INLAND EMPIRE 2Q15: Affordability Continues to be an Issue; Limited Inventory Driving Buyers to the Resale Market

Posted in Inland Empire Market, Southern California Market | Posted on 08-11-2015 | Written by Metrostudy News

  • 2Q15’s Annual Starts stand at 6,371, up 6.6% from 1Q15. Year-over-year annual starts experienced a 25.3% jump from 2Q14 levels.
  • Housing affordability and loan qualifying still remains an issue as it pertains to new home development and sales.
  • There is an approximate $126k difference between a median- priced new and median-priced resale home in the Inland Empire, due in part to limited inventory of new product that can directly compete with existing resale inventory in prime locations.

AUGUST 2015 – Metrostudy’s 2Q15 survey of the Inland Empire’s new home market shows that starts and closings collectively finished the quarter with Annual Starts increasing from 5,975 in 1Q15 to 6,371 in 2Q15 or up 6.6%. Year-over-year annual starts experienced a significant jump from 5,084 starts in 2Q14 or +25.3%. The current housing inventory monthly supply stands at 10.0 months, slightly higher than 9.3 months in 1Q15. For the same period a year earlier, housing supply stood at 8 months. Vacant Developed Lots decreased from 16,030 lots in 1Q15 to 15,563 lots in 2Q15, with monthly supply dropping from 32.2 months to 29.3 months during the same period. Annual Closings increased from 5,052 in 1Q15 to 5,267 in 2Q15, or up approximately 4.3%. Since 1Q15, quarterly closings have increased 6.8%.

“In general, the Inland Empire is experiencing a relatively stable economic environment,” said Dennis Handler, Director of Metrostudy’s Southern California region. “Optimism for gradual economic improvement remains strong and expected to continue through the end of 2015. Housing affordability and loan qualifying still remains an issue as it pertains to new home development and sales. Today, there is an approximate $126k difference between a median- priced new and median-priced resale home in the Inland Empire, due in part to limited inventory of new product that can directly compete with existing resale inventory in prime locations. However, the factors that fuel demand for new home sales are favorably projected to move steadily in a positive direction throughout the balance of the year and into 2016.”

The highest volume of 2Q15 starts occurred in the following price segments: $300k – $400k (38% of starts) and $400k – $500k (32%). Approximately 80% and 82% of housing inventory and VDL inventory falls below the $500k range, respectively.

Starts by County (1Q15 to 2Q15)

  • Riverside County quarterly starts increased from 928 to 1,193 (+28.5%), and annual starts increased from 3,928 to 4,041 (+2.9%).
  • San Bernardino County quarterly starts increased from 585 to 670 (+14.5%), and annual starts increased from 2,047 to 2,330 (+13.8%).

Closings By County (1Q15 to 2Q15)

  • Riverside County quarterly closings decreased from 894 to 887 (-0.7%), and annual closings increased from 3,428 to 3,587 (+4.6%).
  • San Bernardino County quarterly closings increased from 386 to 480 (+24.3%), and annual closings increased from 1,624 to 1,680 (+3.4%).

Vacant Developed Lot Inventory (1Q15 to 2Q15

  • Riverside County VDL’s decreased from 8,406 lots to 7,862 lots (-6.5%). VDL monthly supply is 23.3 months.
  • San Bernardino County VDL’s increased from 7,624 lots to 7,701 lots (+1%). VDL monthly supply is 40 months.

“Due to the recession, demand for new homes fell sharply, which forced builders to focus on selling off existing inventory before renewed builder confidence gradually reentered the market to ramp-up inventory again,” said Handler. “Within the past few years, employment gains have increased at a faster pace than the increase in housing supply, which now has created a situation of strong demand relative to limited supply, especially at the lower-to-middle range of the housing price spectrum. Consequently, permit activity for both single-family and multi-family construction has experienced a moderate upward trend.”

In 2Q15, the Inland Empire real estate market experienced similar characteristics to the broader Southern California market. Resale transactions ramped up due primarily to typical seasonal buying patterns. Albeit, the market is showing some strength with increased listings and closings, moderate price appreciation, shorter days-on-market, and higher absorption rates, but the question remains is this a trend that can be sustained throughout the balance of the year.

New construction annual starts and annual closings have continued to display further separation as closings maintained a fairly flat trend through 1Q15 and showed a slight upward shift in 2Q15. The pipeline of vacant developed lots that feeds housing inventory rests at just over a 29-month supply, while housing supply is currently at a 10-month supply and rising again. Since the 2Q14, finished vacant home supply has increased from three to four months, which indicates the market is still dragging due primarily to ongoing home buyer affordability issues and available product inventory at lower price points.

For information contact: Dennis Handler
email: dhandler@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.

