San Diego Housing 1Q15: The Market is Squeezed as Fewer Residents Can Afford New Home Product

Posted in San Diego Market | Posted on 05-20-2015 | Written by Metrostudy News

  • Our 1Q15 survey shows annual new home starts through 1Q15 down 21.3% from 1Q14 levels.
  • The Average price of a new home stands at $850k in 1Q15, down 11.5% from 4Q14
  • The difference between new and resale median prices is nearly $170,000 in San Diego County, with less than 23% of home buyers currently able to afford a new home.

May 2015 – Metrostudy’s 1Q15 survey of the San Diego County market shows annual new home starts decreased from 2,373 in 4Q14 to 2,188 in 1Q15, or down 7.8%. Year-over-year annual starts dropped 21.3% from 2,789 starts since 1Q14. Annual Closings increased from 2,235 in 4Q14 to 2,351 in 1Q15, or up approximately 5.2%. Since 4Q14, quarterly closings have increased from 467 to 576 or +23.3%.

Housing Inventory supply stands at 10.9 months, with levels increasing slightly from 2,103 lots in 4Q14 to 2,141 in 1Q15 lots (+1.8%). Vacant Developed Lot Inventory increased from 3,965 lots in 4Q14 to 4,040 lots in 1Q15, with monthly supply increasing from 20.1 months to 22.2 months during the same period.

“Starts by Price Range are broadly distributed across all major price ranges, with 26.1% of starts showing up above the $900,000 mark,” said Dennis Handler, Director of Metrostudy’s San Diego market. “Approximately 48% and 56% of housing inventory and VDL inventory falls below the $500k range, respectively. Single-Family Permit Activity through the first two months of 2015 totaled 687 permits, approximately 27% of total permits that were approved for all of 2014.”

Average resale price for single family detached homes increased from $618,556 in 4Q14 to $655,844 in 1Q15, or +6%. For all product types combined, the average resale price increased from $545,586 in 4Q14 to $582,139 in 1Q15 or +6.7%.  New annual average price for single family detached decreased from $960,948 in 4Q14 to $849,869 in 1Q15 or -11.5%. For all product types combined, the average new price decreased from $758,998 in 4Q14 to $713,804 in 1Q15 or -6.0%.

In 1Q15, San Diego County experienced similar characteristics to the broader Southern California market, as resale and new home transactions dropped off nearly 9% and 46%, respectively. However, resale inventory remains fairly low at a 4.4-month supply while new home housing inventory rests closer to an 11-month level. Currently, housing inventory and Vacant Developed Lot monthly supply levels appear relatively stable so long as starts and closings can maintain a somewhat close correlation.

“Average prices for new and resale homes moved in opposite directions as resale prices trended up approximately 6% and new home prices dropped by just over 11% due primarily to affordability of resales versus new homes, as well as builders increasing sales of smaller and more affordable product,” said Handler. “Average days on market for resale homes remain in the 80-day range with no foreseeable change in this trend. Fundamentally, the economic conditions are favorably moving in the right direction due to consistent job growth and lower unemployment, low interest rates, and growing consumer confidence. Builders are addressing affordability by offering smaller new product options at the low-mid range of the buyer price spectrum, thus driving buyer curiosity and higher levels of traffic to new subdivisions.”

Affordability and number of qualified buyers are still primary factors that have a significant impact on the new home buyer market. The difference between new and resale median prices is nearly $170,000 in San Diego County, with less than 23% of home buyers currently able to afford a new home, which combined with limited product inventory at the lower-end of the price spectrum, has major implications on the home building industry through the balance of 2015. Alternatively, the rental market continues to benefit as rental rates are expected to remain stable with occupancy rates averaging 95% across Southern California.

Going forward, builders should expect San Diego County to continue along a fairly stable path. As it stands today, traffic at subdivisions is moderately improving, with a strong bump in activity in 2Q15, yet conversions are still struggling to stay above 1.5% and average weekly sales contracts are averaging less than one per week. Builders are competing for a very small buyer pool relative to the resale market, which is going to make effective marketing strategies and a strong understanding of buyer segmentation and preferences even more important in order to attract and convert new home buyer prospects.

For information contact:
Dennis Handler
dhandler@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.

 

Maryland Housing 1Q15: 2015 Starts Flat – Still on Target for Growth

Posted in Maryland Market | Posted on 05-18-2015 | Written by Metrostudy News

  • Our 1Q15 survey shows new home starts up 2% YoY, caused mainly by a resurgence of mid to high-rise condo activity in the District and Bethesda;
  • We are seeing the highest rate of starts in Anne Arundel county, which is up 34% YoY; the Washington DC rate is also up 23%
  • There is more upward pressure on home prices in Suburban Maryland compared to Baltimore, which is more balanced.

