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

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.

Lack of Inventory and Rising Prices Dampen Demand Growth

Posted in Raleigh - Durham Market | Posted on 08-13-2014 | Written by Metrostudy News

August 2014: Metrostudy’s 2Q14 survey of the Triangle’s housing market shows a return to a more normal operating environment, a positive direction for growth in the coming months.  For the second quarter ending June 2014, the Triangle started construction on 2,344 new homes, down 4.9% from 2Q13. Quarterly Closings – previously unoccupied new homes that now are occupied – totaled 2,163 units, a 0.4% decline from 2Q13.

The survey showed 8,821 annual starts through the end of 2Q14, a 6.6% gain from the same period a year ago. The annual closings figure of 8,557 was 12.8% more than the 7,583 observed in four quarters ended 2Q13.

“An unusually cold and wet winter delayed not just housing starts, and lot development, but also froze housing demand and kept traffic levels below normal into the spring,” said Jay Colvin, Director of Metrostudy’s Raleigh-Durham region. “The result has been a flat market through the first two quarters of 2014, but there are signs that the market is getting back on track. Year-to- date, starts are up 3% over 2013, and closings are up 10%, but even with a strong summer and fall activity, 2014 is expected to finish below our previous expectations from a volume perspective.”

Total inventory – models, finished vacant unoccupied new homes, and new homes under construction – equaled 5,034 units in 2Q14, up almost 6% over the inventory surveyed in 2Q13. Under Construction inventory now stands at 3,244 homes (4.5-months’ supply), which is 7% higher than 2Q13. Finished Vacant inventory now stands at 1,575 homes (2.2 months’ supply). At current closing pace Total Inventory (Models, Finished Vacant, and Under Construction homes) represents a 7.1- months’ supply of homes, in-line with historical averages for the market.

See the Top 10 Communities List, ranked by annual starts based of Metrostudy’s 2Q14 Survey Findings

Raleigh top 10

Triangle townhome builders started construction on 446 Townhomes in 2Q14, up 6.4% over 2Q13. Annual starts of 1,846 townhomes were 9.9% greater than 2Q13. Townhomes currently make up 20.9% of total Triangle new home construction, up slightly from a 20.3% market share in 2Q13.

Triangle townhome inventory of 939 units in 2Q14 represents a 6.6-months’ supply. 664 Townhomes were under construction, a 27% increase from 2Q13. Current under construction inventory represents 4.6 months-of-supply.  The 2,940 vacant developed lots available for townhome product in 2Q14 represent 19.1 months-of-supply, a decrease from the 2Q13 figure of 26.2 months-of-supply.

“Triangle new home construction and sales continue to show a bias towards higher priced homes,” said Colvin.  “While new homes with base prices of $200k-$299k are capturing 35% of all new home demand, homes priced between $400k and $499k showed the highest percentage gain in closings.  Construction on homes priced below $200k continues to shed market share. Construction has decreased 11% from 2Q13 – closing pace has decreased 8%. This price range was affected harshly during the downturn, and has been slow to recover, but will be critical to the overall market’s return to previous levels of volume.”

The 19,766 vacant developed lots in the Triangle in 2Q14 represent a decrease of 3,175 lots from 2Q13. At the current absorption rate, these lots represent a 26.9- months’ supply – the lowest since 1Q08. 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 is significantly longer than 18 months.

Over the last 4 quarters 5,646 new lots were developed in the Triangle, which is 15.7% more lots than were delivered through the end of 2Q13. There were 1,961 lots delivered to the market in 2Q14, which is 61% more than were added to the market in 2Q13. The current pace of lot deliveries is 64% of the absorption rate (annual starts), which indicates that overall lot supplies will continue to decrease, however this trend may be nearing an end as lot development activity has begun to increase at a higher pace.