Sarasota/Bradenton 2Q15: Continued Retiree Demand Drives Record Growth – Inventory Levels and Affordability are Concerns

Posted in Sarasota - Bradenton Market | Posted on 08-10-2015 | Written by Metrostudy News

  • 2Q15 New Home Starts are up more than 44% from 1Q15, and up 24.8% from the 4Q14 numbers.
  • The quarterly starts pace of 1,275 units was the single best quarter for starts since 3Q06
  • Housing Inventory is a concern; the market will need more units for the next “snowbird season”.

AUGUST 2015 – Metrostudy’s 2Q15 survey of the Sarasota-Bradenton housing market shows that growing retiree demand, solid job growth, and low interest rates all fueled an impressive quarter for housing activity. In Sarasota-Bradenton, 1,275 single-family units were started in 2Q15, an increase of 24.8% compared to last year’s 4Q rate of 1,022 units and a 44.1% increase versus the 1Q 2015 quarterly starts pace. The annual start rate compared to last year increased by 7.3%, to 4,078 annual starts.

“The quarterly starts pace of 1,275 units was the single best quarter for starts since 3Q06,” said Tony Polito, Regional Director of Metrostudy’s Sarasota/Bradenton market. “The quarterly closing rate of 1,071 units was the second best quarter for move-ins since 1Q 2008 (the best was 4Q 2014: typically 4Q closings are 25 – 30% higher than 2Q closings). The current new housing starts level is 93.4% of the average annual 20-year volume of 4,369 units. Because of retiree demand, there will continue to be growth in starts and closings in Sarasota over the next few years. This does not mean 2003–2006 levels, but demand should continue to grow. Potential road bumps include rising interest rates, rising costs, affordability issues, public sentiment towards growth, the overall economy and the ability to sell homes “up north.”

For the twelve months ending June 30, 2015, new homes starts in price ranges under $250k totaled 1,344 units, down 4.7% from the 2Q2014 annual activity in prices less than $250k. Annual new homes starts in prices over $250k were up 14.5% for the twelve months ending June 30, 2015 versus 2Q14. The marginal 278 unit increase in the annual start pace was split: 67 less units under $250k and 345 additional units above $250k. During 2Q15, Manatee County recorded 596 housing starts, up 16.4% versus the 512 starts in 1Q 2015 and up 6.1% compared to the 562 units built in 2Q 2014. During 2Q15, Sarasota County recorded 425 housing starts, up 26.5% versus the 336 starts in 1Q 2015 and up 8.4% compared to the 392 units started in 2Q 2014. Both counties were up compared to 90 days ago and a year ago.

The chart below shows the price distribution of annual housing starts for the second quarter this year compared to the three previous years.

Screenshot 2015-08-10 13.31.17

Single-family quarterly closings totaled 1,071 units, 26.0% higher than 2Q14. The annual closings rate was 3,884 units per year, which was 9.7% above the annual closings rate of 3,540 units per year in the same quarter last year. Total single-family inventory, which is composed of units under construction, finished vacant and models, equaled 2,165 units on the ground at the end of the second quarter, a 6.7 month supply. Inventories increased by 9.8% compared to the same quarter last year.

Compared to last year, under construction inventory rose by 193 units to 1,585. Finished vacant inventory decreased by 9.2% from 381 units last year to 346 this year. However, the number of completions exceeded move-ins during the quarter and FV inventory increased by 16 units. This quarter 1,356 lots were delivered to the Sarasota- Bradenton market compared to 853 in 2Q last year. Most Vacant Developed Lots are in Charlotte County. At the end of 2Q2015, Manatee County had a 25.1-month supply, down from a 28.4-month supply of VDL in 2Q2014. Sarasota County had a 33.6-month supply at 2Q2015, up slightly from 33.1-month supply at 2Q2014.

For the first five months of 2015, MLS SF sales were 8.7% higher than the same period of 2014 with 5,994 sales. Prices in May were 14.3% above the same month in 2014.

The final significant trend worth noting is new housing inventory,” said Polito. “We consider FV equilibrium as between 1.5 and 2.0 months. The supply of finished vacant housing units has been dropping since 4Q2006. As of June 30, 2015, the months of supply of FV units for all of Sarasota/Bradenton stood at 1.1 months. Compared to 2Q 2014, we did see a decrease in the number of units (down from 381 to 346) and the MOS (down from 1.3 to 1.1 months). The County by County finished vacant supply indicated that Manatee County is still below equilibrium level of FV supply at 1.2 months. Sarasota County was even further below equilibrium level at 0.7 months. Charlotte County moved below equilibrium with a 1.1 month supply. The market will need more units for the next “snowbird season”. The UC months of supply are up from 4.7 months in 2Q 2014 to 4.9 months in 2Q 2015. All told, the total inventory level of 6.7 months is within equilibrium. Metrostudy believes demographics will support strong “snowbird seasons”, for several years ahead.”

