Tampa Housing 2Q14 Survey: Changing Price Distribution is Key

Posted in Tampa Market | Posted on 08-21-2014 | Written by Metrostudy News

August 2014: Metrostudy today released the results of its 2Q14 survey of the Tampa Bay housing market, which showed that the “pause” that began last Fall is showing some signs of abating as 2Q14 starts were up 31.8% over 1Q14. During 2Q, 1,529 single-family units were started, which was down 17.4% from the 2Q13 level of 1,851 starts (the best post-recession quarter). The annual starts rate, compared to last year, decreased by 6.1%, to 5,850 annual starts.

Single-family quarterly closings totaled 1,396 units, up 5.1% from 2Q13 levels. The annual closings rate was 6,458 units, 23.8% above the rate for the twelve months ending 2Q13.  A review of deed records indicates that the “pause” had more effect on volume than pricing. The price increases pushed thru in early 2013 have held and now builders must face the question of volume versus price.

“As in the rest of the state, the Tampa Bay region is showing a precipitous drop in construction of units for first time and lower income homebuyers, as the number of annual starts under $150k has declined 57% since 2Q13,” said Tony Polito, Regional Director of Metrostudy’s Tampa Market.  “Builders are instead concentrating on higher-priced inventory, which is booming.  Annual starts of units priced over $450k more than doubled since 2Q13, and we expect to see this trend continue.”

Annual Starts by Price Range

tony 2q

For the twelve months ending June 2014, annual new home starts in price ranges under $200k totaled 1,436 units, down 37.5% from the 2Q13 annual activity in that range. New home starts in prices over $200k were up 12.3% for 2Q14 versus 2Q13. The marginal 379 unit decrease in the annual start pace was split: 861 less units under $200k and 482 more units above $200k (127.2% of the marginal growth).

Total single-family inventory, composed of units under construction, finished vacant and models equaled 3,494 units on the ground at the end of the 2Q14; a 6.5-month supply. Inventories fell by 14.8% compared to 2Q13. Compared to last year, the number of units under construction fell by 348 homes to 1,862 homes. Finished vacant inventory decreased by 17.8% from last year to 1,335. The number of move-ins exceeded completions during the quarter and FV inventory decrease by 183 units versus 1Q14. The FV MOS of single family units fell from 2.1 as of 1Q14 to 1.8 months as of 2Q14.

Hillsborough County remained the most active county within the Tampa market during the second quarter. However, market share declined from 65.1% for 1Q14 to 63.3% for 2Q14, in spite of quarterly starts rising from 738 in 1Q14 to 929 in 2Q14. Market share in Pasco fell from 24.8% for 1Q14 to 24.4% for 2Q14 despite quarterly starts rising from 284 in 1Q14 to 379 for 2Q14. The VDL supply throughout all of Hillsborough County stood at 25.3 months. The VDL supply in Pasco stood at 52.2 months as of June 30, 2014. These two major counties accounted for 87.7% of all annual start activity in Tampa Bay.

The table below ranks the top ten communities in the market by annual starts

FishHawk Ranch……………………………………….209

Valencia Lakes………………………………………….159

Hawks Point…………………………………………….146

Lake Brandon…………………………………………..146

River Bend………………………………………………142

Citrus Hills……………………………………………….126

Seven Oaks……………………………………………..126

Magnolia Park…………………………………………..124

The Estuary……………………………………………..123

Trinity……………………………………………………..121

This quarter, 1,949 lots were delivered to the Tampa market. This same quarter a year ago, we delivered 2,447 lots. Vacant developed lot inventory stands at 28,785 lots, an increase of 0.4% compared to 28,801 lots last year. Based upon the annual start rate, this level of lot inventory represents a 59.3 month supply, an increase of 3.8 months compared to last year.

“The major factors going forward will continue to be consumer confidence and general continued improvement in the national economy and the job market,” said Polito. “With an upward trend in wage growth during the second quarter; job creation will be the most important in determining future housing demand in the Tampa market.”

For information contact: tony polito @ 813.888.5151
Email tpolito@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.

Where to buy a home

Posted in National Housing Market | Posted on 08-19-2014 | Written by Metrostudy News

brad hBrad Hunter, Metrostudy chief economist, outlines Texas, Atlanta, and Denver as housing hot spots in the U.S.

