A fresh report signals that the market for new homes in the Twin Cities is thawing.
A day after a report showed monthly residential building permits increased 49 percent in January over year-ago figures, a new report shows further signs of life in new home construction.
Ryan Jones, director of the Twin Cities Market for Metrostudy, a housing research and consulting firm, says the market already hit bottom. New housing starts improved every quarter throughout the year, said Jones, who released a quarterly study of the Twin Cities market Tuesday.
“Think about last year with the 70,000 job losses and the recession really in full stride and things really up in the air,” he said. “We didn’t know what was going on and we still built 3,300 homes.” Given the stock market’s bull run in 2009 and signs the recession is over, Jones says 4,000 new homes could be built this year. That is, if the job market improves.
People without paychecks and families worried about job loss don’t build homes. “The housing market can’t fully begin to recover until the job market starts to improve,” Jones said.
While many reports tend to focus on the larger existing homes market, new construction has more of a ripple effect in the economy. New home sales spur spending on materials such as lumber and new windows and give construction and factory workers jobs.
The extension and expansion of housing tax credits helped to spur some buyers. Nearly 1,000 of last year’s 3,300 housing starts took place in the fourth quarter — a 25 percent increase compared to fourth-quarter 2008 and the first year-over-year rise in almost five years. Jones figures on a slight dip in new-home starts once the tax credits expire in April but expects steady gains through most of the year.
The size of the new home inventory also continues to decline. At the end of the fourth quarter, there were 3,051 new houses in the Twin Cities market, a 30 percent decrease from 2008 and a 56 percent drop from 2007. Of those new homes, 1,548 were under construction, 1,115 were finished vacant properties and 388 were model homes. There is currently a 7.9-month supply. Six to seven months’ supply in the market is considered equilibrium, Jones said.
Being flexible is helping some builders increase sales. In 2009, 24 percent more homes were sold in Stonemill Farms, a Woodbury community being developed by Newland Communities, than in 2008. Jamie Tharp, marketing director for Newland, said introducing new homes costing less than $300,000 helped in this budget-conscious environment.
Once buyers snatch up homes that are ready to go, builders can get to work filling some of the 32,135 vacant lots ready for construction in the Twin Cities. That’s a 10 year supply.
This article is from the Star and Tribue published on Feb. 2, 2010
By KARA McGUIRE, Star Tribune
http://www.startribune.com/homes/83406252.html?elr=KArksUUUoDEy3LGDiO7aiU