==============================================================

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

Community (Area)                                      Ann Starts

Lakewood Ranch …………………………………… 491

The West Villages ………………………………….. 404

South Gulf Cove …………………………………….. 185

Palmer Ranch ………………………………………… 171

Harrison Ranch ……………………………………… 122

Grand Palm ……………………………………………. 121

Heritage Harbour …………………………………… 100

University Groves …………………………………….. 90

Sarasota National ……………………………………. 89

Artisan Lakes ………………………………………….. 88

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.

 

 

Tampa Housing 2Q15: Strong Growth Continues in 2015 – New Home Starts Back at 2007 Levels

Posted in Tampa Market | Posted on 08-10-2015 | Written by Metrostudy News

  • Metrostudy’s survey shows 2Q15 New Home Starts are up 33.5% over 2Q14
  • The quarterly starts pace of 1,985 units was the single best quarter for starts since 1Q07.
  • Despite these positives, Tampa is still building about two thirds of the average annual 20-year volume. While continued growth is expected, potential road bumps include rising interest rates, rising costs, affordability issues, public sentiment towards growth and the overall economy.

AUGUST 2015 – Metrostudy’s 2Q15 survey of the Tampa housing market shows that 1,985 single-family units were started in the quarter, up 33.5% over 2Q14 levels. The annual starts rate, compared to last year, increased by 14.2%, to 6,594 annual starts. Single-family quarterly closings totaled 1,708 units, which was 23.0% higher than 2Q14. The annual closings rate was 5,992 units, 6.0% below the annual closings rate of 6,375 units for the twelve months ending 2Q14.

“For the twelve months ending June 2015, annual new home starts in price ranges under $200k totaled 1,618 units, up 15.4% from the 2Q14,” said Tony Polito, Director of Metrostudy’s Tampa market. “New home starts in prices over $200k grew by 13.8% from 4,374 units as of June 2014 to 4,976 units as of June 2015. The marginal 818 unit increase in the annual start pace was split: 216 more units under $200k and 602 more units above $200k.”

Screenshot 2015-08-10 12.26.01

Hillsborough County remained the most active county within the Tampa market. However, Hillsborough County lost market share, down from 63.5% for 2Q14 to 58.5% for 2Q15. Market share in Pasco grew from 24.3% for 2Q14 to 29.3% for 2Q15 as quarterly starts increased from 395 in 1Q15 to 727 for 2Q15. The VDL supply throughout all of Hillsborough County stood at 29.2 months as 2Q 2015, up 4.0 months from 2Q 2014. The VDL supply in Pasco stood at 40.8 months as of June 30, 2015. One year ago Pasco had a 52.1-month supply of vacant developed lots. These two major counties accounted for 87.8% of all annual start activity in Tampa Bay as of 2Q 2015.

Total single-family inventory, which is composed of units under construction, finished vacant and models equaled 4,145 units on the ground at the end of the 2nd Quarter of 2015; an 8.3-month supply. Inventories grew by 17.4% compared to 2nd Quarter of 2014. Compared to last year, the number of units under construction rose by 407 homes to 2,226 homes. Finished vacant inventory increased by 7.1% from 1,424 units last year to 1,525 this year. Compared to a year ago, the FV months of supply of non-condo product grew from 1.7 to 2.1 months. However, the number of move-ins exceeded completions during the quarter and FV inventory fell by 102 units versus 1Q15 and MOS fell from 2.4 to 2.1 months.

For the first five months of 2015, MLS SF sales were up 19.6% from the same period of 2014 with 18,128 sales. The median home price in May 2015 was up by 12.5% to $175,500. However the resale market is three tiered: traditional, short sales and foreclosure sales. The median sale price for traditional resales was $200,000 in May 2015. Short Sales and Bank Sales continue to skew the overall resale data downward.

The other significant trends involve new housing inventory. Finished Vacant units grew by 108 non-condo units versus 2Q 2014 but fell 102 units versus 1Q 2015. Tampa saw a 246 unit increase in the last two quarters of 2014 as builders started specs to try to bolster 2014 results. The market has absorbed 138 of those units in the first half of 2015. The months of supply of FV units stood at 2.1 months as of June 30, 2015 down from 2.4 months as of March 31, 2015. The supply of FV units still needs to come down nearer to 1.5 months. The backlog of under construction units is about where it was in mid-2013 and should represent strong closing numbers for the back-half of 2015, barring cancellations.