Watch Full Interview 

 

Housing starts up strong, with some stand-out markets

Posted in Atlanta Condo Market, Charlotte Market, Inland Empire Market, Naples - Ft. Myers Market, Nashville Market, National Housing Market, Reno Market, Rio Grande Valley Market, Sarasota - Bradenton Market, Southern California Market, St. George - Mesquite Market | Posted on 08-19-2014 | Written by Brad Hunter

See Top 10 Markets for New Residential  Construction Here 

brad hHousing starts numbers out today surprised many observers with its strength (+15.7%), but we find it to have been in line with our actual counts, released earlier this month. As we predicted, last month’s Census estimate was revised upward, and now the numbers are back in line with the trends revealed by the Metrostudy roll-ups.

The last release of housing starts data from the Census Bureau caused undue alarm about a collapse of activity in the South.  The Census release had shown a 29.6% decline for total starts in the South, but as we pointed out at the time, this exaggerated the weakness in the south. As a matter of fact Metrostudy’s research shows that several markets in the south are up, both based on prior quarter results, and year ago. Raleigh was down 5% versus a year ago, but Charlotte, Atlanta, Texas, and South Florida showed increases.

Metrostudy’s data show that some of the most “beaten-down” markets are now doing better.  In Las Vegas, for example, housing starts were up 16% from 1st quarter 2014 to 2nd quarter 2014, and Phoenix showed a 12.3% increase quarter-on-quarter (though it is still down sharply year-on-year). Housing starts in Chicago were up 87% quarter-on-quarter, and up 30% year-on-year.  Naples Florida showed double-digit gains, both quarterly and annually.

Some significant trends were evident in Metrostudy’s data in California. Housing starts in the Riverside area rose 48.5% quarter on quarter, and are up 14% year-on-year.

We are seeing an increase in lot development in Riverside as lot shortages around the I-15 Corridor have intensified. The Inland Empire is developing its own economy, with 3% job growth, meaning that is it is no longer just a bedroom community for L.A.

Housing starts in Northern California rose 92% in the second quarter compared with the previous quarter, and are up 19% year-on-year. Starts there are at a record high since the boom. Contra Costa and Alameda County had particularly strong increases.

Also see, Brad Hunter discuss the promising increases in the Residential Remodeling Index and New Residential Construction this month on Bloomberg TV.

 

Metrostudy Appoints Lawrence Dean Senior Advisor of Texas Region

Posted in National Housing Market | Posted on 08-19-2014 | Written by Metrostudy News

Washington, D.C. – August 20, 2014   Metrostudy, a Hanley Wood company, announced today the appointment of Lawrence Dean as senior advisor for its Texas markets.

Dean brings over a decade of experience in land acquisition and development with a deep knowledge of the Houston markets, submarkets and industry players.  Prior to joining Metrostudy, Dean held positions as Land Manager at Ryland Homes; Manager of Land Acquisition and Development at KB Home; Land Acquisition Manager at Kimball Hill; and Vice President at CDS Market Research.  He serves on the board of directors for the Greater Houston Builders Association.  Dean holds Master’s Degrees in Land Development and Urban and Regional Planning, both from Texas A&M University.

Dean will be responsible for advising Metrostudy’s clients in the Texas markets on specific sites and residential deals.

“We are thrilled to add Lawrence to the team,” said Bradley Hunter, Metrostudy’s Chief Economist and Director of Consulting.  “He brings with him a phenomenal level of knowledge regarding all of the markets in Texas, as well as a deep, intuitive understanding of the homebuilding business.”

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 Releases Q2 2014 Residential Remodeling Index (RRI) — Remodeling and Replacement Activity Posts Moderate Gains Through 2Q 2014, But Forecast Firms

Posted in National Housing Market | Posted on 08-15-2014 | Written by Metrostudy News

For Immediate Release

WASHINGTON, D.C. (August 15, 2014)  Metrostudy, a Hanley Wood company, announced today the release of its Second Quarter 2014 Residential Remodeling Index (RRI) detailing activity in the remodeling and replacement industry.

The index gained 4.3% in the second quarter, year-over-year, which follows a 6.5% year-over-year increase in the first quarter. Despite the moderation in growth rate, the RRI has posted ten consecutive quarterly improvements and eight consecutive year-over-year increases since the market bottomed at the end of 2011.

