Single family starts fell in January compared to the previous month – but are up 16.3% over the prior year.
So far so good…..
Both NAHB and Metrostudy predict approximately a 15% increase in single family starts in 2015 compared to 2014. An unscientific survey I conducted in late 2014 of builders, developers, and suppliers in the Jacksonville MSA came up with a similar prediction for the Jacksonville MSA. (My subjects – on average – predicted an average increase in Jacksonville over 2014 of approximately 15% .)
Metrostudy has pointed out that lot development has doubled in the last two to three years in many markets. In some markets like Austin and Tampa, lot development is running faster than starts. This will likely lead to higher starts – as lot availability in major markets has been a constraint.
Metrostudy also pointed out a trend we at TRG are definitely seeing – that builders are JUST starting to expand their geographic reach. They are looking at land or lots in the somewhat more remote suburban regions that exploded during the boom (and then collapsed in the late 2000s).
My theory is that lots have moved back to replacement cost in many locations. (Replacement cost being the cost to buy the raw land plus the cost to develop the lots plus a reasonable, but not “bubble,” profit to the developer for the risk and process.)
So now lots in an “A” location are more expensive than they are in a “B” or “C” location. In the long run – that’s the way it usually is – but the last few years haven’t been normal.