Posted in Maryland Market | Posted on 12-10-2014 | Written by Metrostudy News
- 3Q14 Home Starts are down 4% YoY, a surprise given the positive market indicators;
- Market Strength varies by County – the largest increase in starts was in Anne Arundel County
- Despite slight decline in new-home demand, builders have maintained a tight control on their inventory levels
December 2014: According to the Metrostudy’s 3Q14 survey of the Maryland housing market – which includes nearly the entire state save the Eastern Shore south of Queen Anne’s County – home starts, attached and detached, numbered 8,983 during the year ending 3Q14. This is down 4 percent from 3Q13, a surprising decline given the decent job growth and healthy resale housing market indicators. Annual new home closings, or “move-ins” by Metrostudy methodology, were up slightly as builders closed 8,913 units during the year ending 3Q14, an increase of only 1.9 percent from a year ago.
In the resale home market, supply is growing and Maryland is now a more balanced market as opposed to a sellers’ market. September single family resale listings in Maryland numbered 24,633 units, up 24 percent from a year ago. Resale inventory now measures 5.4 months of supply, which is normal by historical standards. It is a little higher in Baltimore at 6.2 months and lower in Suburban Maryland at 4.6 months. Overall, resale prices should continue to climb at a normal rate.
During the 12 months ending June, Maryland MLS sales numbered 54,613 units, up only 1 percent from one year ago, as the annual rate of sales has leveled off since the beginning of the year. The median price of a home sold in this area through the MLS reached $265,000 in September, a 3 percent increase from $257,000 12 months ago. The median price in Suburban Maryland is $280,000, which is up 5 percent from one year ago, while Baltimore – at $245,000 – is even with last year. Median price is not the best indicator of home price appreciation. According to Clear Capital’s repeat-sales index, home values are up 5.9 percent year over year in the DC Metro area and up 2.1 percent in Baltimore.
“In terms of starts activity, Maryland is led by Prince George’s and Montgomery Counties in DC Metro and Howard and Anne Arundel in Baltimore Metro, combining for 54 percent of Maryland’s annual starts,” said Ben Sage, Director of Metrostudy’s Mid-Atlantic Region. “Anne Arundel County experienced the largest increase in annual starts, growing by 174 units compared to one year ago. Washington DC, which Metrostudy includes in Maryland, also experienced notable growth, growing by 114 units over last year. Unfortunately, most areas of Maryland experienced a decline as 11 of 16 market areas lost ground compared to a year ago. The weakest are Baltimore City (-170 units), St. Mary’s County, (-114 units), and Howard county (-102 units).”
The overall inventory of vacant developed lots (VDL), or finished lots, numbers 12,489, which is down 4 percent from last year. This is for all product types, including attached product as well as custom lots. The corresponding months of supply are essentially even with one year ago. Current supply of 17 months is quite low, as this is one of the most land constrained markets in the country. The supply of VDL varies by county, but it is generally lowest in the most active submarkets and in infill areas: Washington DC (4 months), Howard (5 months), Montgomery (8.5 months), and Baltimore (10 months). Higher lot supplies persist in Cecil County (53 months), and in Calvert County and Baltimore City (each at 47 months).
With Maryland being such a land-constrained market, much attention is focused on future lot supply. Metrostudy follows and reports on the entitlement of over 200,000 future lots in the state, but only 24,436 of these are recorded at the counties. Currently, Prince George’s County has the most capacity to meet current and near-future demand needs.
As new-home demand has declined slightly, it appears that builders remain disciplined with spec inventory. Finished vacant new homes number 1,806 units in Maryland, which would last 2.4 months at the current closings pace. Both measures are mostly unchanged from one year ago, and relative supply is normal by historical standards. Furthermore, finished vacant inventory is quite low for townhomes and single family, which measure 1.3 and 1.2 months, respectively. These two product types account for 90 percent of Maryland starts.
“Feedback from Maryland builders is somewhat more positive compared to Northern Virginia,” said Sage. “One reason for this is that Maryland builders have a similar number of open communities now compared to last year, whereas competition in Northern Virginia has increased. Maryland is also experiencing stronger job growth; however, neither market is performing up to expectations. Until we get more economic traction on a regional basis, housing growth expectations should remain modest.”
For information contact:
Ben Sage -703.574.8429
Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com
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