“Solid job and wage growth, falling unemployment rate, near record level employment and low interest rates all fueled an impressive quarter for housing activity in Tampa,” said Polito. “In fact, the quarterly starts pace of 1,985 units was the single best quarter for starts since 1Q 2007. The quarterly closing rate of 1,708 units was the second best quarter for move-ins since 2Q08 (the best was 4Q 2013 when many Spring 2013 sales were occupied). Despite these positives, Tampa is still building about two thirds of the average annual 20-year volume. There will continue to be growth in starts and closings in Tampa over the next few years. This does not mean 2003–2006 levels, but demand should continue to grow. Potential road bumps include rising interest rates, rising costs, affordability issues, public sentiment towards growth and the overall economy.”

================================================

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

Community (Area)                     Ann Starts

Magnolia Park ……………………………………….. 197

Waterset ……………………………………………….. 193

Long Lake Ranch …………………………………… 187

Valencia Lakes ………………………………………. 183

Wiregrass ……………………………………………… 171

Sun City Center …………………………………….. 163

Concord Station …………………………………….. 151

Hawks Point …………………………………………. 151

FishHawk Ranch ……………………………………. 146

South Fork …………………………………………….. 145

 

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.

 

AUSTIN HOUSING 2Q15: Rain Won’t Stop Demand – 2015 Expected to Finish Strong

Posted in Austin Market | Posted on 08-09-2015 | Written by Metrostudy News

  • 2Q15 New Home Starts are down 5% from 2Q14, mainly due to precipitation levels in May and June. Despite this, builders continue to report strong sales.
  • We continue to see an affordability squeeze: Higher lot prices have led to a sustained drop in starts of homes priced under $200k
  • Metrostudy expects a surge of activity in the third quarter as builders attempt to make up for lost weather days from the first half of the year.

 AUGUST 2015 – Metrostudy’s 2Q15 survey of the housing market in Austin shows continuing strength despite the precipitation that inundated the months of May and June. While the Annual Starts pace ended the quarter at 11,333 homes, 2Q15 starts were 5% lower than the 2Q14. With demand strong, annual closings grew to 10,523 by the end of the second quarter, a 2.6% increase from the first quarter. 2Q15 closing were up 10% compared to 2Q14. Despite the inclement weather, builders continue to report strong sales through the second quarter. This will translate to a strong finish to 2015, if the weather continues to cooperate.

“Price increases over the past three years have affected affordability and forced buyers to the next submarket or to an existing home in many areas,” said Steve Plevak, Regional Director of Metrostudy’s Austin office. “Higher prices for the newest generation of lots have led to a sustained drop in starts of homes priced under $200,000. The $250,000 to $300,000 price range reported the strongest growth for the quarter. The $300,000 to $400,000 price range reported a slight decline in the second quarter 2015 compared to the same period in 2014. The $400,000 to $700,000 price ranges showed modest increases in starts while the $700,000 and above price-point saw a significant decline.”

The annualized pricing increases showed the smallest gains in the second quarter since the end of the recession. Prices increased the fastest for homes priced under $300,000 during the second quarter, as inventory of new and existing homes has fallen over the last year. Prices increased at the slowest rate for homes priced over $400,000 and showed the lowest increases at $500,000 and above.

New home inventory dipped 3% during the second quarter, due to a small decline in starts while closings grew during the quarter. Total SFD & TH inventory ended the quarter at approximately 6,000 homes. The inventory represents a 6.9-month supply, down approximately 5% from the first quarter. It is typical for the months of supply to be above 6- months when a market is expanding because starts will increase in response to stronger demand. The extended construction cycle is exaggerating this metric.

“New home inventory has remained healthy during the summer months and benefitted from the drop in starts due to the weather,” said Plevak. “This drop allowed the finished inventory ratios to drop back below an equilibrium level, which will aid in pricing power. Metrostudy will be monitoring the trends in finished inventory for signs of any softening in the market conditions in the coming quarters.”

Finished inventory decreased in the second quarter due to the inability to finish homes under construction and now sits at or below equilibrium in price points under $400,000. Finished inventory has begun to expand above $400,000 and has the most months of supply in the $500,000 and above price range. These numbers may slightly increase in the next two quarters but are unlikely to rise very far above equilibrium due to the majority of starts being tied to contracts written during the strong spring selling season. Total inventory remains very healthy at most price ranges and saw some slight retraction in the second quarter due to issues with starting homes in the damp weather. Inventory at the $400,000 and above price ranges continues to be slightly elevated and Metrostudy will monitor this trend.

Existing home sales grew 3% during the second quarter while average and median prices continued to increase. Inventory has increased as the spring selling season has ended and prices have appreciated to a level where more homeowners are willing to list their existing home. The continued appreciation of existing homes bodes well for homebuilders as prices will become more conducive to buyers including new homes in their search.

