707 $247,643 $123.57
3Q13 827 $259,779 $126.41
4Q13 937 $284,759 $131.04
1Q14 677 $248,670 $130.09
2Q14 637 $295,825 $130.49

 

For town-home and villa product, prices have not changed over the last twelve months. The average closing price in 2Q14 was $224,293 or just 0.9% higher than the $222,364 average in
2Q13. The data does show that the average size of attached product grew to 1,765 SF. For the prior four quarters the average product size was between 1,597 and 1,680 SF.

Sarasota is a very highly concentrated new home market as the Top 10 builders accounted for
72% of all annual housing starts in 2Q14. The list includes seven national builders and three local/regional builders. The list is led by Neal Communities with 627 recorded closings, over one and a half time larger than #2 Pulte Group.

 

Sarasota,
August 1,2013- July 31,2014

Builder Closings
Neal Communities 627
Pulte Group 401
LennarHomes 374
DR Horton 355
TaylorMorrison 349
Ryland Homes 211
WCI Communities 175
Medallion Homes 116
Maronda Homes 109
M/IHomes 72
TOTAL 2,789

 

Southwest Florida:

Southwest Florida’s housing market has recovered nicely from the depths of the Great Recession, and closings were up 31% in 2Q14 over 2Q13. In fact, Metrostudy ranked the Cape Coral Ft. Myers MSA third and the Naples – Marco Island MSA sixth in last month’s “Top Ten Outlook and Market Health Ranking.”

SW Florida Closings Average Price $/SF
2Q13 611 $384,869 $171.12
3Q13 725 $390,281 $177.32
4Q13 891 $429,191 $188.42
1Q14 728 $434,339 $185.36
2Q14 800 $428,685 $173.00

 

During this same period, the average sales price was up 11%, and the size of the home increased by 10%. In particular, Naples showed a significant jump in pricing and home size, with a $75,000 average increase in pricing, to an average of $543,307, and an over 400 square foot increase (19%) in home size, to an average of 2,744.

However, the price per square foot in Southwest Florida only increased 1% from 2Q13. This may be an anomaly for the current quarter, as price per square foot prices had risen from an average of $171/sf in 2Q13 to over $185/sf in 1Q14. Or, it may reflect a developing trend with builders offering larger homes to offset the increase in sales prices. Metrostudy will monitor this metric to see if a trend emerges one way or the other.

 

Cape Coral-Ft Myers, Naples-Imokalee-Marco Island,
August 1, 2013 – July 31, 2014

Builder Closings
Lennar 943
Pulte-DelWebb-Centex 401
DR Horton 374
Stockdevelopment LLC 355
WCI communities 349
Gl Homes 251
TaylorMorrison 175
Habitat for Humanity 116
Toll Brothers 109
MintoBuilders 72
TOTAL 3,145

 

The Treasure Coast:

As with Southwest Florida, the Treasure Coast has seen a big recovery from the lows of the market back in 2010, and closings are up 36% the second quarter this year over the 2Q13. Home prices are among the most affordable in South Florida. However, prices continue to rise, with the average up 16% to $294,131. The average size of the home increased from 2,285 to 2,443, a 7% jump. Pricing per square foot is the lowest of all three areas, and at only $120/sf, represents a true bargain for South Florida home shoppers. It’s still relatively easy to find a new single family detached home selling for under $200,000 on the Treasure Coast. Nevertheless, the price per square foot increased 8% during this period, so the trend is moving upward.

 

Treasure Coast Closings Average Price $/SF
2Q13 190 $253,921 $111.12
3Q13 223 $283,141 $115.23
4Q13 259 $294,108 $116.20
1Q14 208 $288,007 $116.22
2Q14 258 $294,131 $120.38

 

Sebastian-Vero Beach, Port St. Lucie,
August 1, 2013 – July 31, 2014

Builder                   Closings
DR Horton 280
KolterCommunities Florida LLC 199
AdamsHomes 126
AV Homes, Inc. 96
GHO Homes 82
Pulte-DelWebb-Centex 60
Maronda Homes 59
MintoBuilders 59
KB Homes 45
HabitatForHumanity 32
TOTAL 1,038

 

Miami- Ft. Lauderdale:
South Florida is the most populous area with approximately 6 million residents. The Miami – Ft. Lauderdale MSA also placed in our Top Ten Ranking at ninth overall.