The slower growth pace of the home improvement sector came as American households adjusted to the sticker shock of higher costs of living, particularly in bumps to food and gasoline prices. The seasonally adjusted second quarter national composite of the RRI registered a score of 95.5, which was a 0.4% improvement over the revised first quarter result of 95.1. The 0.4% increase follows first quarter’s 0.6% gain.

“Second quarter’s reading on national remodeling activity was just slightly weaker than what was initially forecast in the first quarter’s release – missing the actual number by 0.2%. Consumer confidence paused in April and May as inflationary pressures crept in, and Americans tempered remodeling efforts against some cooling in home price appreciation,” remarked Brad Hunter, Chief Economist of Metrostudy.  “Still, a better-than-expected report on second quarter GDP, rebounds in the Consumer Confidence Index in June and July, and six consecutive months of job growth in excess of 200,000 allows us to remain bullish on our remodeling forecast. A firming in housing fundamentals – faster job growth, more ‘non-distress’ home sales, and higher household formations – is expected to drive remodeling and replacement growth for many quarters ahead. According to our latest forecast, the remodeling market will reach full recovery nationally by third quarter 2015.”

“The long-term outlook for growth remodeling is positive as well,” Hunter added.  “Once mortgage rates start to rise, many people who locked in today’s low mortgage rates will be reluctant to move and lose that low financing rate, choosing instead to improve the home they already own.”

Metrostudy produces the RRI to provide the industry visibility into local market remodeling activity, forecasted future activity, and potential demand.  According to the company’s second quarter report, 371 out of 381 Metropolitan Statistical Areas should see year-over-year growth in remodeling and replacement projects in 2014, with average growth of 4%.

About the Residential Remodeling Index

The RRI is a quarterly measure of the level of remodeling activity in 381 metropolitan statistical areas (MSA) in the U.S., with the national composite reflecting the national level of activity. “Activity” includes home improvement and replacement projects, but does not include maintenance or projects of less than $1,000. The seasonally adjusted index shows the relative level of activity in the geography specified (MSA or national composite) compared to 2007 (the baseline year). A number above 100 indicates a level of remodeling activity higher than the level of activity at the beginning of 2007, which was the peak of remodeling activity in the prior decade.

The index is produced through a statistical model that leverages detailed data on remodeling activity, including household level remodeling permits, and consumer-reported remodeling and replacement projects. Quarterly historical results for the national composite and for each of the 381 Metropolitan Statistical Areas in the U.S. are available back to 2004. In addition, Metrostudy also produces annual estimates of project counts and expenditures as well as forecasts of the quarterly RRI and annual projects and expenditures.

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

About Metrostudy

Metrostudy, a Hanley Wood company, is the largest provider of comprehensive research and insight for the real estate industry. Builders, developers, banks, manufacturers, retailers and many other industries all rely on Metrostudy’s data and analytics to support strategic business decisions at the local, regional and national market level. 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 Names Randall Allsup Regional Director of Austin Market

Posted in National Housing Market | Posted on 08-15-2014 | Written by Metrostudy News

Washington, D.C. – August 15, 2014   Metrostudy, a Hanley Wood company, announced today the appointment of Randall Allsup as Regional Director for its operations in the Austin, Texas market.

Allsup, a senior executive with Metrostudy covering regions in Central and South Texas since 2002, brings over a decade of experience performing detailed analysis on a wide range of locales and projects.  Prior to joining Metrostudy, Allsup held positions as project manager and market analyst for Royce Homes and Highland Homes.   Allsup is a graduate of Texas A&M University, is active in industry trade organizations, including the Greater San Antonio Builders Association and the National Association of Homebuilders, and is a sought-after speaker at industry events.

“We are thrilled to have Randall head up our Austin Market. His extensive and in-depth knowledge of the Texas housing market are a great asset in supporting our client’s research and analysis needs for our clients in Austin, TX,” said Michael Castleman, Senior Vice President of Metrostudy. 

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.

Rising Prices & Demand Meet Restricted Lot Supply: Multi-Family Developers Stand to Gain

Posted in New Jersey Market | Posted on 08-14-2014 | Written by Metrostudy News

August 2014: Metrostudy today released their 2Q14 survey of the New York/New Jersey suburban region’s housing market, showing that strong demand is fueling price increases and growth even as lot supplies will hamper further development.  The Northern New Jersey/NY Suburbs region recorded 1,271 starts in 2Q14, up 32% from the prior quarter total of 958. The 1,271 still remains less than the output for 4Q13 when there were 1,514 starts and 3Q13 when there were 1,671.