The remainder of 2015 will be marked by builders working through their existing backlog of sales from a strong spring and improved weather will allow them to catch up on starts from a damp beginning to the year. There will likely be a surge of activity in the third quarter as these builders attempt to make up for lost weather days from the first half of the year. Metrostudy will monitor the impact of the upcoming increase in interest rates to determine the effect on 2016.

For information contact:
Stephen Plevak
splevak@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.

 

Metrostudy Releases Q2 2015 Home Building Outlook — Total U.S. Housing Starts Projected to hit 1.07 Million in 2015

Posted in In The News, National Housing Market | Posted on 08-04-2015 | Written by Metrostudy News

WASHINGTON, D.C. (August 5, 2015) — Metrostudy, a Hanley Wood company, announced today the release of its second 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 second quarter update indicates U.S. Housing Starts are expected to advance gradually to hit 1.07 million this year, with 691,000 of those being single family homes as defined by the Commerce Department.  Multi-family housing starts are expected to increase to 379,000 as the rental market continues to exhibit strength.  Metrostudy’s proprietary survey database, which consists of data from over 100 CBSAs and consists of hand-counted lots and newly occupied homes, indicates move-ins were 9% higher in the second quarter of 2015 than a year earlier, while new housing starts rose 11%.

Nationwide new home sales as defined by the Commerce Department are expected to increase 22.4% to 535,000 this year, up from 437,000 in 2014.  New home sales saw a sharper peak-to-trough decline than overall housing starts, and from trough to 2014 have not increased as much, resulting in a statistical catch-up this year.

The best overall new home markets are Denver, Austin, and San Antonio 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.

“The U.S. housing market continues to gradually expand,” says Brad Hunter, Chief Economist of Metrostudy.  “While some in our industry are eager to see more rapid growth, a steady and sustainable rate of increase will be beneficial in the long run.  Demand factors should continue to improve, and as rising rents eventually hit the pain point, more people will begin to consider home ownership.”

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 is the leading provider of primary and secondary market information to the housing and residential construction industry. Metrostudy’s actionable business intelligence informs investment decisions that mitigate risk and grow revenue for builders, developers, lenders, suppliers, retailers and manufacturers. It’s the construction industry’s only integrated data intelligence solution supported by the most extensive U.S. geographic coverage. Learn more at Metrostudy.com.

About Hanley Wood

Hanley Wood is the premier company serving the information, media, and marketing needs of the residential, commercial design and construction industry.  Utilizing the largest analytics-and editorially-driven Construction Industry Database, the company provides business intelligence and data driven services. The company produces award-winning media, both digital and print, high-profile executive events, and strategic marketing solutions.  To learn more, visit hanleywood.com.

NORTHERN VIRGINIA 2Q15 HOUSING: 2015 Proving to be Another Disappointing Year for Homebuilders; Gradual Slowdown Seen in Northern Virginia

Posted in Northern Virginia Market | Posted on 08-03-2015 | Written by Metrostudy News

  • New Home Starts in Northern Virginia are down 10% YoY through 2Q15;
  • Growth is spread unevenly across the counties: starts in Loudoun County are down 20% while starts in Prince William County are up 6%. Our Fairfax market area, which includes Arlington and Alexandria, is also up 6%, but annual starts in Stafford County are down 27%.
  • We are seeing changes in product composition of new homes – with a shorter pipeline of attached product, builders are controlling townhome sales by pushing prices more so than with their single family communities.

AUGUST 2015 – According to the Metrostudy quarterly survey, home starts, attached and detached, in Northern Virginia numbered 7,711 during the year ending 2Q15, down 10% from a year ago. Loudoun County accounts for 40% of all Northern Virginia activity, and annual starts in Loudoun have declined 20% from one year ago. Annual new home closings, or “move-ins” by Metrostudy methodology, were also down as builders closed 7,933 units ending 2Q15. This represents a decline of 7%, so starts and closings are trending similarly. This is indicative of a gradual slowdown with a balanced level of new-home inventory, unlike the previous housing recession where the market was overbuilt.

“It looks like another disappointing year for homebuilders in 2015,” said Ben Sage, Director of Metrostudy’s Mid-Atlantic region. “The region has many of the ingredients for an improving new-home market, including job growth, a balanced resale market, and low mortgage rates. The greatest opportunity would appear to be among first-time buyers, but builders are reporting that this consumer group lacks urgency and has difficulty qualifying for a mortgage. Metrostudy continues to forecast that economic growth will push homebuilding up next year, but a robust recovery does not appear to be on the horizon.”

In the resale home market, supply is beginning to grow seasonally, but it is also up from one year ago. March resale listings in Northern Virginia numbered 14,315 units (attached and detached), up 12% from a year ago. Despite this increase, resale inventory corresponds to only 4.2 months of supply, which is low. Nationally, 6 months is considered normal, so there should be upward pressure on home prices.