Miami-Ft. Lauderdale Closings Average Price $/SF
2Q13 1,033 $296,665 $154.40
3Q13 1,256 $377,697 $147.25
4Q13 1,331 $417,954 $154.28
1Q14 988 $425,785 $161.90
2Q14 994 $469,107 $171.46

 

Somewhat surprisingly, the closing rate declined by 4% in the current quarter when compared to
2Q13. This is also reflected in the annualized starts rate, which declined in 2Q14 as well. We are seeing the effects of a slight tempering in demand due to the relatively high sales prices and supply constraints caused by lot and labor shortages, which are noticeable in all three of the MSA’s counties.

Those price increases are on par with Naples, with a similar $75,000 jump in the average sales price, to $469,107. The increase in home size was more modest, at only 7% to 2,736. However, the overall size is one of the largest home sizes in all of South Florida; quite similar to Naples. South Florida also saw the largest increase in price per square foot during this period, rising from
$154/sf to $171/sf, or 11%.

In summary, prices continue to rise, although at a more modest pace, particularly in the past couple of quarters. Homes are getting bigger again, and we are likely to set another record for new home size in 2014. While home appreciation is likely to continue, there’s always the concern that higher prices will crimp demand. Supply constraints, especially in South Florida, might mask a muting in demand, but the other two areas could feel the pinch should prices rise beyond what consumers deem as reasonable.

 

Miami-Fort Lauderdale-West Palm Beach,
August 1, 2013 – July 31, 2014

Builder              Closings
Lennar 1,450
Gl Homes 630
DR Horton 397
CC Devco Homes 316
Standard PacificHomes 304
Pulte-DelWebb-Centex 265
Encore Homebuilders 240
MintoBuilders 226
Toll Brothers 219
TerraGroup 143
  TOTAL       5,640  

 

Jacksonville:

The Jacksonville MSA’s new home average closing price has grown by almost $35,000, or 14% in the 2Q14 when compared to the second quarter of 2013. The price per square foot has grown by almost $8, or just over 7% during that same period.

Jacksonville Closings Average Price $/SF
2Q13 1,122 $249,530 $102.12
3Q13 1,143 $259,474 $103.23
4Q13 1,184 $255,260 $104.84
1Q14 1,165 $272,197 $106.74
2Q14 1,297 $284,114 $109.67

 

Even with this pricing growth the market’s quarterly closing rate increased by over 15% in 2Q14 when compared to 2Q13. New home starts (not shown here) have been flat over the past 6 quarters. Starts grew from under 600 units in the 4Q11, to 1,400 units in 2Q13, but have stayed between 1,300 and 1,400 units per quarter since.

This indicates the market has reached a point where pricing growth has curbed demand. With the strongest market areas being in northern St. Johns County, it is likely the demand for lower priced housing will push demand out of the urban core. We expect to see stronger growth in new housing construction further south in St. Johns county, as well as in Clay and northern and western Duval County over the coming quarters.

 

Jacksonville,
August 1, 2013 – July 31, 2014

Builder             Closings
DR Horton 1,046
DreamFindersHomes LLC (Fl) 384
Lennar 373
Pulte-DelWebb-Centex 317
Kb Home 292
Richmond AmericanHomes-MDC 281
Mattamy Homes 251
DavidWeekleyHomes 245
Standard PacificHomes 152
Providence Homes(Fl) 146
TOTAL 3,236

 

Orlando:

The Orlando MSA’s new home average closing price has grown by almost $40,000, or 15% in the 2Q14 when compared to the 2Q13. The price per square foot has grown by almost $8, or just over 7% during that same period.

Orlando Closings Average Price $/SF
2Q13 1,855 $259,978 $109.05
3Q13 1,949 $274,837 $110.84
4Q13 2,088 $290,887 $112.50
1Q14 1,699 $290,197 $112.53
2Q14 1,757 $299,460 $116.71

 

Not surprisingly, the market has felt this pricing pressure as the quarterly closing rate declined by
5% in the second quarter of 2014 when compared to 2Q13. New home starts (not shown here) have been flat over the past 6 quarters. Starts grew from under 1,000 units in the 2Q11, to 2,400 units in 2Q13, but have stayed in the mid-2,000 range since.

What this ultimately means is that demand will be reduced in the urban core, and increase in the outlying areas as buyers look to find, and builders work to produce more affordable product. Orlando has a mix of buyers with significant international and active adult markets, yet remains primarily a Leisure and Resort Service and Retail Trade job market, catering to first time, first time move-up and multi-generational home buyers.