May 2015 – According to the Metrostudy quarterly survey, home starts, attached and detached, in Maryland – which includes nearly the entire state save the Eastern Shore south of Queen Anne’s County – numbered 9,466 during the year ending 1Q15. This is up 2 percent from the previous year, but we are seeing a resurgence of mid to high-rise condo activity in the District and Bethesda. Excluding this product type, annual starts numbered 8,869, which is essentially flat compared to a year ago. (NOTE: Metrostudy includes The District in our Maryland territory.)

In the resale home market, supply is growing while sales are increasing, both of which are signs of confidence in the housing market at this stage of the cycle. March resale listings in Maryland numbered 19,706 units, attached and detached, which is up 10 percent from a year ago – even though it is down since September 2014 due to seasonality. Resale inventory now measures 4.1 months of supply, which is similar to one year ago and just below normal by historical standards. This figure is a little higher in Baltimore at 4.6 months and lower in Suburban Maryland at 3.6 months. There is more upward pressure on home prices in Suburban Maryland compared to Baltimore, which is more balanced.

During the year ending in March, Maryland MLS sales numbered 57,800 units, which is up 6 percent from one year ago. Annual sales in Baltimore Metro are up 8 percent, a larger increase perhaps because it has more supply compared to Suburban Maryland.

“The median price of a home sold in Maryland through the MLS reached $255,250 in March, a 1.9% increase from a year ago,” said Ben Sage, Director of Metrostudy’s Mid-Atlantic Region. “The median price in Suburban Maryland is $277,500, which is up 2.3% from one year ago, while Baltimore – at $230,000 – is up 1.1%. Median price is not the best indicator of home price appreciation. According to Clear Capital’s repeat-sales index for 1Q15, home values are up 2.9% year-over-year in the DC Metro area but down 1.8% in Baltimore.”

In terms of starts activity, Maryland is now led by Anne Arundel, which surpassed Montgomery and Prince George’s thanks to a surge of starts in the first quarter. Anne Arundel’s 1,425 starts over the past year represent a 34 percent increase from a year ago. Washington DC is also expanding, as the 923 annual starts in that area represent a 23 percent increase from this time last year. Furthermore, Baltimore County, Charles, and Frederick all registered notable gains of 12 to 19 percent. Among the counties that lost market share, Howard gave up the most ground. The 854 starts represent a 29 percent decline from a year ago. This is largely due to an under-supply of lots, as Howard remains a desirable destination. Last quarter we noted the return of mid to highrise condo construction in the District, and it should be noted that Bethesda is a hot spot for this product type as well.

The overall inventory of vacant developed lots (VDL), or finished lots, numbers 12,845, which is essentially even with last year. This is for all product types, including attached product as well as custom lots. The corresponding months of supply has remained steady for the last 7 quarters. Current supply of 16 months is quite low, as this is one of the most land constrained markets in the country. The only market area with more than enough lots is Cecil.

As new-home demand has declined slightly, it appears that builders remain disciplined with spec inventory. Finished vacant new homes number 1,932 units in Maryland, which would last 2.6 months at the current closings pace. Single family and townhome product accounts for 88 percent of Maryland starts, and their combined months of supply measures only 1.4 months. While this is up slightly from 1.3 months one year ago, it is still quite low.

While starts in Maryland (excluding mid and highrise condos) are flat, builder feedback has been generally positive. In Metrostudy’s weekly builder survey, builders are reporting an average of 2.5 sales per month per subdivision so far this year, which is up from 2.3 per month over the same time last year. Given the continued low mortgage rates and lower gas prices, we might have expected more sales activity, but Maryland is on target for our forecasted 5 percent increase in starts this year.

For information contact
Ben Sage
703.574.8429
bsage@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.

Phoenix Housing 1Q15: 2015 Starts Strong; Economic Consistency is Key

Posted in Phoenix - Tucson Market | Posted on 05-18-2015 | Written by Metrostudy News

  • Sales have been positive – when will the price appreciation begin?
  • Consistency in job growth and wage increases hold the key to maintaining and improving starts numbers
  • Builders optimistic but cautious about 2015 closings – is the subcontractor base large enough to meet current demand?
  • Metrostudy’ s forecast remains unchanged: 8% starts growth in 2015

May 2015 – According to the Metrostudy 1Q15 survey, home starts, attached and detached, in the Phoenix area numbered 10,160 over the last four quarters. 4Q14 annual starts were down significantly year over year at 14%. This was not unexpected as builders were much more pessimistic going into 2015 than 2014. Due to the 2014 decrease we did not see much improvement in the annual start numbers up only 1% annually. This raises a few questions if you have been watching sales numbers during the first quarter.