The Triangle housing market was directly impacted by delays in construction and development. An already tight lot supply was exacerbated by the exceptionally wet and cold winter/spring, which kept lot development professionals on the sidelines and in turn delayed the release of those lots for home construction and subsequent home sales. The lack of inventory – whether that be home or lot – continues to be cited as the primary culprit among on-site sales professionals. While eather cannot shoulder all the blame, prices have risen dramatically over the past year, with several communities seeing double digit and above price appreciation.

Much of this price growth is the result of cost increases, and not necessarily margin growth for the builder. At the same time interest rates have increased from a year ago – although this increase has been moderating over the past several months. The result has been a net increase in the cost to own for potential buyers. Metrostudy believes that the lack of inventory continues to be the biggest issue influencing the pace of home closings; however, as the cost of housing has increased the pace of demand growth has begun to moderate.

“The number of higher priced homes being built has continued to grow at a faster rate than the number of households with the ability to qualify for those homes,” said Colvin.  “For unit volume growth, more moderately priced homes will need to be produced in the Triangle. Right now, the realities of finding land, entitling and developing projects, while maintaining profitability present significant challenges.”

For information contact: Jay Colvin @ 919- 314-0420
Email 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, 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.

A Year of Rebalancing Leaves Buyers on the Fence

Posted in Phoenix - Tucson Market | Posted on 08-12-2014 | Written by Metrostudy News

Metrostudy’s survey of the Phoenix housing market indicates that initial expectations for 2014 were overly optimistic, and we expect to see the market down 5% for the year.   Our 2Q14 survey shows that home starts, attached and detached, in the Phoenix area numbered 11,270 over the last four quarters. The Northeast Valley continues to see the strongest starts growth year over year with an increase of 53.3% (857 starts). Closings over the last four quarters are also trending down to 10,981, a slight decrease of 2.5%.

MLS listings are down to 23,099 listings in June when compared to our market a year ago we have seen listings increase and sales decrease.  These seems necessary in order to get a stronger resale market in June 2013 the market was sitting a 2.1 months.  Now we are seeing stronger numbers at 3.7 months. A normal resale market carries 5-6 months of supply. Just as the new home market has experienced, appreciation has start to slow with only a 2.5% increase in median price over the last quarter. Days on market have been holding steady at 82 days for the past 3 months.

“For the four quarters ending in 2Q14, single family annual MLS sales numbered 73,938 units,” said Rachel Cantor, Regional Director for Metrostudy’s Phoenix office. “This is down 12.7% from one year ago, but it still represents a large volume of transactions. The median price of a single-family home sold through the MLS reached $200,000 in June, a 7.1% increase from twelve months ago. Though listings are increasing and sales are decreasing we do feel that some of this is just due to market stabilization.”

The Top Ten Builders in Phoenix Hold 59% Market Share of Closings. See The Top Ten Phoenix Builders based of Metrostudy’s 2Q14 Survey Findings

10 ten builders phoenix 2q14

 

The SE Valley continues to dominate in starts with 3,901 for Q2 and with 35% of the starts coming from this market.  Though boasting larger start numbers more builders have initiated decreases in base selling prices and higher incentives to attract buyers to their communities. The competition is fierce in the master planned communities with multiple builders. Buyers are attracted to this market for a number of reasons and builders are looking to replace lots in this corridor. Land prices in this corridor have skyrocketed and though builders would like to stay in this submarket the land pricing has to adjust. With no appreciation expected for the remainder of the year builders are wondering how to make the next deal in this area work for them.  The Northwest and Northeast Valley continue to be strong markets but keep your eyes peeled on the Central Valley as builders start testing the waters of new product in this market.

“The hottest market is the Northeast Valley, where starts grew by 54% from June 2013 numbers,” said Cantor. “Closings are now feeling the impact of the slow spring selling starts for the year. Though only a 2.5% decrease being felt across the market with positive numbers being seen in Northeast and Central Valley.”