 

Orlando,
August 1, 2013 – July 31, 2014

Builder               Closings
Lennar 922
DR Horton 852
Meritage Homes 581
TheRyland Group,Inc. 484
Kb Home 416
M/IHomes 352
BeazerHomes 341
Pulte-DelWebb-Centex 299
TaylorMorrison 299
Standard PacificHomes 287
TOTAL 4,833

 

Florida is not just one market, clearly. Activity levels and pricing power vary from one market to the next, but the entire state is set for growing demand over the next five years. From the Millennials to the Boomers, an even greater influx of residents is coming to the state. Demand from retirees is expected to be a palpable force as 10 million more people reach retirement age in the U.S. over the next 5 years. Generation Y is so far showing a tendency to rent, but that will start to change as more of them start families.

For information contact:
Danielle Fiore
813-443-6504
dfiore@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.

Market Enters a Cooling Off Period as Rising Prices and Declining Supply Squeeze Entry Level Buyers

Posted in Boise Market | Posted on 11-06-2014 | Written by Metrostudy News

  • New home production levels are still strong compared to historical averages
  • The market is heavily favoring the higher price points, as Annual Starts over $300k are up 37% YoY
  • Median New Home Prices Continue to Trend Upward: Ada County Median Price is $285k, up 20% YoY and Canyon County Median is $180k up 12% YoY

November 2014: Metrostudy’s 3Q14 survey of the Boise / Treasure Valley housing market shows that while we have experienced some slowing in the past few quarters, new home production remains relatively strong when compared to the historical average. According to the survey, there were 823 new homes (both attached & detached) started during 3Q14, down 19% compared to 3Q13, and another 1% from last quarter. New home closings totaled 950 during the quarter, a 1% decrease from last year at this time, however increased 28% from last quarter, signaling that demand for homes remains strong.

Annual new home starts have decreased 9% compared to last year’s pace for a total of 3,045 and annual closings are down 3% to 3,092.  Ada County started 578 new homes during 3Q14, which is down 22% compared to 3Q13, and another -4% from last quarter. Annual starts decreased -12% from last year to 2,231. There were 700 new home closings during 3Q14, down only -.4% compared to last year, however up 28% from last quarter. Canyon County started 231 new homes during 3Q14, which is down 11% compared to last year, however up +6% from last quarter. Closings during the second quarter decreased 6% compared to last year, however increased +27% from last quarter, for a total of 233. Annual new home starts decreased -1% over the pace last year to 787 and annual closings are up +12%, for a total of 769.

 

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“As in other parts of the region, the new home market is now heavily weighted towards the move-up buyer, leaving the entry-level buyer at a disadvantage, due to the rapid increase in prices and tightening lending environment,” said Eric Allen, Director of Metrostudy’s Utah/Idaho Region.  “Annual starts above $300,000 have increased 37% over last year, while the pace has decreased 25% for homes under $300,000 compared to the same time. Demand for homes in the market remains strong, and low inventory levels have contributed to the rapid increase in prices.  The median price for a new home in Ada County is $285,3000, up 20% over last year and 4% from last quarter.  The median price in Canyon County has increased 12% over last year to $180,300 and up another 2% from last quarter.”

As of September, there is a 5.6 month supply of new single family detached homes in the Treasure Valley market, which is unchanged from last year, but down from 6.0 months last quarter. Inventory for homes under construction declined -11% compared to last year at this time, and -5% from last quarter. Currently this is a 3.2 month supply, down from 3.6 months in 3Q13. Finished vacant home inventory has increased +15% from 3Q13, however decreased -11% from last quarter. Due to the increased absorption (closings), the supply of finished vacant homes dropped from 2.4 months to 2.1 months currently. There is also a 10.1 month supply of attached home inventory on the ground. Under construction inventory calculates to a 5.8 month supply, with an additional 5.8 month supply of finished vacant homes/units on the ground.

Inventory of vacant developed lots (VDL), for both attached and detached homes in Ada County has increased +17% over last year and +7% from last quarter, and translates to a 26.6 month supply. Vacant developed lot inventory in Canyon County is down -10% from last year. Based on the current pace of absorption, this is a 56.0 month supply, which is down from 61.2 months recorded in 3Q13. There have been 3,050 new lots delivered over the past year, compared to 1,504 in 3Q13. Despite the spike in deliveries, “good” lots are being absorbed quickly, and need to be replaced.

“Metrostudy expects demand to remain relatively steady for the next year, however there are some indicators that will continue to put pressure on the market, primarily those being lack of supply, higher prices and interest rates,” said Allen. “The market is experiencing a cooling off period compared to the rapid growth over the past three years, but is not cause for concern as long as jobs keep pace.”