MLS single family monthly sales have seen solid growth showing 16% growth year over year up to 7,326 during the month of March. Annual sales year over year are still down 5% to 73,622. That is driven by the market contraction we started to see in March/April 2014. Though the annual sales number is still down it has steadily been improving 3% month over month, which substantiates that there are more buyers in the market for new homes and resales.

“With sales on the rise and median MLS single family pricing seeing a solid increase of 7% the market vibe has cautious but positive vibepositive,” said Rachel Cantor, Director of Metrostudy’s Phoenix region. “The solid price appreciation seen in the resale market is a good sign. The plan is this price appreciation will be felt on the new home side late Q2 2015. MLS inventory did raise some questions as it has seen a solid decrease over the past quarter down 16% from March 2014. The Phoenix resale market is still below the equilibrium currently holding 3.4 months of supply and days on market has seen a slow increase to 93 days. With inventory continuing to drop we may begin to see a supply issue that could push buyers to new homes and sellers to the market. It is only a watch item at this time.”

As always the highs and lows of the market are driven by the SE Valley. With a major gain in SE Valley 1Q14 to 1Q15 (starts up 26.8%) we can see the market improvement. One submarket does not make the entire market so though the growth is definitely notable more of a shared starts growth is needed before we start projecting larger growth than the projected 8% for the Phoenix metro area. Low starts growth can be attributed to less spec building. If we look back at 1Q14 builders were just starting to pull back on starts as the market was retracting. Another question mark is do we have the subcontractor base in place to support larger growth. The SE Valley is now driving 40% of starts for the market so builders may be searching for contractors in the other submarkets which could also be leading to the slower starts. With increased sales, most builders are still providing some type of incentive but it appears that the war on incentives has become less volatile.

Annual closings showed a slight decrease year over year down 1.8% (45 closings). As we watch the SE Valley again leading the closings charge with 17.6% increase (152 closings). The NE Valley also showed a 26% improvement with 32 additional closings year over year. Closing increases definitely spark our interest because at the end of the day that is how builders make their money.

Inventory in the form of finished vacant (FV) units saw a slight decrease down to 2.8 months with a total unit count of 2,394. It is within the market equilibrium and builders have been careful managing the unit count. The overall inventory of vacant developed lots (VDL) continued to rise in Q1. The slight increases indicate that we are bringing slightly more inventory to market than is being absorbed. Since the market boom, the Phoenix market has held a larger than typical VDL count and months of supply are driven by start changes. Phoenix is carrying about 25,000 D lots “dead lots” across the market. These lots have streets completed but are currently in undesirable locations for the builder and not completely finished in some cases. .

Q2 2015 will really set the market for 2016 – 2017 as builders will have to make the decision on their expected growth. Planning for future growth of 15-20% is not a realistic expectation based on what we have seen historically. It is also not clear that we can build them if we sell them. If we can continue to see consistent job growth like we have seen in the trade base then I would feel more comfortable that we can meet the larger demand.

“Overall we have some solid indicators in the Phoenix market,” said Cantor. “It was expected that we would see some growth from those exiting the penalty box this year, but it appears that more of the buyer drive is from consumer confidence. Also it appears that buyers are more qualified – also another bonus for homebuilders. With continued solid economic growth in the form of jobs and hopefully wages to follow then the growth will be sustainable. My previous forecast of 8% starts growth (11,800) remains in place. “

For information contact:
Rachel Cantor
480.588.1585
rcantor@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.

TAMPA 1Q15 HOUSING: Job Growth is Back – and Housing Demand is Growing With It

Posted in Tampa Market | Posted on 05-14-2015 | Written by Metrostudy News

  • 1Q15 New Home Starts were up 24.5% over 1Q14 levels
  • The Tampa region is now at 99% Peak Employment – and we are starting to see the effects of that on the Housing Market
  • Wildcards in Demand include Pricing and Availability of Entry Level Product 

May 2015 – Metrostudy’s 1Q15 survey of the Tampa housing market shows that 1,422 single-family units were started in the quarter, up 24.5% over 1Q14 levels. The annual starts rate, compared to last year, decreased by 12 starts or 0.2%, to 6,122 annual starts. Single-family quarterly closings totaled 1,364 units, down 7.5% from 1Q14. The annual closings rate was 5,695 units, 10.9% below the annual closings rate of 6,394 units for the twelve months ending 1Q14.