“The demand in this market is being spurred on by potential buyers who can’t afford to live in New York City and are choosing to look in counties right outside of the city,” said Quita Syhapanya, Director of Metrostudy’s Northeast Region. “The Northern New Jersey/New York suburbs have seen price increases month to month, quarter to quarter and year over year. Builders have no choice but to build more homes at a more expensive price point on larger lots since many of the municipalities are not bending in the requirements for density.”

Product type breakdown shows that detached closings increased 12.1% to 509. Starts increased by 24.7% to 574 units compared to 1Q14. Attached homes saw a big swing in starts to 707 units from the 498 in 1Q14, a 41% uptick. Closings saw a 20% decrease to 610 from the 772 from the prior quarter. The first quarter saw a big increase in closings and it could be due to buyers moving in at the end of the 1st quarter as opposed to moving in the beginning of the 2nd or postponing the move from the end of 4Q until 1Q14 due to the extreme weather that may have delayed the move.

Total housing inventory stands at 8,710 units, up 2% from 1Q14. Total housing inventory is made up of models, units under construction, and finished vacant units. In 2Q13 Housing Inventory was at 7,278 units and has increased by 19% to end 2Q14. Under construction inventory is at its highest count since Metrostudy started collecting inventory data in 2Q13. Units under construction stand at 4,145, up 4% from 1Q14. It is a 33% positive swing from 2Q13 when there were 3,108 units under construction. Finished vacant inventory increased slightly to 4,261 from the 4,203 vacant standing units in 1Q14.

There is significant pricing pressure in this market: the median closing price for a new home closed in the Northern New Jersey/NY Suburbs for the second quarter was $421,800, up 9% from 1Q14 and 4% year over year. The median closing price for a single family home for 2Q14 was $466,000, a 5% increase from 1Q14.

Philly Mh closings price yoy

For 2Q14 there are 9,483 Vacant Developed Lots (VDL) in the Northern New Jersey/NY Suburbs market. That represents a .67% increase in developed lots in the region from the 9,420 lots available in 1Q14. When Metrostudy started collecting Vacant Developed Lots in this region for 2Q13 there were 10,852 lots available. From 2Q13 to the 2Q14 there has been a 12% decrease in developed lots. With an annualized starts rate of 5,414, this region has 21 months of supply of vacant developed lots remaining. A healthy market supply level for equilibrium would be between 24 to 30 months. The Northern New Jersey/NY Suburban market is extremely under supplied when it comes to finished lots.

There were 1,334 lots delivered into the market as VDL which is the highest level since Metrostudy started collecting the data. This represents a 44% increase in lot deliveries from the 926 delivered in 1Q14. Even with an increase in lots delivered the volume needed to meet the demands of the market is still not on pace since there is only 21 months of supply of VDL.

The Top 10 suburbs for the New Jersey/NYRegion by Starts based of Metrostudy’s Data

NJNY top ten subs 2Q14

“Much of the lot development not accounted for in our survey is occurring in the multi-family rental product,” said Syhapanya. “These units are coming on-line fast with developers looking to gain access to the movement of younger buyers burdened with school debt, short on a down payment, and quite simply choosing a lifestyle that is centered on walkability and no mortgage to hold them in one place. The rental route is picking up a good amount of the building activity as well as gaining access to new household formations that can’t afford to buy.”

While the increase in inventory for new homes is a welcome sign, it just isn’t enough at this time to satisfy the demand in this market. Prices will continue to rise until the right balance is found with homes in the resale market and new homes for sale are readily available for potential buyers.

For information contact: Quita Syhapanya @ 215.893.9890 Ext. 231
Email qsyhapanya@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.

“Where is New Home Construction Growth Occurring in the Philadelphia Area?”

Posted in Philadelphia - Market | Posted on 08-14-2014 | Written by Metrostudy News

August 2014: Metrostudy today released the results of their 2Q14 survey of the Philadelphia housing market, which showed steady growth in the region despite a drag on the MSA from Southern New Jersey markets.  The Philadelphia region recorded 2,415 observed closings for 2Q14, up 13.9% from 1Q14.  Starts for 2Q14 also increased to 2,866, a 26.9% increase from 1Q14.  The Philadelphia MSA had 988 closings, down 13.5% from the prior quarter and significantly lower than expected for the MSA. Starts on the other hand increased for the MSA by 33 lots to 1,271, a 2.6% jump from 1Q14. Note that the Philadelphia MSA includes four counties in South Jersey that have pushed the MSA numbers lower for 2Q14. Closings dropped by 70% in South Jersey, and starts in that region also decreased by 60% from the prior quarter. The South Jersey new home construction market has been restrained by lack of job growth as well as the challenges facing Atlantic City.