For information contact:
Eric Allen
801.571.7700 x424
eallen@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.

Market Weighted Towards the Move Up Market – Entry Level Buyers Under Pressure

Posted in St. George - Mesquite Market | Posted on 11-06-2014 | Written by Metrostudy News

  • Strong new home production growth in both markets continues to buck national trends.
  • First time buyers are squeezed as home starts over $300k are up 62% over last year
  • New Home Prices Continue to Rise: Median Price in St. George is $341k, up 10% YoY while Median Price in Mesquite is now $227k, up 52% YoY

November 2014: Metrostudy’s 3Q14 survey of the St. George and Mesquite housing market shows that while new home production in many regions nationwide has retracted for the past few quarters, St. George and Mesquite continue to buck that trend. According to Metrostudy’s quarterly survey, there were a total of 394 new homes started during 3Q14 in the St. George market (both attached and detached), up 35% compared to 3Q13, and 11% more than last quarter. New home closings totaled 389 during the third quarter, which is 31% more than last year at this time, and 25% more than last quarter. Annual new home starts have increased 42% compared to last year’s pace, for a total of 1,639 homes, a level not seen since before the recession. Annual closings totaled 1,474 as of September, which is an increase of 33% compared to the pace last year.

The Mesquite market area started 74 new homes during the third quarter of 2014 which is up from 52 (+42%) starts during 3Q13. Annual starts as of September totaled 235, which is an increase of 9% compared to this time last year when there were 127. Quarterly closings totaled 63 during 3Q14, up 58% from the 40 closings in 3Q13. Annual closings totaled 241, which is a 63% increase compared to the pace last year at this time

“The mix of buyers has been heavily weighted towards the move-up market, leaving the entry-level buyer somewhat depressed, due to increasing prices, interest rates and difficult lending conditions,” said Eric Allen, Director of Metrostudy’s Utah/Idaho region. “This trend continues as starts for homes above $300,000 increased 62% over last year, while starts under $300,000 are up only 16%.”

While new home prices have increased rapidly for the past few years, it appears that the pace may be starting to taper. The median price for a new detached home in the St. George market is $341,400, which has increased +10% from a year ago, however down 1% from last quarter. The median price for a new detached home in Mesquite is currently $227,800 which is up 52% from last year at this time, and up 8% from last quarter.  The median price for an attached unit is $160,100

As of September, there is a 5.9 month supply ofsingle family detached homes in the St. George market, which is up from 5.0 months recorded at this time last year. Under construction inventory increased +49% compared to last year at this time, and up +15% from last quarter. This is a 4.1 month supply, which is up from 3.8 months recorded last quarter. Finished vacant home inventory has increased +60% from 3Q13, however down -8% from last quarter. This supply remains healthy at 1.4 months.

New detached inventory in Mesquite increased +4% from a year ago, and up +9% from last quarter. Currently, this is a 5.8 month supply, and well within equilibrium. Under construction inventory increased +63% from last quarter (24), which was a 1.5 month supply, to a current level of 2.1 months. There is currently a 1.8 month supply of finished vacant homes on the ground, down from 2.6 months in 3Q13.

Inventory of vacant developed lots (VDL), or finished lots, in the St. George market have increased +9% since last year to 5,531. Despite the slight increase in overall lot inventory, absorption (starts) has also increased, which has caused the supply to drop. Based on the current pace of absorption, there is a 40.5 month supply, down from 52.5 months recorded at this time last year, and down from 43.3 months last quarter. There have been 2,112 new lots delivered over the past year, compared to 696 in 3Q13. While lot inventory remains above equilibrium, the market has been in need of new replacement lots in the “A” and “B” locations. Vacant developed lot inventory in Mesquite decreased -6% from last year to a total of 1,559. At the current pace of absorption, this calculates to a 79.6 month supply, which is down from 156.4 months recorded in 3Q13.

“The St. George market continues to enjoy the expansion of the local economy and housing market, which have recovered nicely from the recession,” said Allen.  “Metrostudy believes demand will remain steady for the remainder of 2014 and through 2015, as long as prices and interest rates remain relatively flat and employers continue to hire at a similar pace.”

For information contact
Eric Allen 801.571.7700 x424
eallen@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.

