Metrostudy’s 4Q16 survey of the Maryland housing market – which includes DC but excludes the Eastern Shore south of Queen Anne’s County – shows annual home starts, attached and detached, numbered 9,946 during the year ending 4Q16, up 8% from the same quarter last year. The annual closings rate of 9,219 units is up 3% from one year ago.
“The growing local economy appears to be benefitting the resale market the most,’ said Ben Sage, Director of Metrostudy’s Mid-Atlantic Region. “According to MRIS, December resale listings in Maryland were down 17% compared to December 2015 and, with demand up and inventory way down, the months supply of listings fell from an already low 3.7 one year ago to 2.7 months currently. This means that upward pressure on existing home prices in Maryland is building. Metrostudy’s survey of builder sales activity indicates that in 2016 sales on a per-subdivision basis averaged 2.2 per month. This was even with the previous year, highlighting the competitiveness of the market despite more starts. Builders indicated they were in a position to put a few more specs in the ground heading into 2017.”
Looking at 4Q16 starts activity in the region by county, Anne Arundel and Prince George’s remain on top with 1,499 and 1,485 starts in 2016, respectively, representing an 11% increase in starts for both counties from one year ago. Montgomery County is third, with calendar-year starts of 1,217, a 24% increase from 2015. Two high-rise condo projects started last year (Pike and Rose in Rockville and Stonehall in Bethesda), so excluding these buildings Montgomery starts are up 10 percent – similar to Anne Arundel and Prince George’s. The area with the largest decline is Baltimore City, where starts are down 33% due to land constraints. Much of the decline is due to the sell out of O’Donnell Square by Ryan, which averaged 6 closings per month over the past two years. Starts in Baltimore County were also down 10%. This area had been running out of lots, but development in Ballard Green to the west (Beazer, Ryan) and Sheltered Harbor to the east (Ryan) has helped restore some capacity.
The overall inventory of vacant developed lots (VDL), or finished lots, numbered 12,622 at the end of 2016, down 4% from the previous year. This is for all product types, including attached product as well as custom lots. The corresponding months of supply stands at 15, which is largely unchanged since mid-2013. This reading remains quite low as Maryland is one of the more land-constrained markets in the country. With starts registering a larger increase than closings in the state, finished empty new-home inventory rose to 2,324 units, up 10% percent from 2015. Single family and townhome inventory alone represents 2.0 months of supply, which is slightly above historical norms. This increase in new-home supply was expected, and the availability of quick-close inventory will help in light of very short resale inventory
“As expected, the Maryland new-home market expanded modestly in 2016 and Metrostudy forecasts new-home demand to rise 10% this year, slightly outpacing last year’s modest growth,” said Sage. “Barring any economic shocks, the state is poised for further growth in 2017 given the economic growth in the region, low unemployment, and an under-supplied resale market. Rising mortgage rates will hurt affordability, but this could be somewhat offset by higher wages.”
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.
