Affordability Squeeze in Raleigh: As Production Shifts to the Higher Price Points, Entry Level Buyers Feel the Pinch

Posted in Raleigh - Durham Market | Posted on 02-20-2015 | Written by Metrostudy News

  • 4Q14 New Home Starts are down 2.2% from 4Q13, the first drop in YoY starts since 2010 and an indicator that the recovery phase is over
  • Low inventories and higher demand has pushed land prices higher, which has squeezed the affordability of the market for the new homebuyer.
  • Starts above $350k are at 2007 levels even as starts under $200k are down 20% YoY

February 2015: Metrostudy’s 4Q14 survey of the Triangle’s housing market shows that builders started construction on 1,922 new homes, down 2.2% from 4Q13. Quarterly Closings – previously unoccupied new homes that now are occupied – totaled 2,051 units, a 3.3% decrease from 4Q13.   The 8,630 annual starts surveyed through the end of 4Q14 was 0.7% lower than the number of homes started in the same period a year ago. The 2014 annual closings figure of 8,612 was 4.8% more than the 2013.

“The fourth quarter is traditionally a slower quarter for new home starts, however the market has experienced year over year gains in the fourth quarter over the past three years as the market recovered,” said Jay Colvin, Director of Metrostudy’s Raleigh-Durham region. “This year’s decline is the first time the market has seen a drop in year over year starts since the post-tax credit period in 2010, and is seen as an indicator that the recovery phase of the housing cycle has ended.”

The 19,794 vacant developed lots in the Triangle in 4Q14 represent a decrease of 1,100 lots from 4Q13 levels. At the current absorption rate, these lots represent a 27.5- months’ supply. Metrostudy considers 18-24 months to be normal, as on average that is the amount of time it takes to entitle and deliver new home lots to the market. Not all lots share equal demand. In Triangle submarkets with the highest demand, lot supplies are well below equilibrium, and in some municipalities the entitlement timeline has been significantly longer than the 18-24 month average.

“The under supply of lots has been a major issue is restraining the market’s ability to deliver more homes, but there are signs that the tides are changing,” said Colvin. “Over the last 4 quarters 7,530 new lots were developed in the Triangle, 67% more than were delivered through the end of 4Q13. The current pace of lot deliveries is 87% of the absorption rate. The gap has been narrowing over the last few quarters and the trend of underdevelopment may be nearing an end. “

Lot and developable land inventories have been one of the biggest hindrances to increased housing production in the Triangle in the near term. Low inventories and renewed demand has resulted in land prices moving higher and the result has been that higher priced homes have gained share even as the overall rate of market activity has increased.

“The growth has been so strong in the $350,000+ market that production levels in these price points are at or above 2007 levels,” said Colvin. “In contrast the entry level market continues to shrink. Starts of homes priced below $200,000 – which account for 24.5% of the current market – are down 20%. The result has been that overall market activity has been flat or slightly down over the past year.”

The realities of continued higher variable cost of development and construction seem to be more structural. Labor supplies are still constrained and the costs of construction materials continue to increase as well. From a development side a longer more rigorous entitlement process – exacerbated by public concern about overcrowding of schools – along with land improvement delays and the resulting costs have all added to the price of finished lots and the resulting finished home price. These costs have so far been passed onto buyers with relatively little push back, as the market tapped pent-up demand and were able to leverage low inventory of homes. But as the market in the $350,000+ ranges has approached peak levels, remaining entry level inventory has eroded, and inventory in the luxury market has grown, sell side parties have seen their advantage wane, the pace of growth has slowed. At the same time the level of lot production has been picking up. Metrostudy sees this as a positive as it will enable the coveted submarket to once again grow total starts. However this growth will come at the expense of pricing power as inventories are expected to increase.

The expectation is that the land market will continue to see some softening and the price increase of land will start to slow down. A lower land cost basis would help the market provide some more mid-priced homes and enable some growth in those price points however it is still early on in this phase of the market cycle and it will take time before this scenario fully plays out. Metrostudy expects only slight gains in housing production in 2015.

For information contact
Jay Colvin
919- 314-0420
jcolvin@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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Outlook for 2015 Housing is Tepid at Best; Multi-Unit Activity Dominates This Market

Posted in New Jersey Market | Posted on 02-19-2015 | Written by Metrostudy News

  • New Home Starts showed a significant decline of 41.3% from 3Q14; YoY activity is down by 54.6%
  • Multi-family product in the Northern New Jersey market continues to be the driving force in construction in this region.
  • Multi-unit structures are up 55.6% month to month and are up 2.6% year over year even considering year over year for November 2013 skyrocketed up plus 85.1%.