During the year ending March, Northern Virginia MLS sales numbered 40,597 units, which is up 3 percent from the previous year. The median price of a home sold through the MLS in this area reached $410,500 in June, which is down slightly from one year ago. According to the Case-Shiller Home Price Index, a better indicator of home appreciation trends, prices in the DC Metro Area increased 1.1% during the year ending April, the latest available. This is below average, which would indicate a more balanced or slightly over-supplied resale market.

Despite a 20% decline in starts, Loudoun County remains the most active market area in Northern Virginia, generating 3,042 starts over the past four quarters. The slowdown in Loudoun is broad-based geographically, but attached product accounted for a larger share of the decline with starts down 29 percent. Single family detached annual starts are down only 7 percent. Attached product in the county now accounts for less than half of all starts, down from 63% in 2012. Interestingly, the supply of vacant developed lots for attached and detached product in Loudoun is similar, so that would not explain the shift towards detached. There are, however, twice as many recorded future lots for detached product compared to attached. With a shorter pipeline of attached product, builders are controlling townhome sales by pushing prices more so than with their single family communities.

As for the rest of the region, Prince William County is the second most active area with 1,436 annual starts, which is up 6%. Our Fairfax market area, which includes Arlington and Alexandria, is also up 6%, but annual starts in Stafford County are down 27%. There are plenty of lots in Stafford, so this would appear to be purely demand driven. The resale market is up 8% in Stafford, so new product does not appear to be competing very well with resale.

The overall inventory of vacant developed lots (VDL), or finished lots, numbered 21,705 at the end of 2Q15, which is down from last quarter. This is surprising given that lot absorption (starts) is down, but 2Q15 registered the fewest lot deliveries since early 2011. The current inventory of VDL represents 34 months of supply. This is above normal for the area as a whole, but supply varies greatly by market area. VDL supply is low in Fairfax, Loudoun, and Prince William, while the more distant suburbs have a more ample supply. This is for all product types, including attached product as well as custom lots. With some key submarkets under-supplied with lots, more attention is focused on the pipeline of future lots. Metrostudy follows and reports on the entitlement of over 235,000 future lots in Northern Virginia, but only 13,255 of these are recorded at the counties.

“Given the relative weakness in the demand indicators, it becomes increasingly important to monitor new-home supply,” said Sage. “Finished vacant new homes in Northern Virginia number 1,082 units, up 24 percent from the previous year. Despite this large increase, current inventory would last only 1.6 months at the 2Q15 annual closings pace. This is a healthy figure, especially given the amount of attached-product that is built in the region.”

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

Builders Expect Steady Increase in Starts in Next 12 to 24 Months

Posted in National Housing Market | Posted on 07-17-2015 | Written by Brad Hunter

Housing starts rose 9.8% in June, driven by the continued upswing in apartment construction (up 28.6%, and remaining volatile).

Single-family construction remained fairly flat (down 0.9%) by comparison. That said, builders are clearly expecting a steady increase in starts in the next 12 to 24 months, based upon the investments that are being made in land and lots.  Single-family lot development is up 21.5% compared with a year ago, based on Metrostudy’s latest national research.

Part of the reason the number of single-family housing starts (a measure of production, not demand) is sluggish is the depletion of lot supplies in many of the most coveted locations around the country.  The supply of new homes is still barely keeping up with demand.  Finished new-home inventory is still at 2.5 months of supply, which is in the historically normal range, but somewhat low for a market that is starting to revive rapidly.  This explains the high rate of price increases on new homes.  As mentioned, builders and developers are pushing hard right now to get more home sites ready for construction in the months ahead.

Here are some of the markets that we have found are increasing single-family home production the most.  You will notice that the former “bubble” markets figure prominently in this list, reflecting the fact that they had fallen so far during the downturn.

  • Northern California         +46.3%
  • Reno                              +44.9%
  • Las Vegas                      +36.5%
  • Naples/Ft. Myers            +27.4%
  • Tampa                           +15.4%
  • Atlanta                           +15.0%
  • Denver/Co. Springs       +14.9%

(all quarterly data, construction of single-family detached homes, versus four quarters ago)

Today’s government release also showed that permitting is up for single-family as well as multifamily construction, which promises further increases in housing production in the last half of the year.  Job growth is strengthening, mortgage rates remain low, and household formation rates are starting to increase.  All of these bode very positively for increased housing demand for the remainder of this year and into 2016.

Brad Hunter is Chief Economist of Metrostudy.

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. To learn more, 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.

Don’t Be Misled by the “Drop” in Housing Starts: Some Markets are Showing Large Increases in Homebuilding

Posted in Economy, National Housing Market | Posted on 06-16-2015 | Written by Metrostudy News

June 16, 2015 – The government’s June report on housing starts showed an 11.1% decline, but that was on the heels of an incredibly strong report the previous month.   