Boomers Will Drive Tampa New Home Construction

Posted in Sarasota - Bradenton Market, Tampa Market | Posted on 11-05-2014 | Written by Tony Polito

tonyThe Tampa housing market continues to recovers from the devastating recession which saw housing starts activity fall by 85% in the five county market between early 2006 and late 2009.  As of mid-2014, the Tampa market annual pace for new housing starts was 5,853 units.  While this was a 69% improvement from the 3,462 homes built in 2009, it represents just 26% of the peak starts (22,409 units for the twelve months ending March 31, 2006).  Families that lost their homes by foreclosure, have difficulty in qualifying for a mortgage or can’t afford the rising new home prices.  This has driven a greater portion of housing demand into rental apartments.

So, where does growth come from over the next five years for new home builders?  While Florida, as a whole has certainly established itself as a desirable choice for retirees, Tampa has typically focused on family buyers.  Demographics will change this.  Claritas estimates for household growth between 2014 and 2019 indicate that “Baby Boomers” and not millennials will drive demand for housing in Tampa Bay.  The year 2019 is significant as 100% of the Baby Boom (defined as those born between 1946 and 1964) will be age 55 and older.

tony blog

The above chart represents annual household growth for just Hillsborough and Pasco counties as they represent 90% of all new single-family homes being built in the Tampa market.

“Head of Households” whose age is between 35 and 44 years old in 2019 will only grow by 598 new households per year, or about 10% of the new construction expected to be built annually through 2019 in these two counties.  The “Baby Boomer” will represent the major growth opportunities between 2014 and 2019.  Hillsborough and Pasco Counties are expected to add 35,300 households per year into this age cohort by 2019, myself included.  This is greater than 100% of the annual growth as some younger age groups are expected to see household count decline.  Does this mean a rise in “active adult” communities?  Not necessarily, as more of the retirees are coming from the Mid-Atlantic and Northeast and they are used to more urban living.  Many could be attracted to downtown living.  Many will choose not to live in purely age restricted communities.  But considering that there are just a few new home communities that are age restricted, we do expect to see growth in the number of age restricted offerings in Tampa over the next five years.

Oil Prices and Houston Housing Starts

Posted in Economy, Houston Market, In The News, National Housing Market | Posted on 11-05-2014 | Written by Scott Davis

Scott DavisThere’s no question that there is a strong correlation between home prices and housing starts in Houston.  A significant share of our economy is still based on oil, and energy has been the fastest growing employment sector this year.

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Historically there is a pretty strong correlation between starts and oil prices, looking back to 1980:

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Oil prices have fallen significantly in the last 90 days, falling to $75, its lowest price since 2011.  There is some belief that the price drop may be geopolitical, rather than economic as Saudi Arabia may be trying to squeeze its OPEC competitors and Russia, most of whom require oil above $100/bbl to be profitable.  Even if true, US oil production is up almost 50% since 2011, and we see evidence of weakened demand from China and India.  It’s likely a result of a combination of these factors.

What does this mean for Houston?  We’ve plotted quarterly housing starts versus real oil prices from 1980 through Q3 of 2014, below.

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The conclusion we draw is as follows:  there is a “sweet spot” between $55 and $90/bbl that produces the highest demand for Housing in the Houston market.  Above $90 it would appear that high energy prices dampen demand for housing because of the squeeze on consumer budgets for housing and in a market the size of Houston, transportation.  Below $55 it appears that demand is lessened because of weaker job growth.  The Energy Information Administration’s pricing forecast for oil in 2015 is $91, and Saudi Aramco needs oil at about $93 to be profitable.  We expect oil prices to rise slightly to that level through the quarter and remain there on average through the balance of 2015.

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What does this mean for Houston?  We expect job growth, presently 112,900 (+4.3%), to slow and to place pressure on upward prices.  The resulting declines may make some newer developments less favorable and place them under financial pressure.  Overall, however the fall in oil prices will be beneficial because:

  1. Declining energy employment, particularly in the downstream sector, will relieve pressure on labor shortages for the construction industry, reducing one of our market’s key cost drivers.
  2. Lower gas prices will favor development in more remote markets, opening up lower cost sources of land and encouraging development of lots at the lower range of the market;  about one third of new home buyers in Houston are in the under $200K price band, a segment increasing difficult to meet.
  3. Lower energy prices may assist improving economies in other markets which should help the share of Houston’s economy dependent on national economic performance.
  4. Houston’s energy economy includes upstream, midstream and downstream energy.  Downstream energy, exploration and production, will likely suffer from extended low energy prices.  The two other sectors, midstream (pipelines) and upstream (petrochemical manufacturing) will likely improve as lower prices encourage more consumption nationwide requiring more oil/refined products to be transported (midstream) or manufacturing sees lower costs for feedstock (upstream).