February 2015:  Metrostudy’s survey of the housing market in the Northern New Jersey/NY Suburbs region showed 671 starts in 4Q14, a decrease of 41.3% from 3Q14. Year over year comparison from 4Q13 versus 4Q14 saw an even greater drop off in new home starts activity by 54.6 percent. The Northern New Jersey/NY Suburbs region recorded 1,064 observed closings for 4Q14., down 17.3% from 3Q14.

“A product type break down shows that detached closings decreased 19.3% to 440 from 545 in the third quarter,” said Quita Syhapanya, Regional Director of Metrostudy’s Northeast region. “Year over year closings increased 1.4% but it is a disappointing number compared to the depressed starts that occurred during the harsh winter in 4Q13. Starts in detached single family also took a big hit with a decrease of 46.6% to 298 units in comparison to the 558 started in 3Q14. Year over year also reflected a decrease in new home starts by 50.9%.”

Attached homes saw a decrease in starts as well to 373 units from 585 in 3Q14, a 36.2% decrease and an even larger 57.2% decrease compared to this time last year.  This decline is particularly concerning considering attached product starts accounts for 56% market share. Closings saw a 15.9% decrease to 624 from the 742 from the prior quarter as well as a decrease year over year by 10.5% when there was 697 closings in 4Q13.

The median closing price for a new home closed in the Northern New Jersey/NY Suburbs in 4Q14 was $436,900, up 4.3% from 3Q14 and up 7.1% from 4Q13. The median closing price for a single family home for 4Q14 was $468,900, a .4% increase YoY and a 1.6% decrease from 3Q14. Pricing for new home construction has continued to slow down to wrap up 2014. We expect pricing to moderately increase in 2015 with no dramatic swings one way or the other.

For 4Q14 there are 9,742 Vacant Developed Lots (VDL) in the Northern New Jersey/NY Suburbs market, a 3.5% YoY increase in developed lots. With an annual starts rate of 3,905 it would take 29.9 months to go through the remaining lots at this pace, up five months from 3Q14. The Northern New Jersey/NY Suburban market remains in equilibrium but is moving closer to over-supply from the 1,761 lots that were delivered in 2Q14 that have not been absorbed. There were 635 lots delivered into the market this quarter. Year over year lot deliveries dropped by 33.3% from the 952 delivered in 4Q13. Quarter to quarter saw deliveries drop by 32.8%.

“With multi-family product type moving the needle north in construction it remains a struggle for new home builders to move new product in Central, Northern NJ as well as the New York suburbs,” said Syhapanya. “Looking at permit data 1 unit structures took a 4.7% decrease year over year and a 13.3% decrease month to month ending November 2014 which is our earliest indicator of a new home start. Meanwhile, multi-unit structures are up 55.6% month to month and are up 2.6% year over year even considering that year over year for November 2013 skyrocketed up plus 85.1%.”

The overall outlook on new home construction in the Northern New Jersey and NY Suburbs region is tepid at best. The activity for the 4th Quarter has stalled a great deal in comparison to the last few quarters and year over year. The region ended the year with significant signs of a struggling new home construction market. There were many factors in play that caused the drastic decline in construction activity. One of the main impediments was builders and developers playing catch up due to stalled construction earlier in the year with most of the activity starting in 2Q14 where we saw an increase of 35% in starts. On a rolling four quarters there was 3,905 annual new homes started ending 4Q14. To end the 3rd quarter the pace was at 4,712 new home starts. It was a 17.1% decrease in quarter to quarter comparing the pace ending 4Q14 versus 3Q14. The annual closings pace did not take the same hit due to the homes beginning to be occupied from the big jump in new home starts back in 2Q14. To end 4Q14 the annual closings pace ended the quarter at 4,757 new homes being occupied which is just a slight decrease off the pace ending 3Q14 by only a decrease of 1.4% when there was 4,824 closings.

“Multi-family product in the Northern New Jersey market continues to be the driving force in construction in this region,” said Syhapanya. “A hot topic of debate and discussion we will hear in the media is if there is an oversaturation of rental units in this market in the near future. I don’t believe at this point over saturation or bubble will form in the near term for rental units only because the entry level or first time buyer can’t get their foot in the door in regards to their jobs, flat income growth, debt, and not having enough for a down payment even with 3% down. They have no choice but to rent at this point. It may be a few years before they enter into buying their first home, in particular in this region where the job market is dominated by firms in Manhattan and NJ is having trouble retaining companies who are packing up and taking their jobs elsewhere. Buying will be in the equation just not now. Maybe after this group gets to their second milestone which is their first baby a home purchase will be in order!”