We at Metrostudy have just completed another complete count of builder activity and new-home supply in markets all around the nation, and it provides strong quantitative evidence that the demand for new homes is still recovering, albeit slowly.  Furthermore, builders in most markets are confident that this slow-motion rebound will continue.  That is why builder confidence has improved and lot development is up 21.5% compared with a year ago (from the latest Metrostudy research).

The supply of new homes remains tight.  Finished new-home inventory is still at 2.5 months of supply, which is in the historically normal range, but somewhat low for a market that is starting to revive rapidly.  This explains the high rate of price increases on new homes.

There is much more detail available in Metrostudy’s research than is evident in the government data; some markets are actually showing very strong increases in homebuilding.  Here are some of the markets that we have found are increasing home production the most.  The former “bubble” markets figure prominently in this list, reflecting the fact that they had fallen so far during the downturn.

Recently-reported Metrostudy quarterly data, construction of single-family detached homes, versus four quarters ago.

  • Northern California                         +46.3%
  • Reno                                                     +44.9%
  • Las Vegas                                            +36.5%
  • Naples/Ft. Myers                             +27.4%
  • Tampa                                                  +15.4%
  • Atlanta                                                 +15.0%
  • Denver/Co. Springs                         +14.9%

Brad Hunter is Chief Economist of Metrostudy.

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.

 

Denver Housing 1Q15: Market is Squeezed as Prices Rise and Resale Supply Contracts

Posted in Denver - Colorado Springs Market | Posted on 06-03-2015 | Written by Metrostudy News

  • New Home Starts are flat in the first quarter but traffic and sales contracts are up 29% and 39%, respectively, over last year
  • Major impediments to growth in this market include higher home prices – currently only 14% of the new home market is priced below $300k, and tight construction trade labor
  • Denver’s resale market continues to post remarkable numbers that confirm the high rate of demand for housing

June 2015 – According to Metrostudy’s quarterly lot-by-lot field survey 1,679 homes were started in 1Q15, down 7% from 4Q14 and up 0.1% from 1Q14. Housing starts are essentially flat for the quarter, which would be concerning if traffic and sales contracts for the first quarter weren’t up 29% and 39% over last year respectively. Builder backlog continues to swell as most still face significant challenges with tight trade labor getting homes built in a timely manner. Despite continued strains on trade labor, builders have still started 7,930 homes in the last 12 months, a 16% increase from 1Q14. Builders closed 1,659 units in the first quarter, an increase of 23% from 1Q14. This large increase was expected as 2nd and 3rd quarter starts in 2014 were the highest in the last seven years. Annual closings in 1Q15 increased 10% to 7,026 units compared to 1Q14. With a robust economy and strong in-migration, along with growing buyer traffic and contracts activity, it’s a fairly safe bet that that both new home starts and closings will increase in the second quarter, and throughout the remainder of the year.

“Along with trade labor shortages, the other major impediment to housing growth in 2015 and beyond is higher home prices,” said John Covert, Director of Metrostudy’s Denver region. “Strong demand for move-up buyers combined with rising costs have placed more emphasis on higher priced product over the course of the last several years. The trend continues as all price points above $350,000 have experienced market share increases since 2013 with the strongest growth in the $400,000- $500,000 segment. With demand shifting to move-up product and only 14% of the new home market priced below $300,000, the average sales prices are skewed higher, now at $459,557 for the trailing 12 months ending in March, which is back to the previous high in December 2007.”

Despite the increase in home starts, vacant developed lot (VDL) inventory in the Denver Market has increased +12% since 1Q14 to 11,262 lots for a 21 month supply. Metrostudy considers 18-24 months of lots to be equilibrium for the entire market, a range that varies from one jurisdiction to another. Lot deliveries, which have outpaced starts recently, are up 62% from a year ago with most coming in the Parker, Arvada, Castle Rock, and West Adams submarkets, among others. In active projects, lots are virtually nonexistent for homes priced under $250,000 and months’ supply hovers between 9 and 16 months for the $250,000-$399,000 segments.

At the end of March there were 5,731 new homes in inventory, up 19% from a year ago and essentially flat compared to last quarter. Of that total, 4,020 are single family detached units that are either under construction, finished & vacant or model homes (total inventory). Inventory levels for SFD are at 8.6 months compared to 7.8 months a year ago – and slightly above the 7.0- 8.0 months considered to be equilibrium for SFD total housing inventory. While closings are higher, which would normally bring down months of supply, there are some 600 more homes under construction this quarter than a year ago which has pushed months of supply higher. Most of these homes are already sold, but have yet to close so the higher months of supply figure will almost certainly fall in the next quarter. There are another 1,711 attached (condo, townhome, duplex) units in total inventory, up from 1,501 units in 1Q14, an increase of 14%.