Houston’s economy remains heavily dependent on the energy industry, both in direct employment and supporting economic activities indirectly tied to it.  It’s important to remember that energy projects are generally significant long term investments that are not very sensitive to daily or weekly price movements and the long term worldwide trend for oil consumption still points upward.  In the short to midterm timeframe, the recent declines in energy costs should actually prove to be a positive factor in Houston’s housing market, not a negative one.

2014 is Ending with Sustained Growth: New Home Supply in Affordable Price Ranges Coming Online

Posted in South Florida Market | Posted on 11-05-2014 | Written by Metrostudy News

  • 3Q14 New Home Starts are flat compared to last quarter
  • Still, the annual starts rate showed its first measurable increase in five quarters
  • Supply is still coming on board at moderate price points, especially in Indian River and St. Lucie counties; while starts under $199k are off 42% YoY this quarter showed a 56% jump in starts between $200-250k

November 2014: Metrostudy’s 3Q14 South Florida new home market showed third quarter starts of 2024 were flat when compared to the previous quarter. The annual pace increased 3.3% to 7,103 over the last quarter, and the annual rate is 3.6% higher than the pace recorded in the third quarter of 2013. This is the first measurable increase in the annual starts pace in five quarters. Constraints in land availability, labor supply, and the cumulative effect of price increases are all factors in dampening the growth of the starts rate.  Restrictive mortgage qualifying standards are also crimping demand.

The annual closings rate of 6,490 was up 3.4% from the previous quarter and is up 15% from one year ago, which extends this upward trend to ten consecutive quarters. Finished, vacant inventory increased 3.4% to 1,232 units from last quarter, and this figure is 13% higher than the third quarter of 2013. Finished, vacant inventory has hovered in the 2 months-of-supply (MOS) range for the past eight quarters, and remains unchanged at 2.3 MOS for the current quarter. The finished-vacant MOS metric is the number of finished-vacant homes divided by the number of move-ins over the last four quarters, then multiplied by twelve. Metrostudy has observed over the years that when this number rises above about 3.0 and stays there, builders tend to reduce prices or make concessions, so Metrostudy monitors this metric closely.

Vacant, developed lot (VDL) inventory dropped slightly to 21,554, a 36 month supply. This is down 9% from the third quarter of 2013. VDL MOS is calculated by dividing the number of developed lots by the current annual starts pace, and then multiplying by twelve.

Annual Starts by Price Range

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South Florida has two distinct submarkets.  The Treasure Coast (Indian River, St. Lucie, and Martin counties) offer affordable housing, while the Gold Coast (Palm Beach, Broward, and Miami-Dade) have some of the highest per square foot prices in Florida.  While single family detached home prices average $250,000 or less in the Treasure Coast, new detached homes in the Gold Coast now average $665,000, and the square footage has grown to 3,500 square feet living area.  There is an $80 per square foot difference in pricing between Treasure Coast and Gold Coast single family detached homes.  Price increases are expected to moderate going forward, as current pricing has reached 2004 levels in many markets.

Below are the top 10 communities in South Florida, ranked by annual starts through the third quarter of 2014.

Rank  Community

1        Aragon (Miami-Dade)

2        Aventura Isles (Miami-Dade)

3        Tradition (St. Lucie)

4        Valencia Cove (Palm Beach)

5        Silver Palms (Miami-Dade)

6        Bridges, The (Palm Beach)

7        Kendall Square (Miami-Dade)

8        MiraLago (Broward)

9        Villaggio Reserve (Palm Bch)

10      Venetian Parc (Miami-Dade)

Aragon by Lennar once again claims the top starts spot for the quarter, followed by Aventura Isles, a former starts leader. St. Lucie’s Tradition remains in third place, with four active builders. GL Homes’ Valencia Cove, an active adult community, and The Bridges are fourth and sixth, respectively, while Lennar’s Silver Palms, MiraLago, Kendall Square, and Venetian Parc all make the Top 10 list. Ansca Homes’ newest active adult community, Villaggio Reserve, rounds out the Top 10.

Results by County:

Miami-Dade: Miami-Dade County regained its starts lead this quarter, with an annual starts pace of 2,510, up 11% from the previous quarter, but off 1.3% year over year. Quarterly starts were up 22% from the previous quarter, and were up 38% from 3Q13. Closings were up 36% from a year ago. Finished, vacant inventory is holding steady at 2.4 MOS.

Broward: Quarterly housing starts in Broward County declined 0.9% over the previous quarter, and are down 8.9% from 3Q13. The annual starts pace remains flat at 1,118. Finished, vacant inventory inches up to 2.0 MOS.