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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Despite Positive Economic Trends, the Philadelphia Market is Still Finding Its Way

Posted in Philadelphia - Market | Posted on 02-19-2015 | Written by Metrostudy News

  • YoY Philadelphia Region closings are up 6.8%
  • Quarter to quarter the region saw new home starts down 13.5% from 3Q14; while the Philadelphia MSA also saw starts down 14.6% from 3Q14
  • The median price of a single family home stood at $360k in 4Q14, up 3.9% YoY
  • The entire region is facing a shortage in Lot Supply that will play out differently from county to county

February 2015:  Metrostudy’s survey of the Philadelphia region’s housing market shows that 4Q14 starts totaled 2,336, down 13.5% from 3Q14. The Philadelphia region recorded 2,643 observed closings for 4Q14, down 8% from 3Q14.  The Philadelphia MSA had 1,393 closings in 4Q14, a decrease of 13.7% from 3Q14. Year over year closings are up 17%. Starts decreased for the MSA to 1,219 which was a 14.6% dip from 3Q14. Year over year saw a 9.9% increase in new home starts.

Annual starts pace for the region saw a very minimal decrease of .1% to 10,127 from 3Q14. The pace for the region for annual starts shows some stability in the region considering the 4th Quarter is typically a slower time for home building. The main counties driving activity for the entire region can be attributed to the state of Delaware. Sussex County, Delaware in particular is a hot market where activity is driven towards the East side of Route 1 towards the shore accounting for a significant amount of the activity for the region.

Total housing inventory for the Philadelphia region has dropped 3.9% quarter to quarter. Finished vacant inventory remained flat quarter to quarter rising only 2 units to 2,808 from 2,806. Finished vacant inventory is an early indicator of the health of the new home construction market. If finished vacant inventory continues to increase without being absorbed with an actual home buyer moving in quarter to quarter, as well as the months of supply continuing to increase quarter to quarter is an early sign of a weakening housing market. In the Philadelphia region it is also a valid indicator, but not the only indicator only because this market historically does not build too many speculative homes. We are a pretty tight market in regards to when we start a home. Most often a home that is finished vacant will be occupied at some point in the next 5 to 6 months after it started since the home most likely is under contract. Most communities in this market will only have one model home available if they have one at all.

Annual Starts pace and closings pace for the Philadelphia MSA in the 4th Quarter saw a 2.2% and 4% increase respectively off of the pace from 3Q14. The starts pace ended the quarter at 5,171 starts and closings came in at 5,193 closings. The Philadelphia MSA is led by the activity occurring in Bucks County, Montgomery County, Chester County, and New Castle County in Delaware.

“The median closing price for a new home in the Philadelphia region was $337,100, up 3.3% from 3Q14,” said Quita Syhapanya, Director of Metrostudy’s Northeast Region. “Year over year change was a 2.1% increase for 4Q14. The median closing price for a single family home ended 4Q14 at $360,100, a 2% increase over 3Q14 and a year over year increase of 3.9%. Price increases are due mostly to product type mix rather than any significant change to housing fundamentals.”

In 4Q14, there were 22,557 Vacant Developed Lots (VDL) in the Philadelphia Region. Finished lots decreased by 1.6%. Year over year vacant developed increased by 2.5% which is more to do with the fact that this time last year the region was hit with some significant weather that delayed new developed lots.

“Philadelphia County continues to be in short supply of finished lots with only 9.9 months of supply,” said Syhapanya. “Most of the new home construction occurring in Philadelphia is of the tear down and in-fill type of building.  The Philadelphia MSA also faces a short supply of available finished lots.  Our 4Q14 numbers show that there are only 8,318 finished lots available, a 19.3 months’ supply. Montgomery County, which is an in demand market with good schools, only has 16.3 months of supply. Delaware and Bucks counties are both still less than 20 months of supply for finished lots.”

The Philadelphia Region for new home construction has been an anomaly. Numbers swing back and forth due to seasonality in the Northeast. The housing market in this region is predictable only in that 99% of the time 4Q and 1Q to always be down relative to the other quarters when tracking activity. With seasonality it is important getting a gauge year over year to see how the market faired in the same three months in the previous year. The caveat this year is that around this time last year is where this region experienced the Polar Vortex which was thought to have slowed down the housing market not only in the Philadelphia Region, but across the country due to supply chain and logistics of manufacturers that are based out of this region.

The same positive forces that many experts and economist speak about in regards to continued low mortgage rates, economy strengthening, jobs market getting better, etc. are the same today that they were for the past few quarters. The only problem is that even with these positive factors housing is still caught in lull. So the same negatives are still staring the housing market in the face – like tight credit standards, a still tepid job market, debt for first time buyers, and high prices that have moved builder strategies to only build higher ticket homes. Many in the industry were disappointed by 2014’s housing market. Moving forward many who work in the housing industry are playing their cards close to the vest as they play the wait and see game. The market has slowed down this year but 2015 is expected to see growth in 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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Jacksonville Housing: Metrostudy 4Q14 Survey Results Reveals New Trends

Posted in Jacksonville Market | Posted on 02-19-2015 | Written by Metrostudy News

February 2015:  Metrostudy’s survey of the Jacksonville Market – including Clay, Duval, Nassau, and St. Johns counties – shows that 1,142 single-family units were started in the 4Q14. This represents a decrease of 11.3% compared to last year’s rate of 1,288 units. Still, the annual starts rate compared to last year decreased by only 1.1% to 5,350 annual starts. Single-family quarterly closings totaled 1,257 units, up 6.1% from 4Q13. The annual closings totaled 5,520 units, up 18.1% from 2013’s number.