If we exclude South Jersey, the Philadelphia MSA counties (Bucks, Chester, Montgomery, Philadelphia, Delaware, and New Castle) had a solid 2nd Quarter. Closings increased 10.7% from 800 in 1Q14 to 886 in 2Q14. Starts had a big quarter with 1138 starts, a 26% increase from 1Q14 which could also be attributed to the catch up factor from the two prior quarters. The Philadelphia MSA market has its own challenges with the time it takes to move dirt, but there seems to be some positive momentum in particular submarkets.

2014 County by County Starts and Closings

Philly cbc starts and closings

Rising land prices are squeezing out first time buyers.  “We are not seeing household formations forming at a capacity to sustain new homes for the entry level or first time buyer in this market,” says Quita Syhapanya, Regional Director for Metrostudy’s Northeast market.  “With the price of land at all-time highs, builders are not able to build homes at the lower price points, making building for this segment nearly impossible. This is why we are seeing an abundance of multi-family for rent apartments in high demand. Lending is also a factor as banks are readily funding for rental projects quicker than the traditional ADC lending for traditional subdivision building.”

Total housing inventory (model homes, under construction units and finished vacant homes) for the Philadelphia region has increased 6% since 1Q14 to 4,749 units. Finished vacant inventory stands at 2,704 units in 2Q14, a 2% increase from last quarter.

“The median closing price for a new home in the Philadelphia region was $331,400, a marginal decrease from the prior quarter,” said Syhapanya. “Despite that, we still see prices up 9.5% YoY from 2Q13, and the median closing price for a new home for the second quarter is the highest it has been for this quarter since 2Q08. With a majority of the homes being sold on larger lots and the entry-level buyers priced out of the market, a higher median closed price is to be expected.”

In 2Q14, there were 23,816 Vacant Developed Lots (VDL) in the Philadelphia Region, up 3.3% from 1Q14’s levels. This is the first time VDL’s have increased since Metrostudy started tracking the Philadelphia Region in 2Q13.  Still, the increased lot supply is not the entire story: a majority of the VDL resides in the state of Delaware, and lots in areas that buyers consider desirable remain scarce in the Philadelphia market. At a high level including undesirable locations the months of supply is at 26.1 months. A healthy market supply level for equilibrium would be between 24 to 30 months. At an annualized starts rate of 10,952 for a rolling four quarters it will take 26 months to go through the available finished lots in the entire market. In specific submarkets, cities, and towns that are in demand those numbers are close to single digits.

The Top 10 suburbs for the Philadelphia Region by Starts based of Metrostudy’s Data

philly top ten subs 2Q14

 

There are currently 153,802 lots sitting in various entitlement stages at the municipality and/or the county for approval, up 1% from 1Q14. There were 1,133 lots in the pipeline that have been delivered into the market as VDL. The state of Delaware continues to house the most future lots: Sussex County, DE has 38,544 lots in the pipeline, Kent County has 19,193 and New Castle County has 17,293. The county with the most future lots in the Philadelphia MSA is Chester County, PA where there are 13,864 lots.

Builders in the Philadelphia Region have remained fairly confident with the turbulent housing market here never seeming to put consecutive quarters and or months together of positive sales and closings. There are early headwinds that this region may start to see more positive signs in new home construction, but significant challenges still remain. Positive economic indicators include a strengthening job market in the region and specifically in the Philadelphia MSA. Conditions have stabilized on a macro view, but obviously there are markets and submarkets that still have issues to resolve before a more robust rebound can occur. We expect to see all housing indicators continue to show signs of health.

For information contact: Quita Syhapanya @ 215.893.9890 Ext. 231
Email qsyhapanya@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.