“A quarter ago, we were questioning lack of job growth and its affect upon housing demand,” said Tony Polito, Director of Metrostudy’s Tampa Market. “With one stroke of the government pen in March, Tampa Bay job growth was restated to add 18,000 additional jobs. Moreover, our unemployment rate has dropped by 1.1 percent over the last twelve months. Couple this with higher household formations, lower gas prices and wage growth, demand for housing is improving. Coming out of the Great Recession we stated that Tampa will not return to average housing activity until the workforce size fully recovers to prerecession levels. As of March, Tampa is at 99% of the peak employment level. If job creation continues at the current pace, Tampa will set a new peak employment level sometime in 2015. The wildcards in demand moving forward will be pricing, availability of entry level product and potential interest rate increases.”

The chart below shows annual starts by price range since 1Q12:

Tampa-Fig6

Total single-family inventory, which is composed of units under construction, finished vacant and models equaled 3,772 units on the ground at the end of the 1st Quarter of 2015; an 7.9-month supply. Inventories grew by 13.2% compared to 1st Quarter of 2014.

Compared to last year, the number of units under construction rose by 361 homes to 1,898 homes. Finished vacant inventory (non-condo) increased by 2.8% from 1,101 units last year to 1,132 this year. However, the number of move-ins exceeded completions during 1Q and FV inventory decreased by 39 units versus 4Q14. The FV months of supply held steady at 2.4 months.

This quarter, 2,295 lots were delivered to the Tampa market, up 79% from 1Q14. Vacant developed lot inventory stands at 33,133 lots, an increase of 16.6% from last year. Based upon the annual start rate, this level of lot inventory represents a 64.9 month supply, an increase of 9.3 months compared to last year.

 Hillsborough County remained the most active county within the Tampa market. However, it lost market share, down to 61.6% as of March 31, 2015 as quarterly starts went from 891 in 4Q14 to 893 for 1Q15. Market share in Pasco County for 1Q 15 improved 25.9% as quarterly starts increased from 320 in 4Q14 to 389 for 1Q15. The VDL supply for Hillsborough County stood at 31.1 months, and the VDL supply in Pasco stood at 49.8 months as of March 31, 2015. These two major counties accounted for 87.5% of all annual start activity in Tampa Bay as of 1Q 2015. For the twelve months ending March 2015, annual new home starts in price ranges under $200k totaled 1,608 units. This was up 1.2% from the 1Q 2014 annual activity in prices less than $200k. New home starts in prices over $200k totaled 4,514 units, which were down 0.7% for 1Q2015 versus 1Q2014.

A review of deed records thru February indicates prices are increasing from 4Q2014 as year-end purchase incentives have been reduced. Surprisingly, new SF detached homes closed in Pasco in January and February averaged $317.8K for 2,830 SF versus $290.7k for 2,723 SF in Hillsborough.

For the first three months of 2015, MLS SF sales were up 22.5% from the same period of 2014 with 9,866 sales. The median home price in March 2015 was $166,900, up 11.3% from March 2014. The other significant trends involve new housing inventory. Finished Vacant units fell by 39 units during 1Q 2015 and at 2.4 months, the supply of FV units still needs to come down nearer to 1.5 months. The backlog of under construction units grew from 1,798 units as of December 2014 to 1,898 units as of March 2015. The UC months of supply has grown from 3.7 months for 4Q 2014 to 4.0 months as of 1Q 2015, as 270 less units were completed.

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

Community (Area)                             Ann Starts

Magnolia Park ………………………………………… 205

Valencia Lakes ……………………………………….. 180

Hawks Point ……………………………………………. 173

Sun City Center ………………………………………. 157

FishHawk Ranch ……………………………………. 155

Waterset ………………………………………………….. 150

Ayersworth Glen ……………………………………. 143

K-Bar Ranch ……………………………………………. 136

Lake Brandon …………………………………………. 136

Cypress Creek ………………………………………… 128

For information contact:
Tony Polito
813.888.5151
tpolito@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.

SARASOTA HOUSING 1Q15: Despite Rising Prices, Retiree Demand is Still Strong

Posted in Sarasota - Bradenton Market, Sarasota Condo Market | Posted on 05-12-2015 | Written by Metrostudy News

  • 1Q15 New Home Starts are up 1.6% from 1Q14 and the annual starts rate was up 2.5% YoY
  • We continue to see a squeeze on housing starts in the lower price ranges, as starts under $250k are down 15.3% YoY
  • Demographic shifts – most notably an increase over-65 population in the coming five years – are still driving growth in this market.

May 2015 – Metrostudy’s 1Q15 survey of the Sarasota-Bradenton market showed 894 single family units started in the first quarter of 2015, up 1.6% from 1Q14 and a 0.8% decline from 4Q14’s total. The annual start rate compared to last year increased by 2.5%, to 3,837 annual starts. Single-family quarterly closings totaled 914 units, which was 0.8% lower than the same quarter last year. The annual closings rate was 3,665 units per year, which was 6.2% above the annual closings rate in the same quarter last year.