Starts and closings this quarter in Jacksonville were down significantly from 3Q14, which is not uncommon seasonality. However, since this year’s fourth quarter starts was well below last year’s fourthquarter, the annual starts rate declined. The annual closing pace continues to grow as slightly more units were occupied in 4Q14 than last year.

The Jacksonville new housing market’s pricing distribution continues to push into the higher ranges and weaken in the lower price points,” said Anthony Crocco, Director of Metrostudy’s Jacksonville region. “Recently, pricing increases have slowed and some of this change in distribution is due to the new projects opening at higher prices and older projects selling out at lower prices.”

Total single-family inventory, comprised of units under construction, finished vacant units and models, equaled 2,728 units on the ground at the end of the fourth quarter, a 5.9 months of supply. Overall, housing inventories decreased by 6.1% compared to last year.  As compared to last year, Jacksonville’s
under construction housing inventory declined by 18.2%, or 347 units to 1,562. Finished vacant inventory increased by
17.3% from 803 units last year to 942 this
year.

This quarter, 1,481 lots were delivered to the Jacksonville market, a 104.3% increase from 725 lots delivered in the same quarter last year. Vacant developed lot inventory stands at 15,675 lots, a decrease of 2.3% compared to 16,036 lots last year. Based upon the annual starts rate, this lot inventory represents 35.2 months of supply, a decrease of 0.4 months from last year.

“Overall housing inventory levels have been slowly declining on a relative and actual basis for about a year,” said Crocco. “There has been little change to the level of finished inventory, which is in good condition at approximately 38% of all housing inventory. The vacant developed lot inventory ratio has flattened over the last few quarters, at about 3 years supply, as lot deliveries have picked up and are approximately matching the starts rate.”

The resale housing market remains strong, although some foreclosure pressure remains. Even with foreclosures, pricing growth is good and inventories are tight.

“The new home market’s annual construction rate has been slowly declining for about a year,” said Crocco. “Closings are still growing and have exceeded starts for most of the last year, although barely. In the short term, we expect construction activity to pick up slowly, with very slow pricing growth except what is due to the change in subdivision mix  – more newly developed projects coming in, and older projects with discounted lot prices selling out.”

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

Community Annual Starts  

Nocatee (Duval) ………………………… 886

Durbin Crossing (St. Johns) ………… 277

OakLeaf Plantation (Clay)…………… 253

Bartram Park (Duval)…………………. 169

Palencia (St. Johns) …………………… 117

Pablo Bay (Duval) ……………………… 113

Las Calinas (St. Johns) ……………….. 104

Eagle Landing (Clay) ………………….. 103

Bainebridge Estates (Duval) …………. 97

Samara Lakes (St. Johns) …………….. 82

For information contact
Anthony Crocco
919- 314-0420
acrocco@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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

With Prices and Growth Leveling Off, Changes are in the Margins

Posted in Central Florida Market | Posted on 02-19-2015 | Written by Metrostudy News

  • 4Q14 New Home Starts in the Orlando MSA are in line with 4Q13 numbers – down only 0.7% YoY
  • 2014’s Annual Starts Rate is up 2.9% from 2013 but the Annual Closings Rate is up 15.3%
  • New home construction continues to move into the higher price ranges as newly opened communities often have a higher cost basis

February 2015:  Metrostudy’s 4Q14 survey of the housing market in the Orlando MSA – which includes Lake, Orange, Osceola, and Seminole counties – showed that 1,828 single-family housing units were started this quarter, down a small 0.7% from 4Q13.   The annual starts rate of 9,278 units has increased by 2.9% over the past year. Single-family quarterly closings totaled 1,972, 2.5% higher than 4Q13. The annual closings rate (past 4 quarters) of 9,019 units is 15.3% above the rate recorded a year ago.

Starts and closings in the Orlando MSA were down significantly from 3Q14, which is not uncommon seasonality. Since 4Q14 starts were about the same as last year, the annual rate has barely changed from last quarter. The annual closing pace continues to grow as slightly more units were occupied in 4Q14 than last year.