Palm Beach: Quarterly housing starts in Palm Beach County are down 22% from the previous quarter and are off 5.5% from 3Q14. Closings were off 6% from the previous quarter, and are down 2.5% from 3Q13. Finished, vacant inventory remains exceptionally low at only 1.2 months of supply.

Treasure Coast: The Treasure Coast includes Indian River, St. Lucie, and Martin counties. Starts declined 5% while closings increased by 13% over the previous quarter.

For information contact:
David Cobb – 813-443-6504
dcobb@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 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 Growth Won’t Stop, Even as The Market Moves to the Higher Price Ranges

Posted in Naples - Ft. Myers Market | Posted on 11-04-2014 | Written by Metrostudy News

  • 3Q14 was the 13th consecutive quarter of growth in the annual starts pace
  • Quarterly starts rate in 3Q14 is up 40% from 3Q13
  • Supply is not entering the market at the lower price points; strongest growth is in the $300k+ segments which are up 38% YoY

November 2014: Metrostudy’s 3Q14 survey of the Naples/Ft. Myers housing market showed the thirteenth consecutive quarter of growth in the annual starts pace. The annual starts rate increased 10%, to 3,952 over the previous quarter, and is up 25% from the third quarter of 2013. The quarterly starts rate in Naples/Ft. Myers rose 20% to 1,250 over the previous quarter, and was up 40% when compared to the third quarter of 2013.

The annual closing rate was up 13% from a year ago, which extends this upward trend to ten consecutive quarters. Both Lee and Collier’s F/V supply ticked up last quarter, at 1.7 and 2.7 months of supply (MOS) respectively. The previous quarter’s F/V MOS was 0.9 for Lee and 2.0 for Collier.

Vacant, developed lot (VDL) inventory declined by 2% over the previous quarter, to 11,482 lots. However, lot deliveries were up by 80% year over year, to 1,017 in the current quarter. This marks the third consecutive quarter where lot deliveries topped 1,000 units, and is slightly above the quarterly start pace during this period.

Annual Starts by Price Range

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“As in other parts of the state, we are seeing the highest rates of growth for starts in the $300-399k price range, which are up 25% since 3Q13,” said David Cobb, Director of Metrostudy’s Naples/Fort Myers region.  “Starts under $150k are practically non-existent, which is putting a squeeze on the first-time or entry level buyer.  We are seeing consistent strength in the higher price ranges.“

Listed below are the top 10 communities in the Naples/Ft. Myers market, ranked by annual starts:

Rank  Community                                     Starts                         Move-Ins

1          Riverstone (Collier)                     229                             172

2          Ave Maria (Collier)                       215                             118

3          Preserve at Corkscrew (Lee)   198                             171

4          Pelican Preserve (Lee)               155                             137

5          Plantation (Lee)                            154                             141

6          Moody River Estates (Lee)       131                             93

7          VillageWalk of Bonita (Lee)     130                             132

8          VeronaWalk (Collier)                  129                             115

9          Lely Resort (Collier)                    121                             64

10       Reflection Isles (Lee)                  102                             102

 

As before, GL Homes, Pulte/DiVosta/Del Webb, and WCI are the market leaders in Southwest Florida this quarter. Riverstone by GL Homes continues as the current starts leader. Multi-builder Ave Maria moves up the list to second place, and WCI’s active-adult Pelican Preserve remains a top five contender. Pulte/DiVosta/Del Webb’s Ave Maria, Plantation, VillageWalk and VeronaWalk continue with their sales successes. Moody River by D.R. Horton, Lely Resort by Stock Development, and Reflection Isles by Lennar round out the Top 10.

Separated by County:

Lee County: Quarterly starts were up 20% and quarterly closings were down 6% from the previous quarter. The annual starts rate is up 23% and annual closings are up 15% from one year ago.  Housing Inventory remains below equilibrium in Lee County at eight months of supply. Nine months of supply (MOS) is considered normal. The supply of VDL inventory declined 2.7% quarter-over-quarter to 6,829, which is 39 months of supply. There were 461 lot deliveries in the quarter. Future lot inventory ticked up 1% in 3Q14, at 49,229.

Collier County: Quarterly starts rose 20%, while quarterly closings dropped 20% from the previous quarter. The annual starts rate is up 28%, and annual closings are up 11% from a year ago. The annual starts rate has risen for twenty-one consecutive quarters, from a low of 399 in early 2009, to 1,860 in the current quarter.  Housing Inventory has climbed above equilibrium at twelve MOS. A portion of this is due to labor constraints in the market, which is increasing construction cycle times. VDL inventory rose 1% quarter-over-quarter to 4,577, a 29 month supply. Lot deliveries remained robust at 556 for the quarter, while future lot inventory declined 2% this quarter, to 23,277.