The chart below shows the trend in annual starts by price range since 1Q12:

Chart6

“For the twelve months ending March 31, 2015, new homes starts in price ranges under $250k totaled 1,324 units, down 15.3% from the 1Q2014 annual levels,” said Tony Polito, Regional Director of Metrostudy’s Sarasota market. “Annual new homes starts in prices over $250k were up 15.3% for the twelve months ending March 31, 2015 versus 1Q2014.”

During 1Q2015, Manatee County recorded 513 housing starts, down 4.5% from 4Q2014 but up 8.7% compared to 1Q14. During 1Q15, Sarasota County recorded 343 housing starts, up 7.9% versus 4Q14 but down 5.5% compared to 1Q14.

Total single-family inventory, which is composed of units under construction, finished vacant and models, equaled 1,971 units on the ground at the end of the first quarter, a 6.5 month supply. Inventories increased by 9.6% compared to the same quarter last year.

Compared to last year, under construction inventory rose by 129 units to 1,414. Finished vacant inventory increased by 4.7% from 318 units last year to 333 this year. However, the number of completions exceeded move-ins during the quarter and FV inventory increased by 1 unit.

The final significant trend worth noting is new housing inventory. The supply of finished vacant housing units has been dropping since 4Q06. As of March 31, 2015, the months of supply of FV units for all of Sarasota/Bradenton stood at 1.1 months, below our equilibrium range of 1.5-2.0 months. The County by County finished vacant supply indicated that Manatee County is still below equilibrium level of FV supply at 1.4 months. Sarasota County was even further below equilibrium at 0.6 months. At 1.5 months, Charlotte County was at an equilibrium level. The UC months of supply are up slightly from 4.5 months a year ago to 4.6 months in 1Q2015. The Sarasota market’s inventory levels are very well balanced and show no negative signs. In fact, the market can still use some additional “spec” units.

“Sarasota’s employment is cyclical with employment rising into the “Snowbird Season”,” said Polito. “While this is a positive for housing demand, retirees still drive the Sarasota/Bradenton market. In 2015, the number of people turning 65 will be slightly less than those that turned 65 in 2014. However, in 2016, the number of people turning 65 will jump by 4% and will continue to increase for the following five years. Our forecast for 2015 is for moderate growth in housing starts in the 5 – 10% range and then stronger growth in 2016. In another piece of good news, Gallup just named the Sarasota MSA as the “Happiest City in America”, which should continue to drive retiree demand. Metrostudy expects moderate price increases in 2015 for all three counties with Sarasota County still commanding a price premium.”

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

Community (Area)                                    Ann Starts

Lakewood Ranch ………………………………………… 498

The West Villages ……………………………………….. 376

Palmer Ranch …………………………………………….. 189

Harrison Ranch ………………………………………….. 126

Grand Palm ………………………………………………. 112

Heritage Harbour ……………………………………….. 110

University Groves ……………………………………….. 105

Venetian Golf & River Club ………………………….. 82

Sarasota National ………………………………………… 78

Greyhawk Landing ………………………………………. 76

For information contact:
Tony Polito
813.888.5151
tpolito@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.

 

TWIN CITIES HOUSING 1Q15: Despite Strength in the Economy, Regulation & Rising Costs are Pushing Buyers into the Resale Market

Posted in Twin Cities Market | Posted on 05-12-2015 | Written by Metrostudy News

  • Despite many signs of economic growth, the Minneapolis/St. Paul market’s 1Q15’s starts and closing numbers are the lowest in three years.
  • The annual rate of new home starts continues to trend down, with starts through 1Q15 down 9.4% from 1Q14’s numbers
  • Low levels of lot supply in some markets and submarkets have had the effect of restricting demand and increasing prices at a time when demand has declined and prospective buyers are price sensitive.

May 2015 – Metrostudy’s 1Q15 survey of the Twin Cities’ new home market shows that during the most recent twelve-month period, there were a total of 5,354 new housing units started, down 9.4% from the 1Q14 annual rate. The 996 units started in 1Q15 represent a decline of 9.0% compared to the 1Q14 starts total. The annual rate of closings is at 5,131 units, down 10.5% compared to the 1Q14 annual rate. The annual rate of new home starts has been steadily declining since the end of 2013, with a consistent drop of nearly 10% each quarter.