Annual Starts by Price Range

4q14 ORL

 

“New home pricing has flattened in many parts of the Orlando MSA,” said Anthony Crocco, Director of Metrostudy’s Central Florida Region. “The market’s pricing distribution of new homes continues to push into the higher ranges, and weakens in the lower price points. Part of this change in distribution is due to the new projects opening at higher prices and older projects selling out at lower prices.”

Total single-family inventory, which is comprised of units under construction, finished vacant units and models, equaled 5,140 units at the end of the fourth quarter, 6.8 months of supply. Housing inventory increased by 5.3% compared to last year.  Under construction housing inventory rose by 6 units to 2,910 units over the past year. Finished vacant inventory increased from 1,642 units last year to 1,856 this year.

This quarter, 2,426 lots were delivered to the Orlando MSA versus 2,442 lots a year ago. Vacant developed lot inventory stands at 25,472 lots, a decrease of 2.1% compared to 26,017 lots last year. Based upon the annual starts rate, this lot inventory represents 32.9 months of supply, a decrease of 1.7 months from last year. The number of units in housing inventory has increased over the past year, but the relative inventory has fallen as the move-in pace has grown. There has been a slight increase in finished supply but we don’t expect finished inventory to grow significantly over the next few quarters as closings should remain strong.

Vacant lot inventory levels have increased slightly as lot deliveries are increasing and exceeded the number of starts over the last couple of quarters. Lot deliveries should continue to increase in the near term, at least.

“The resale housing market is strong, although still dealing with a significant
number of foreclosure sales,” said Crocco. “Even with foreclosures, pricing growth is good and
inventories are tight. The new home market’s growth rate has
flattened in the Orlando MSA over the past few quarters, while closing activity continues
to grow and is almost on a unit to unit basis
with starts. The slowdown in demand is
primarily due to pricing growth that occurred
from the spring of 2012 thru summer of
2013. “

In the short term, we expect pricing to
continue to grow slowly, in great part due to the change in subdivision mix (more newly
developed projects coming in, and older
projects with discounted lot prices selling
out). As a result, demand will continue to be
pushed to more suburban markets in
Osceola, Lake, Polk, and to a lesser degree, Volusia Counties.

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

Community                              Annual Starts

Lake Nona DRI (Orange)…………………… 468

ChampionsGate (Osceola)…………………. 266

Wyndham Lakes Estates (Orange)……… 215

Tapestry DRI (Osceola)…………………….. 188

Regal Oaks at Old Town (TH) (Osceola) . 182

Heritage Hills (Lake) ………………………… 170

Windermere Trails (Orange) ……………… 161

Summerlake (Orange)………………………. 149

Westside-Osceola (Osceola) ……………… 141

Lake Burden (Orange)………………………. 139

 

For information contact
Anthony Crocco
919- 314-0420
acrocco@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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

The New High End Market: Starts are Booming Over $400k and Dying Up Under $250k

Posted in Naples - Ft. Myers Market | Posted on 02-19-2015 | Written by Metrostudy News

  • 4Q14’s Quarterly starts rate declined by 28% from 3Q14, but was up 16% from 4Q13
  • 4Q14 is the 14th Consecutive Quarter of Growth in the Annual Starts Rate
  • Lot deliveries for the quarter were up 94% from 3Q13

February 2015:  Metrostudy’s survey of the Naples/Ft. Myers housing market shows that in 4Q14 new home starts declined by 28% to 893 over the previous quarter, but were up 16% compared to the fourth quarter of 2013.  The annual starts rate increased 3% over the previous quarter, to 4,083, up 25% from 4Q13. The annual starts pace has increased for fourteen consecutive quarters in Naples/Ft. Myers.

Annual Starts by Price Range

4q14 naples

“We continue to see a decline in new home starts for the under $250k price range,” said David Cobb, Director of Metrostudy’s Naples/Fort Myers’ Region.  “New Home Starts under $250k are down 53% from 4Q13, and starts under $150k are practically non-existent.  Starts in the $400-499k price range are up 127% from 4Q13 however, and production of homes over $750k is up 129% in the same time period.”

The annual closing rate was up 15% from a year ago, which extends this upward trend to eleven consecutive quarters. Both Lee and Collier’s F/V supply inched downward last quarter, at 1.6 and 2.5 months of supply (MOS) respectively. The previous quarter’s F/V MOS was 1.7 for Lee and 2.7 for Collier.

The finished-vacant months-of-supply 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 3.0 and stays there, builders tend to reduce prices or make concessions, so this indicator is closely observed each quarter for emerging trends.  Vacant, developed lot (VDL) inventory increased slightly by 1% over the previous quarter, to 11,457 lots. Lot deliveries for the quarter stood at 1,001, a 94% improvement over the fourth quarter of 2013. For the year 2014, lot deliveries totaled 4,490, compared to 2,247 delivered in 2013.

