BUILDER is taking a 50-city tour of the largest housing markets, evaluating vital housing stats, employment information, and population numbers to find out what’s good, what’s bad, and what’s the bottom line for housing going forward. We’ll be rolling out 10 market summaries per day for the next week, so be sure to check back daily.
Are you building in one of the country’s top 50 markets? Let us know if our analysis jibes with what you’re seeing in the field.
Total new-home closings: 7,114
The good: Housing hot spots in Northern and Central New Jersey.
The bad: Signs of withdrawal, including falling housing inventories, fewer homes under construction, and starts and closings down for a rolling four quarters.
The bottom line: By following niche markets and capitalizing on 29.5 months of lot inventories, there’s plenty left to spur competition among builders.
Builders aren’t traveling to Atlantic City to place their bets in Jersey; instead, they’re showing their hands in Central New Jersey, where starts have taken off in the first quarter of 2015 by a 32.5% increase over the fourth quarter of 2014. Northern New Jersey is another location to bet on, where a niche market among those aged 55 and over is producing 30% of total home sales. Those hot spots aside, the region shows signs of withdrawal. Compared with the fourth quarter of 2014, total housing inventories in this year’s first quarter dropped by 5%, representing a 10.8% decrease year over year, as the number of under-construction units fell by 2.7%, a 12.4% decrease year over year. Meanwhile, finished vacancies decreased by 7.4% over the same period. With the first quarter of 2015 delivering a 61.1% year-over-year increase in lots delivered, starts in mid-2015 may serve as indicators for where this region is heading.
Total new-home closings: 6,906
The good: The average sales price among new homes has risen from $537,901 in February 2013 to $708,852 in February 2015.
The bad: Resale properties stole 12% of the total market over a two-year period, as less than 30% of buyers can afford new homes.
The bottom line: With an 11.1-month vacant developed lots inventory and peak sales occurring at the $1M mark and above, there’s money to be made in this market.
As prices rise beyond the reach of nearly one-third of the area’s population, the new-home market surrounding Los Angeles continues to cool in 2015. Year-to-date permit figures dropped in March 2015 year over year by 12%, as the resale market squashed new sales over a 12-month period ending in February, expanding from 68% to 80% of market share. With the number of vacant developed lots in Los Angeles County rising to a monthly supply of 11.1 months, the issue isn’t in finding lots on which to build so much as it’s finding qualified buyers. From the fourth quarter of 2014 to the first quarter of 2015, closings decreased by 11%, but starts prove that builders aren’t giving up—they increased by a whopping 36% over the same period. Based on sales statistics, the greatest success should come from prices of around $425,000 and over $1M.
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”