“Even in the face of strong job growth numbers, very low unemployment, and recent income growth, starts and closing numbers are at the lowest first quarter level in three years,” said Chris Huecksteadt, Director of Metrostudy’s Twin Cities’ market. “Rising construction costs, development costs, increased regulation (energy code and sprinklers for example) have all negatively impacted the potential for growth in the local housing market. In many markets and submarkets, the gap in price between an existing home and a newly constructed home continues to widen, ranging from $125,000 to $225,000. Although the size of a new home is typically significantly larger than that of an existing home, it may still be a bit much for the consumer to swallow, especially for the first time buyer or younger family that cannot afford a new home.”

Nearly every Twin Cities sub-market tracked by Metrostudy saw a decline in construction activity in the first quarter of this year compared to the prior year. Hennepin County is the most dramatic exception, with new home starts in the first quarter up 11.4% from the prior year. The low levels of lot supply in some markets and submarkets have had the impact of restricting demand and increasing prices at a time when demand has declined and prospective buyers are price sensitive.

As overall demand for new homes in the market has slowed, inventory has risen. Since mid-2013, the amount of standing new home inventory has increased 87%. Currently there is a 1.7 month supply of finished and vacant inventory in the Twin Cities market, well below the estimated normal level of 2.5 months, but up from the 1.0 month supply a year ago. With the recent downturn in the pace of new home construction (the rate of lot absorption), and a static level of vacant developed lot inventory, the months of supply for lots in the Twin Cities has, over the past three quarters, risen. The current overall supply of lot inventory stands at 47.0 months. Builders and developers are both feeling the squeeze from a lack of quality lots in desirable locations, leading to more acquisition and development activity. While the overall market shows a slight oversupply of lots, lots in many of the most desirable locations are becoming more and more scarce, leading builders to seek land and lot opportunities in those markets (driving up the price of land) as well as some secondary markets.

 “Although many reports from the field indicate decent levels of traffic – due likely in no small part to the annual Parade of Homes – sales and construction are below the levels expected in the first quarter,” said Huecksteadt. “An uptick was expected in the first few months of the year if for no other reason than to get homes started before the more onerous energy codes went into effect. With every increase in new home prices due to more regulation, a few more homebuyers are lost to the resale market. In fact, the first quarter of this year saw an uptick of 6.7% in resale transactions. Homes are selling, and will continue to sell. There is job growth and people need a place to live. The question is how big a slice of the pie will the new home market be able to cut.”

Rising home prices due to increased construction costs, land and lot price increases, and rising development costs have forced new home prices above levels that could maximize absorption. Many economists foresee the emergence of the first time home buyer and the millennials as an important component of the new home demand forecasts, however, many of our locations are priced above what these buyers can afford. The new home market is unable to reach the largest pool of potential buyers that are out there. Metrostudy does expect the new home market to rebound slightly in the second half of 2015, IF the economy continues to perform and grow at it’s current pace. The current forecast for construction in the Twin Cities market is at 5,500 units, which would represent only a slight – less than 1% – increase over 2014.

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.

HOUSTON HOUSING 1Q15: Despite the Slowdown in the Oil Industry, Prices and Demand Remain High

Posted in Houston Market, Texas Market | Posted on 05-12-2015 | Written by Metrostudy News

  • Through 1Q15, Metrostudy’s survey shows annual new home starts at over 29k, down slightly from 4Q14 but still the second strongest total since 3Q08
  • The current annualized rate of home closings is the second highest since 1Q09
  • Although the supply of finished vacant homes has increased 22% from a year ago, this number is a mere 30% of FV inventory in 2Q07, the height of speculative building

Metrostudy’s 1Q15 survey of the Houston new home market showed continued strong performance, with builders starting construction on 6,655 new homes, a slight increase over 4Q14 but about 6.9% lower than 1Q14. On an annualized basis, starts stand at 29,852, about 1.6% below 4Q14 and the strongest rolling four quarter total since 3Q08. The annual pace in starts declined for the first time since 2011 as 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, only to fall 2.7% over Q1 2014,” said Scott Davis, Director of Metrostudy’s Houston region. “In the first quarter, area builders closed 6,383 new homes, bringing the annualized total to 28,106. Despite the dropoff in closings in the first quarter, the rolling four quarters total still represents a 7.3% increase year-over-year. The current annualized rate of new home closings is the second 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 first quarter survey reflects 11,916 homes currently under construction; about 1,000 more than a year ago, and which equates to 7.1 months of supply. Conversely, the supply of homes sitting finished and vacant has increased 22% from a year ago to 3,945 units, which represents the highest level of inventory since Q1 2012. 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 788 a year ago.