4Q14 by County:

  • Lee County:  Quarterly starts were down 35% while quarterly closings were up 59% from the previous quarter, typical of fourth quarter results. The annual starts rate is up 18% and annual closings rate is up 14% from one year ago. Housing Inventory remains below equilibrium in Lee County at 6.6 MOS. Nine months of supply is considered normal. The supply of VDL inventory increased 0.5% quarter-over-quarter to 6,850, which is 39 months of supply.
  • Collier County:  Quarterly starts declined by 21%, while quarterly closings improved 57% from the previous quarter. The annual starts rate is up 33%, and annual closings are up 16% from a year ago. The annual starts rate has risen for twenty-two consecutive quarters, from a low of 399 in early 2009, to 1,988 in the current quarter.  Housing Inventory remains slightly elevated at 11.8 MOS. Labor constraints and the size of these homes are partially responsible for the above average inventory level. VDL inventory rose 1.7% quarter- over-quarter to 4,531, a 27 month supply. Lot deliveries increased to 536 for the quarter, a 50% improvement over last year. Future lot inventory increased 3% this quarter, to 33,166. Lot inventory was adjusted to include 9,000 lots at Big Cypress.

Listed below are the top 10 communities in the Naples/Ft. Myers market, ranked by annual starts. As noted previously, 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 holds on 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. Lely Resort by Stock Development, Quail West, and Fiddler’s Creek round out the Top 10.

Rank Community Starts Move-Ins

4q14 naples2

 

For information contact
David Cobb
561.228.8001 x505
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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

2014 Ends With a Slow Fourth Quarter; Lot Shortages Dampening Expectations for 2015

Posted in South Florida Market | Posted on 02-19-2015 | Written by Metrostudy News

  • 4Q14 New Home Starts are down 16% from 3Q14; nevertheless the annual starts rate is up 6.4% from 2013
  • We expect lot shortages to have a dampening effect on the starts rate for the near term

February 2015: Metrostudy’s 4Q14 survey of the South Florida housing market shows that  quarterly starts decreased by 16% from 3Q14 to 1,691, but are up 19% from 4Q13. The annual pace increased 6.4% to 7,334 from the annual starts rate observed in the fourth quarter of 2013. This marks two consecutive quarters of measurable annual starts growth. Lot shortages in Palm Beach, Broward, and Miami-Dade are likely to have a dampening effect on the starts rate in the near term, however.

The annual closings rate of 6,852 was up 18% from the previous quarter and is up 21% from one year ago, which extends this upward trend to eleven consecutive quarters. Finished, vacant inventory increased 6% to 1,310 units from last quarter, and this figure is 12% higher than the fourth quarter of 2013. Finished, vacant inventory has hovered in the 2 months-of-supply (MOS) range for the past nine quarters, and remains unchanged at 2.3 MOS for the current quarter. 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 Inventory

4q14 sfl

“Vacant, developed lot (VDL) inventory dropped 5% from the previous quarter to 20,349, a 33 month supply,” said David Cobb, Regional Director of Metrostudy’s South Florida Market. “This is down 11.5% from the fourth 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. “

4Q14 by County

Miami-Dade: Miami-Dade County maintained its starts lead in South Florida this quarter, with an annual starts pace of 2,715, up 9% from the previous quarter, and up 6% year over year. Quarterly starts dropped 26% from the previous quarter. Finished, vacant inventory also dropped to 2.1 MOS.

Broward:  Quarterly housing starts in Broward County declined 5% over the previous quarter, but are up 54% from 4Q13. The annual starts pace increased 7% y-o-y to 1,194. Finished, vacant inventory rose to 2.4 MOS.

Palm Beach: Quarterly housing starts in Palm Beach County are down 17% from the previous quarter and are off 22% from 4Q13. Closings were up 39% from the previous quarter, and up 35% from 4Q13. Finished, vacant inventory remains low at only 1.5 months of supply.

Treasure Coast:  The Treasure Coast includes Indian River, St. Lucie, and Martin counties. Starts improved by 5%, while closings increased by 6% over the previous quarter.

TOP 10 COMMUNITIES IN SOUTH FLORIDA

4q14 sfl2

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

Aragon by Lennar once again claims the top starts spot for the quarter, followed by GL Homes’ new Active Adult community, Valencia Cove. Aventura Isles moves down a notch to third, while St. Lucie’s Tradition takes fourth place. The Parkland submarket delivers two top ten leaders, Ansca’s Villaggio Reserve adds another active adult community, and Lennar delivers three additional market leaders with Kendall Square, Venetian Parc, and Silver Palms.