While starts growth is expected to continue in a positive direction, we now see new home prices beginning to match what they were in 2004, just before the housing market meltdown.  It’s likely that price appreciation will trend to a more modest level, perhaps at the typical average of 3% per year.

For information contact:
David Cobb –  813-443-6504
dcobb@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.

The Cooling Off Period Starts Now: First Time Buyers Squeezed as Supply & Price Pressures Amp Up

Posted in Salt Lake City Market | Posted on 11-04-2014 | Written by Metrostudy News

  • Production at lower price points is dropping, with annual starts under $300k down 19%
  • Median price for a new Single Family home is up 9% YoY to almost $331k
  • Attached homes are the shining star in the market with starts up 15% on an annualized basis

November 2014:  Metrostudy’s 3Q14 survey of the Greater Salt Lake market shows that while the housing market has been experiencing some slowing in the last few quarters, new home production remains healthy. According to Metrostudy’s quarterly survey, there were a total of 2,125 new homes (both attached and detached) started during 3Q14, which is a 16% decrease compared to 3rd quarter last year, however increased +13% from 2Q14. Closings for the quarter dropped 1% compared to last year and increased 9% from last quarter, for a total of 2,049. The pace for annual new home starts has declined for the past two quarters, causing a bit of concern within the industry. Annual starts totaled 7,739 at the end of September, -3% fewer than last year at this time.

Annual new home closings have increased 4% compared to 3Q14, however the pace slowed 0.3% from last quarter, to 7,694. Annual starts for Single Family detached homes have decreased 7% compared to last year at this time for a total of 5,711. However, new home closings have increased 3% over 3Q13 for a total of 5,734.

Attached (for sale) homes continue to be the shining star in the market with a +15% increase in annual starts over last year with 2,028. Annual new home closings totaled 1,960 as of the end of September, up 8% over last year at this time.

Annual New Home Starts By Price Range

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“The mix of buyers has been heavily weighted towards the move-up market, leaving the entry- level buyer somewhat depressed, due to the rapid increase in prices and difficult lending environment,” said Eric Allen, Director of Metrostudy’s Utah and Idaho region.  “This trend continues as annual starts above $300,000 have increased +17% over last year, while the pace has decreased -19% for starts under $300,000. While new home prices have increased very rapidly for the past few years, the pace appears to be slowing ever so slightly. The median price for a new Single Family home has increased +9% from last year at this time to $330,900, and is +1% above last quarter. The median price for a new Attached unit currently sits at $208,400 which is +7% higher than last year at this time, and +1% above last quarter.”

As of September, there is a 6.7 month supply of single family detached home inventory in the Greater Salt Lake market, which is down slightly from 7.0 months at this time last year, and up slightly from the 6.6 months recorded last quarter. Under construction inventory decreased 9% compared to last year at this time; however increased 4% from last quarter, and currently has a 4.8 month supply. Finished vacant home inventory has increased +32% from last year, however decreased -7% from last quarter to a 1.5 month supply.  This is up from only 1.1 months at this time last year, and down from 1.5 months last quarter. There is currently a 9.0 month supply of townhome units in inventory,,which is up from 8.7 months recorded last year in 3Q13. Of this, 912 are under construction, a 6.5 month supply. There are also 273 finished vacant units on the ground, which is up +34% from last year, and is a healthy 2.0 month supply. Condo inventory totaled 732 units, which is a 30.2 month supply.

Inventory of vacant developed lots (VDL), or finished lots, for single family detached homes have recently leveled off with 15,343, virtually unchanged from last year. While overall lot inventory is essentially unchanged over the past year, lot deliveries have increased to the highest levels since 2009,” said Allen. “There have been 7,773 new lots delivered over the past year, compared to 4,893 in 3Q13. Despite the spike in deliveries, lots are being absorbed quickly, particularly for homes priced from $200,000-$400,000, where the supply remains within equilibrium at 19.2 months, while lot inventory for homes above $400,000 is 54 months.”

“Metrostudy expects demand to remain relatively steady for the next year, despite the pressures from lack of supply, rising prices and the possibility of increased interest rates,” said Allen.  “The market is simply experiencing a cooling off period, coming off the heels of one of the most rapid recoveries on record.”

For information contact
Eric Allen 801.571.7700 x424
eallen@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.