“Most of the increase has come by way of paired or townhome product, which represents 1,126 of the attached units in inventory,” said Covert. “Townhomes and paired product has experienced a 34% increase in homes starts in the last year. Many of these projects have found their way back into the suburban market, within master planned communities, and are serving the increasing void left by scant condominium development which had traditionally served the entry-level buyer.”

Denver’s resale market continues to post remarkable numbers that confirm the high rate of demand for housing in Denver. The number of active listings fell to a new low in March, putting extreme pressure on buyers desperate for housing that has become increasingly difficult to find as we enter the strongest buying season of the year. There were only 4,112 active listings at the end of the year compared to over 7,000 a year ago. As would be expected, new listings jumped nearly 70% over the year, the vast majority of which already have contracts on them, leaving an active listings count at extremely low levels. Months of supply now sits at 0.9 months, down from 1.6 months a year ago. As expected median home prices are pushing higher, up 19% over the year to an all-time high of $345,000 for single family detached resales in Denver.

So far, tight trade labor and rising home prices haven’t shut off the industry’s ability to deliver homes. But many wonder at what point consumers will forego a more expensive new home that takes longer than normal to deliver and look for other alternatives. The problem they’ll face, at least in the short term, is an incredibly tight resale market where few options exist. Given the constraints the industry is facing, Metrostudy believes the market will still grow in 2015, but not nearly at the pace possible if more affordable product appealing to entry-level buyers was available.

For information contact:
John Covert – 720.493.2020 x 201
jcovert@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.

California Central Valley 1Q15: Demand Stabilizing in the More Expensive Markets; Picking Up in Affordable Areas

Posted in Central California Market | Posted on 06-01-2015 | Written by Metrostudy News

  • Through 1Q15, the annual starts rate is up 4% YoY, with starts higher in seven of eight counties
  • Price increases have been moderate as builders are reaching affordability limits and may be more concerned with maintaining absorption pace
  • The San Joaquin/Stanislaus region will benefit most from the rapidly improving Bay Area market as buyers move inland to find more affordable and abundant housing.

June 2015 – Metrostudy’s 1Q15 survey of the Central California region shows that the improving job numbers seem to have had a positive impact in the new home market this quarter. Annual starts and closings as of 1Q15 improved, with starts up 4% to 6,176; and closings up 2.4% to 5,748. This is indicative of a stabilizing housing market. Builders are adjusting pace based on current demand.

“Compared to 1Q14, annual new home starts were higher in 7 of the 8 counties Metrostudy monitors,” said Greg Gross, Director of Metrostudy’s Central California region. “Starts in Fresno County were 12% lower than this time last year. Merced had a very impressive increase of 70% as did Tulare County with a 23% increase in starts suggesting demand is beginning to stabilize in the more expensive markets, and picking up in the more affordable markets.”

Regionwide the average “offer to build” base price for new Single Family detached homes increased a modest 2% to $318K compared to 1Q14. Builders are reaching affordability limits and may be more concerned with maintaining absorption pace and are adjusting prices accordingly. In some submarkets, higher priced product is being offered as builders are seeing increased traffic and demand, especially in Kern, Fresno, and San Joaquin Counties.

Finished inventory of homes has decreased during the 1st quarter. Metrostudy counted 1,060 Finished Vacant Single Family homes this quarter; the market now has 2.2-months of supply, an improvement from fourth quarter. We will continue monitor these inventory levels as there are an additional 2,020 new homes under construction. Builders will need to adjust to the changing demand dynamics expected in 2015.

The Central Valley has been absorbing more lots than were delivered for most of the past three years, making a noticeable dent in the number of finished lots. 2014 did experience a slight reversal in this trend as 6,216 new lots were added to the supply.

As 2015 begins, the Central Valley demonstrated a fairly respectable economic improvement, especially considering the extreme drought, tightened lending standards, rising construction costs and overall economic uncertainty.

“Overall job growth remained positive so far this year and improved in most all counties; this should keep the demand for new homes moderate,” said Gross. “We are optimistic that pent up demand will continue through 2015, but the challenge will be converting this demand into buyers. The San Joaquin/Stanislaus region will benefit most from the rapidly improving Bay Area market as buyers move inland to find more affordable and abundant housing, especially with falling gasoline prices.”

Metrostudy expects the Central Valley housing market to remain steady over the course of the next year. Notably, Kern, Fresno, Stanislaus and San Joaquin Counties will be most stable and consistent housing markets in all of Central Valley.

For information contact:
Greg Gross – 916.231.9370
ggross@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, visithanleywood.com.