For information contact
David Cobb
561.228.8001 x505
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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Market Ends 2014 Strong Even as Oil Prices Plummet

Posted in Houston Market | Posted on 02-19-2015 | Written by Metrostudy News

  • 4Q14 New Home Starts were up 7.3% over 4Q13 – the highest starts level since 2007
  • Job Growth is the most significant driver of home sales and Houston’s is the highest in the nation
  • Lot supplies are constrained and lot availability will be the key determinant in the growth of the market in 2015

February 2015: Metrostudy’s 4Q14 survey shows that the Houston new home market continued its strong performance in Q4, with builders starting construction on 6,591 new homes, a 7.3% increase over Q413. This is the highest level of starts since Q407. On an annualized basis, starts stand at 30,325, about 2% above Q3 and the strongest rolling four quarter total since 3Q08. The growth in the pace of starts continues to increase but at a slower pace as builders and developers are beginning to catch up on inventory and the region felt the first effects of the slowdown in the oil patch.

While annual starts have outpaced annual closings since 2012, closings have increased steadily over the last thirteen quarters. In the fourth quarter, area builders closed 7,125 new homes, bringing the annualized total to 28,294. This level of activity represents a 10.0% increase from a year ago, and a 10.8% increase for the year. During the expansion phase of a housing recovery we expect to continue to see closings lag behind starts activity given the timeline of home construction and sales. The current annualized rate of new home closings is the largest since the first quarter of 2009 when builders were still liquidating their inventory as quickly as possible. Needless to say, the sales occurring today are of a much healthier nature.

Metrostudy’s fourth quarter survey reflects 16.931 homes currently under construction; over 2,200 more than a year ago, and which equates to 7.3 months of supply. Conversely, the supply of homes sitting finished and vacant has increased 13% from a year ago to 3,453 units, although this remains below the inventory levels from Q113. Interestingly, this is a mere 30% of the number of finished vacant units available in the second quarter of 2007, the height of speculative building. The number of model homes has risen to 803 from 774 a year ago, and represents the lowest supply of models in 15 years.

“The number of finished vacant homes in the market remains at near historic lows as builders see their speculative homes purchased before reaching completion,” said Scott Davis, Director of Metrostudy’s Houston market.  “The relative supply of finished vacant homes in the market is a mere 1.5 months, well below the 10 year average of 2.5 months, and represents the eighthlowest quarter since 2000. As Finished Vacant and Model inventory increased slightly, the drop in Under Construction inventory was sufficient to offset the increase as months’ supply declined to 6.9 months for total housing inventory.”

Deliveries of Vacant Developed Lots are starting to catch up to the pace of absorption. By year end, we had only started about 1,400 more homes than lots, about half of the gap from last year. During the fourth quarter, 7,695 new lots were delivered to the market while 6,591 new homes were started. Year to date, 28,835 lots have been delivered, while builders have started construction on 30,325 new homes during the same time frame.

“That deficit is the smallest since 2009, suggesting that although the pace of lot development is finally gaining momentum, and we expect lot delivery to surpass starts in 2015 and the market should finally see a build in lot supplies,” said Davis. “Houston’s relative supply of VDL sits at 14.4 months, well below the 10 year average of 25 months.  Moving forward, lot availability will continue to be a key factor for the growth of the Houston housing market. Due to builder demand for more lots, the large public homebuilders have taken major land positions representing a significant increase in the share of builder-controlled lots. We expect that some of this inventory will work its way back into the lot or land market as builders look to reduce their land inventory this year.”

In 2015, several trends are significant for the Houston housing market. Mortgage rates should continue to remain low, factors that have contributed to the rapid increase in home construction costs should abate, and lot supply should increase significantly and these should encourage new home sales. But these trends will be overshadowed by concerns over the rapid decline in the price of oil. At present, consumer hesitation over the influence of oil prices is the greatest risk to the market; job increases from oil and gas producing companies have comprised less than 10% of the job increases in Houston over the last year. However, the longer that oil stays below $55/barrel the greater the negative impact it will have on the Houston housing market.

“Job growth is one of the single most important drivers of home demand, and Houston’s pace of job growth is the strongest in the nation at 120,700 jobs from Dec 2013- Dec 2014,” said Davis. “That’s the highest year-over-year increase in more than 30 years. Even if that number is revised downward, the number for 2014 is still likely to be more than 90,000 new jobs. The early forecasts for job growth in 2015 are closer to 65,000 jobs would should still be sufficient for demand for 30,000 – 35,000 new home starts.”

Another important driver for new home demand is the extremely tight inventory of resale homes available on the market. Historically low resale inventory levels seem to be pushing would-be resale buyers into the new home market. Buyer traffic and net sales reported in Metrostudy’s monthly survey over the last 12 months have been consistent with the 12 months prior, although some respondents reported larger declines from mid-December to year-end as oil crossed below $55/barrel.  “We know there are a lot of concerns about how the drop in oil prices will affect the Houston housing market, but we just haven’t seen any significant evidence of a negative effect yet, and builders at the lower end of the market are actually reporting increased activity as entry level buyers have expanded purchasing power from declining energy costs,” Davis added on the effects of energy prices on the Houston market.