Market Slowing as Higher Prices Constrain Demand

Posted in Jacksonville Market | Posted on 08-14-2014 | Written by Metrostudy News

August 2014: Metrostudy today released results of its 2Q14 survey of the Jacksonville housing market, which showed slowing new home construction  since the second half of 2013.  In the Jacksonville Market (Clay, Duval, Nassau, and St. Johns counties), 1,274 single-family units were started in 2Q14, down 11.8% from 2Q13’s rate of 1,444 units. Despite this drop compared to last year’s second quarter, the annual starts rate compared to last year increased by 14.7% to 5,376 annual starts.

Single-family quarterly closings totaled 1,342 units, 6.4% higher than the same quarter last year. The annual closings rate (past 4 quarters) totaled 5,217 units, 29.0% above the rate recorded a year ago.  Quarterly closings in the Jacksonville market continued the upward trend, although new construction activity slowed slightly from the first quarter. The flat trend in recent quarters’ starts rate was echoed by many of the major markets in the southeast United States. With the growth in retail home pricing over the past year and the lowering of FHA lending limits, we expect uneven growth in new home constrution over the next few quarters.

“Slowing housing growth can reflect weakness in demand, a lack of supply, or a bit of both,” says Anthony Crocco, Regional Director of Metrostudy’s Jacksonville/Orlando region.  “At this point in the cycle we believe it is both. Quarterly lot deliveries are still running behind quarterly new home construction rates, meaning we are burning thru lots much faster than we are delivering them.”

Weakness in demand is primarily due to pricing. Strong new home construction activity for the past 15-18 months has spurred increases in retail pricing, often at a rate near the peak of the boom. Pricing has also been impacted by increasing lot costs, for both progressive lot takedowns and replacement projects.  New home pricing continues to increase in most locations. As a result, the higher price bands are starting to see strong growth. Builders are generally holding the line on prices, although base price increases seem to be slowing and a few more concessions are being offered.

Annual Starts by Price Range

Jax annual starts by price range

 

“This quarters activity continued the trend of builders abandoning the lower-priced market, as starts over the past year for units priced under $150k declined 35% from the year ending 2Q13,” said Crocco.  “We are seeing a burst of activity at the higher end segment, with annual starts for units priced over $400k up 114% from 2Q13.  The implications of this for the future of the market are significant.”

Total single-family inventory, comprised of units under construction, finished vacant units and models, equaled 2,698 units on the ground at the end of the second quarter, a 6.2 months of supply. Overall, housing inventories increased by 6.1% compared to last year.

This quarter, 806 lots were delivered to the Jacksonville market, a 47.6% increase from 546 lots delivered in the same quarter last year. Vacant developed lot inventory stands at 15,430 lots, a decrease of 11.3% compared to 17,403 lots last year. Based upon the annual starts rate, this lot inventory represents 34.4 months of supply, a decrease of 10.1 months from last year.

Overall housing inventory levels have dropped slightly over the past two quarters. However, the level of finished inventory has grown slightly. With starts having slowed, we do not expect the finished supply to increase significantly.

Vacant lot inventories have been generally declining, and the increase in construction starts has caused the ratio of months of supply to drop below 3 years. However, there are an increasing number of lots being delivered to the market and in the development process, so we expect lot inventory ratios to continue to flatten.

The following table identifies the top ten communities as     defined by annual construction starts.

Community Annual Starts

Nocatee (Duval) …………………………850

Durbin Crossing (St. Johns) …………364

OakLeaf Plantation (Clay) ……………248

Aberdeen (St. Johns)…………………..143

Eagle Landing (Clay) …………………..129

Murabella (St. Johns) ……………………97

Bartram Park (Duval) ……………………97

Two Creeks (Clay) ………………………..88

World Golf Village (St. Johns) ………..86

Victoria Preserve (Duval) ………………83

Like any market, buyers must get used to the sticker shock of rapidly escalated prices. To continue to increase construction activity builders must help the consumer accept the pricing growth, and many builders are through the use of incentives.

For information contact: Anthony Crocco @ 919- 314-0420
Email acrocco@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 Focus is Inventory as In-Demand Areas are Seeing Shortages

Posted in The Triad Market | Posted on 08-13-2014 | Written by Metrostudy News

August 2014: Metrostudy’s 2Q14 survey of the Triad housing market showed construction delays from the hard winter finally being mitigated, as quarterly starts increased to 632, up 14.7% over 2Q13.  Annual Starts of 2,295 were observed in the Triad in 2Q14, up 27.6% from 2Q13. Annual Closings of 2,132 in 2Q14 was an increase of 287 homes from 2Q13. The winter delayed both home starts and completions, and contributed to the slower pace of closings as home buyers were unable to move into their homes while awaiting final completion of construction.