The overall inventory of vacant developed lots (VDL), or finished lots, continues to rise in Q2. The total of 54,177 vacant lots includes all product types, including attached product as well as custom lots. With the decrease in starts we are starting to see movement upward with the total market now sitting on 57 months of supply, well above equilibrium range of 24 months. A majority of the vacant developed inventory is in the Southwest Valley and Pinal County. With these two markets maintaining 29,369 lots, 54.1% of the total finished lots the market appears heavy in finished lots. Taking out these two markets, the finished lots count is more equalized. We are still slightly above equilibrium at 36 months of supply but it explains what builders are feeling. Finished lots in the more desirable locations are decreasing and replacement lots with higher costs and thus higher home pricing may not be possible with the low appreciation expected for the remainder of the year. The SE Valley has the lowest months of supply at 31 months.

With nearly all of the finished lots in the more desirable parts of town under builder control, proper tracking of future lots is of utmost importance. As builders continue to struggle with sales across the valley we have expected to see more finished vacant inventory on the ground this quarter. The number of newly built finished vacant units totals 2,530, which is up 26 percent from one year ago. Months of supply grew from 2.01 months in 2Q13 to 2.76 months as of 2Q14. This is considered to be just above normal, and the upward trend is a concern that should continue to be monitored.

We should see a decrease to around 11,000 starts for 2014, 5% lower than the 2013 numbers.  The expectation is that what is occurring is a balancing within the market. Caution is advised as builders begin to make their plans for 2015. “With no strong indicators of changes in the Phoenix economy, my expectations for the next year will be moderate growth of 10-15% in starts up to 12,200 and price appreciation in the 2-4 percent range if we see the continued scale back in pricing for the remainder of the year,” said Cantor. “If interest rates start to rise, we could see some positives in the latter part of the year if buyers decide to get off the fence and buy.”

For information contact: Rachel Cantor @ 480- 588-1585
rcantor@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.

Lots of Catch-Up

Posted in Atlanta Market, Austin Market, Central Florida Market, Dallas - Ft. Worth Market, Denver - Colorado Springs Market, Houston Market, Inland Empire Market, Jacksonville Market, Las Vegas Market, Maryland Market, Naples - Ft. Myers Market, National Housing Market, Northern Virginia Market, Phoenix - Tucson Market, Raleigh - Durham Market, Sarasota - Bradenton Market, South Florida Market, Southern California Market, St. George - Mesquite Market, Tampa Market | Posted on 08-04-2014 | Written by Brad Hunter

brad hWe have been talking for years about the lot shortages that builders are facing.  Now, it’s time to talk about how many lots are being developed.  Builders and developers are now playing “catch-up,” with builders buying land and lots and developers/investors paving roads and putting in infrastructure to serve the builders’ needs at a frenetic pace.

The pace of lot delivery (completion, ready for the builder) has gone up 140% in the past two years, much faster than the pace of housing production has risen (+84%).  Despite this increased pace, lot development STILL lags the pace of home production nationwide.

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In some markets, the lot production machine is in full gear, and has caught up with demand.  This is a good sign for builders, and a vital turning point for home production in 2015 and beyond.

The TOP TEN states for lot production in 2Q14 are:

State       2nd Q.   Starts        2nd Q. Lot       Deliveries
Texas 19,714 18,931
Florida 12,416 10,974
California 10,050 10,219
North Carolina 4,866 3,168
Georgia 4,489 1,270
Colorado 3,985 3,276
Arizona 3,519 4,596
Maryland 2,436 2,122
Utah 2,328 2,498
Virginia 2,198 1,850

Note that lot production has caught up with new home production in California, Arizona, and Utah.   Florida development is woefully far behind demand for lots, hence the skyrocketing cost of finished lots there.

Metrostudy defines “future lots” as those that are in the pipeline (some are pre-entitlement), and Florida has the deepest pipeline.   Below are the top 10 states ranked by known future lots.

State Future Inventory
Florida 1,597,055
California 1,378,299
Arizona 1,213,476
Texas 651,413
Colorado 406,613
Georgia 316,956
Illinois 281,054
Nevada 227,121
Maryland 194,829
Virginia 183,613