For information contact:
Scott Davis
713-622-9909 x132
sdavis@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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Chicago Finishes 2014 Strong; Growth Should Moderate in 2015

Posted in Chicago Market | Posted on 02-19-2015 | Written by Metrostudy News

  • 4Q14 Survey Shows 5,708 New Home Starts in 2014 – up 17.3% over 2013
  • We are seeing the highest annual rate of new home construction since 1Q09
  • Despite 2014’s growth, shifts in the market should moderate demand in 2015.

February 2015:  Metrostudy’s 4Q14 survey of the twelve county Chicagoland region shows that including single-family detached homes, townhome and duplex units, there were a total of 5,708 new units started in the twelve month period ending with 4Q14, an increase of 17.3% compared against the previous year. This is the highest annual rate of new home construction since 1Q09. The annual rate of closings also increased in the fourth quarter, to 5,265 units. This represents a 9.5% increase in the number of annual closings compared to the prior year. The double digit percentage increases represent the largest rate of growth in annual starts and closings since the early 2000’s.

“The 1,538 units started in the fourth quarter of this year represents an increase of 24.9% over the 4Q13 starts total,” said Chris Huecksteadt, Director of Metrostudy’s Chicagoland region. “This number is nearly double the first quarter tally, and the most in a fourth quarter since the mid-2000’s. With the job growth experienced over the past eighteen months, Metrostudy expects growth in both starts and closings to moderate somewhat in the coming year”

Nearly two-thirds of all new home starts in the Chicagoland market occurred in four counties: Cook, Kane, and Will in Illinois and Lake County in Indiana. Lake County, Indiana, after leading the region through the first quarter, fell to third following the third quarter. Throughout the collar counties, a significant increase in construction activity occurred in calendar year 2014 compared to the prior year 2013.

Finished and vacant inventory had steadily fallen in the overall market, which led to the need for new home construction as demand continues to grow. The supply of finished and vacant inventory rose slightly to 2.8 months for single- family detached and attached homes in the third quarter.

“With the continued increases in construction activity, and the traffic slowdown reported by builders, it is not surprising that inventory has risen over the past few quarters,” said Huecksteadt. “Metrostudy expects the rate of construction to slow in the first quarter as builders attempt to reign in inventory levels heading into 2015. In fact, don’t be surprised if incentives are offered to buyers by builders in an attempt to absorb the standing new home inventory in the market place.”

With a relatively consistent pace of new home construction, and a declining level of vacant developed lot inventory, the months of supply for lots in the Chicago market has fallen from a high of nearly 250 months in the third quarter of 2011, to a current level of 98 months (we’re below 100!!!). Increases in construction activity, even in the outlying areas of the market, have continued to drive the months of supply indicator downward. If Metrostudy excludes those lots in less desirable locations from the survey, the months of supply indicator drops even more sharply.

Much of the news that impacts the new home market continues to sound positive; job growth continues, the unemployment rate has fallen, foreclosures have moderated, and the resale market, though slowing, is still considered healthy. However, the positive news is just not positive enough to sustain the growth in construction activity that was seen over the past two years. In addition, there just does not seem to be much urgency among prospective homebuyers in the marketplace.

“The question is whether the new home market can maintain its 2014 momentum into 2015. The market is not too far off from having supply issues impact the market’s potential for growth in addition to an economy whose temperature can be described as lukewarm at best (though improving),” said Huecksteadt.  “Given these factors, Metrostudy forecasts new home starts to reach the 6,000 unit threshold in 2015, modest growth but growth nonetheless.”

For information contact
Chris Huecksteadt
847-651-9080
chueck@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 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; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

Rocky Mountain Way: Four Markets Climbing to New Heights

Posted in National Housing Market | Posted on 02-19-2015 | Written by Metrostudy News

Most of the Rocky Mountain Region didn’t have an end-of-year sales slump. In fact, after a strong fourth-quarter in most of the area, the Rockies are ready for consistent demand through 2015. So what’s their secret?

The cold can’t keep buyers away in the Rockies. The Boise, Denver, Salt Lake City, and St. George markets collectively saw significant closings in the new home market throughout 2014, and while some of the Nation’s hottest metros had a slower end to the year, the area kept a steady sales pace in the fourth-quarter with promise of continued momentum into this year. While prices have spiked enormously in markets seeing similar demand nationwide, most of the Rocky Mountain region held price points somewhat steady throughout the year. What’s the secret to the four metros set-up for solid sales numbers in 2014? Here are some of the trends.

bdms rri

Read Full Article on Builder