The 567 finished vacant homes on the ground in 2Q14 represent a 3.2 month supply, below the 7 year average of 5.1 m-o-s. As standing inventory in higher activity locations decline, under construction inventory has continued to increase to meet demand. The 978 homes under construction in 2Q14 represent a 5.5 months’ supply, and is a 17.1% increase from 2Q13. “Weather related delays in construction have caused some housing construction delays,” said Jay Colvin, Director of Metrostudy’s Triad region. “The inventory picture will be the focus for the market for the next two quarters. If inventories remain high, the starts projections for next year will be more subdued.”

The 11,194 lots on the ground in the Triad in 2Q14 are 11.6% fewer than 2Q13’s levels. This represents a 58.5 months-of- supply at the current start rate, yet even though this figure is well above the 18-24-month range that Metrostudy considers normal, there are shortages of lots in the highest demand locations, and that has driven limited new lot production.

“The oversupply of lots, many of which are bank owned or in the default process, has aided in resetting the price for lots, helping builders offer homes priced to reflect market demand,” said Colvin. “As higher activity neighborhoods near build out, existing lots offer a cost effective replacement alternative to new lot production, and allow builders to keep cost in line with market demand.”

See the Top 10 Builder List by Annual Starts based of Metrostudy’s 2Q14 Survey Findings

triad top 10 for 2Q14

 

Townhomes – following national trends – are showing increased gains in the Triad new home market. Construction began on 148 townhomes in 2Q14, up 82.7% from 2Q13.  Only 84 townhomes were closed on in 2Q14, slightly lower than the number in 2Q13.  The slowdown in closings again is seen as weather related, as finished vacant inventory has dropped 12% year over year, while under construction inventory has increased 15%.

Vacant developed lots available for townhome product, is down 11.4% from 2Q13. At the current pace of starts, the total number of lots represents a 62 months-of-supply. Lot supplies are still high, but as with the overall trend, the most in-demand submarkets are seeing shorter supplies.

The job gains that the region has experienced so far in 2014 are very important to the local housing industry. However, for a sustainable recovery, this level of job growth needs to be sustained and avoid the choppiness that the market has experienced over the past several quarters. In order for the excess housing supply to be reduced, the region will need to experience greater job growth rates, as well as increased rates of population growth.

Guilford County captures the greatest share of new home activity in the Triad with 41% of the new home starts that began in the six counties that makes up the Triad market. The 993 new homes started in Guilford Co. over the previous 12 months was an increase of 26% over 2Q13. The 748 homes of total inventory represent a 9.9-months’ supply.

Forsyth County made up 27.74% of Triad new home activity through 2Q14. The county saw 699 new home starts for the four quarters ended 2Q14, an increase of 26.2% from the 2Q13 figure of 554. 686 new homes were closed in the trailing four quarters ending in 2Q14, up 12.1% from 2Q13. The county now has a 7.9 months’ supply of new homes based on the 449 inventory homes (models+finished vacant+under construction).

Alamance County continues to see the strongest growth in the Triad. The county started 371 homes in the four quarters ended 2Q14. This represents an 18% market share, which is up from 16% market share in 2Q13. The county has not only seen an increase in new home construction but demand as well. 330 homes were closed in the four quarters ended 2Q14, a 44.7% increase. Alamance is benefiting from a lack of entry level product in Durham and Chapel Hill, and the majority of the production gains have been near the Alamance and Orange county border.

Many markets across the country have been experiencing lot shortages in higher demand locations. When looking at the Triad, this same trend can be seen by looking at single family detachedneighborhoods averaging at least one start a month. The 44 subdivisions that meet these criteria make up 37% of total Triad activity measured by annual starts, and they have 411 inventory homes – 6.8 months-of-supply. These subdivisions have a 16.7 months-of-supply of vacant lot inventory, and many of the individual neighborhoods in this group are nearly built out. What this means for the Triad is price increases in higher demand subdivisions and a spreading out of activity to other neighborhoods with room for growth in similar locales. This is already happening, and the broadening out of the market is already taking place, and as long as job growth continues to be recorded in the region, the pace of growth in these neighborhoods is expected to continue.

For information contact: Jay Colvin @ 919- 314-0420
Email jcolvin@metrostudy.com

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