“Houston’s resale market closed on 83,224 single-family homes from Mar 2014 through Mar 2015, falling just shy of the level in Jan 2015 but represents the second largest volume of resale closings since we’ve been compiling the statistics back to 1990,” said Davis. “Despite the slowdown in energy, the pace of closings remains ahead of Q1 2014. The pace of home closings remains constrained, with listings at 19,286 in March 2015, even though it is up from 17,857 last year. The addition of almost 2,000 properties in listing inventory has increased the months of supply to 2.8, which remains significantly below the six month mark, which is typically considered a healthy equilibrium level. Even with a weakened economic background, Houston is currently not able to meet housing demand.”

MLS transactions of resale homes reflect a median price of $204,000 in the fourth quarter, nearly 7% higher than a year ago, and the third highest median home price since 1990. Prices on existing product have held better than most expected, driven by tight supply. We would expect that prices in the resale market should return to historical levels as sales slow as pressure on the market is lessened by the slowdown in the energy sector.

Deliveries of Vacant Developed Lots are starting to catch up to the pace of absorption. By the end of the quarter, we had supplied about 1,020 more lots than starts. During the first quarter, 7,675 new lots were delivered to the market while 6,655 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. Houston’s relative supply of VDL sits at 14.9 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.

In 2015, several significant trends are important 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.

“Tight supplies of available housing historically lead to home price appreciation, and prices in housing are rising quickly in both new and resale homes,” said Davis. “On top of this, builders are coping with an overall increase in the real cost of building a new home in the market. Builders currently face fierce competition for a limited number of available lots to build on in suitable locations. In addition, builders are paying higher costs for materials and facing shortages in labor. These factors have contributed to a bottleneck which has limited growth in starts and has extended delivery times.. Consumers have little choice but to pay higher prices or continue to rent at ever increasing rates, as inventories in both the new home and resale markets are quite thin. The result of all these factors is strong appreciation in home values, which Houston has already been observing as median closing prices for resales in Houston are up over 5% since last year and new sales are up 4.6%.”

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.

NATIONAL HOUSING MARKET: Metrostudy Releases 1Q15 Home Building Outlook

Posted in In The News, National Housing Market | Posted on 05-11-2015 | Written by Metrostudy News

Total U.S. Housing Starts Projected to hit 1.1 Million in 2015

 

WASHINGTON, D.C. (May 11, 2015) — Metrostudy, a Hanley Wood company, announced today the release of its first quarter 2015 Home Building Outlook detailing housing construction trends nationwide.  The Home Building Outlook is the platform for Metrostudy’s national and local forecasts, spotlighting the Top 100 Housing Markets across the United States.

The first quarter update indicates U.S. Housing Starts are expected to advance gradually to hit 1.1 million this year, with 715,000 of those being single family homes as defined by the Commerce Department.  Multi-family housing starts are expected to increase to 385,000 as the rental market continues to exhibit strength.

New Home Sales are expected to increase 18.8% to 519,000 this year, up from 437,000 in 2014.  The best overall new home markets are Denver, Austin, and The Villages (FL) in terms of health and local new home sales forecast.  The southern U.S. dominates in terms of sales volume, with the largest new home markets expected to be Houston, Dallas, and Atlanta.

“We continue to forecast a gradual recovery in construction,” says Brad Hunter, Chief Economist of Metrostudy.  “Our forecast of eventual rising new home demand is founded on a reversion to long-standing typical behavior patterns.   One of these relates to the “doubling-up” of households during and after an extended recession.  But we are now seeing some evidence that those households are beginning to split apart once again, increasing demand for housing.  As rising rents eventually hit the pain point, more people will begin to consider home ownership again.”

Metrostudy produces the Home Building Outlook to provide the building industry with visibility into local residential construction activity as well as official national forecasts. 

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 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, visithanleywood.com.

See more at: http://www.hanleywood.com/pressroom/metrostudy-releases-q1-2015-home-building-outlook#sthash.IQIEeAnF.dpuf

CHICAGO HOUSING 1Q15 – Rising Costs & Regulation are Pushing Buyers to the Resale Market

Posted in Chicago Market | Posted on 05-10-2015 | Written by Metrostudy News

  • The annual rate of new home construction through 1Q15 was the highest since 4Q08
  • Builders and developers are both feeling the squeeze from a lack of quality lots in desirable locations, leading to elevated levels of acquisition and development activity.
  • Rising prices have prevented the new home market from reaching the largest potential pool of buyers – Millennials and first-time buyers

May 2015 – Metrostudy’s survey of the twelve county Chicagoland region shows that a total of 5,748 new units were started in the twelve month period ending 1Q15, an increase of 15.9% compared against the previous year. This is the highest annual rate of new home construction since 4Q08! The annual rate of closings also increased in the first quarter, to 5,228 units, a 6.7% increase compared to the prior year. A closer look, however, shows that the annual rate actually fell from the prior quarter, down 0.4%

The 923 units started in the first quarter of this year represents an increase of 6.8% over the 1Q14 starts total. This number is the most started in a first quarter since 1Q08. The number of homes closed in the first quarter of this year, however, saw a slight decline, down 2.3% compared to the 1Q14 total. There were 966 new homes closed in the first quarter of 2015, compared to 989 units closed in the first quarter of 2014.

“Even with the recent uptick in job growth, the slowdown in closings gives cause for concern,” said Chris Huecksteadt, Director of Metrostudy’s Chicagoland region. “Reported slowdowns in buyer traffic over the past several months also make the increased rates of construction appear unsustainable. With new development beginning to occur again, and the slow disappearance of below market value lots, it is likely that the share of new home closings as compared to all home sales will begin to decline.”

Following years where the market expanded into the outlying counties of the Chicagoland area, the past five years have seen the market consolidate around Cook and the traditional collar counties. Cook County saw more new home starts (even excluding the vertical market) than any other county in the region.

“With the continued increases in construction activity, and the slowdown reported by builders of traffic, it is not surprising that inventory has risen over the past few quarters,” said Huecksteadt. “Metrostudy expects the rate of construction to continue to remain flat, as traffic and contract activity has been lackluster. In fact, don’t be surprised if more incentives are offered to buyers by builders in an attempt to absorb the standing new home inventory and generate activity in the market place.”

With a relatively consistent pace of new home construction (the rate of lot absorption), 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 97.2 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. Builders and developers are both feeling the squeeze from a lack of quality lots in desirable locations, leading to elevated levels of acquisition and development activity.

Even though the number of new home starts continues to steadily increase, closings have slowed and the amount of traffic reported by many builders has been spotty. Even in the face of strong job numbers, there seems to be little excitement among prospective homebuyers in the market place. The cost to deliver new homes in the market continues to rise and with every increase in new home prices due to costs and regulation, a few more homebuyers are lost to the resale market. Homes are selling, and will continue to sell. There is job growth and people need a place to live. The question is how big a slice of the pie will the new home market be able to cut.

Rising home prices due to increased construction costs, land and lot price increases, and rising development costs have forced new home prices above levels that could maximize absorption. Many economists look to the emergence of the first time home buyer and the millennials as an important component of the new home demand forecasts, however, many of our locations are priced above what these buyers can afford.

“The new home market is unable to reach the largest pool of potential buyers that are out there. Given these factors, Metrostudy forecasts new home starts to range from 5,600 to 5,800 units in 2015, no to only slight growth,” said Huecksteadt. “Strong wage growth combined with continued job growth in the 1.5% to 2.0% range could positively impact this forecast. It remains to be seen, however, if the economy can sustain strong numbers for more than a three to six month period.”

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.

SAN ANTONIO HOUSING 1Q15: New Home Closings Increase In First Quarter

Posted in San Antonio Market | Posted on 05-10-2015 | Written by Metrostudy News

May 2015 – The San Antonio housing economy had a good first quarter even though the annual rate of single-family housing starts did not increase since the end of last year. Significant rainfall during the first part of this year limited the completion of new lots and slowed starts overall. This leads to higher expectations for an increase in new home construction activity in the second quarter that should push our starts level a few hundreds units higher and taking care of some pent up demand.

Metrostudy’s 1Q15 survey of the San Antonio housing market shows the annual starts pace relatively unchanged from 4Q14, but is up 8.8% above last year’s 1Q14 level, an increase of 752 units. The annual rate of starts as of 1Q15 is 9,326 units, which is down 3 units from last quarter. Metrostudy’s 1Q15 drive survey recorded 2,200 housing starts in the San Antonio area, approximately the same number of starts in the first quarter of 2014. In addition, Metrostudy’s research indicates there were 2,236 new home closings in the most recent quarter, a 13.3% increase compared to 1Q14. The annual rate of new home closings as of 1Q15 registered at 8,810, a 6.1% increase from 1Q14 and up 3.1% from 4Q14.

“New home activity by price range shows that the San Antonio market’s loss of its affordable product continues, with only 33% of all new housing starts priced below $200,000,” said Jack Inselmann, Director of Metrostudy’s San Antonio region. “Two years ago the affordable segment recorded a 51% share. All price ranges above $200,000 maintain good rates of growth.”

Job growth in San Antonio has been excellent over the last few years which is fueling housing demand to its higher construction levels and for higher priced homes. Job growth in the San Antonio MSA has grown an average of 28,500 jobs per year over the last three years and is currently generating its best numbers since 2005. Moving forward the level of success in the homebuilding industry will depend on the level and type of job growth.

For information contact:
Jack Inselmann
210.710.3635
jacki@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.