Written by The Business Journal Staff
Builders were starting new homes like it was 2008, with annual housing starts up 22 percent to 7,573 and closings up 27 percent to 7,266 in an eight-county region from Stanislaus to Kern counties, according to the Metrostudy report.
“It’s been 8 years since building activity has been this strong in the Valley,” said Greg Gross, director of Metrostudy’s Central California market. “The question is will there be sufficient economic growth to keep new home demand strong.”
Merced County saw the highest increase in annual housing starts for the quarter, up a whopping 134 percent over the same quarter last year. Madera housing starts were up 51 percent, Kings County up 26 percent, Fresno up 19 percent and Tulare up 17 percent, according to Metrostudy.
The average base price for a new single-family home increased 4 percent to $334,000 compared to the first quarter of 2015. Metrostudy noted that Kern, Fresno and San Joaquin Coutnies are seeing increased traffic and demand for higher-priced housing product.
The finished inventory of homes in the region is also down over the past year, with a current 1.7-month supply and 1,018 finished vacant homes in the first quarter. An additional 2,378 new homes are under construction.
“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,” Gross said. “Over the past 12 months, there were nearly 4,694 new lots delivered to the market, yet nearly 7,600 lots absorbed, thus bringing months of supply to 31. We counted 19,783 finished lots throughout the Greater Central Valley. Of those, 4,800 finished lots remain in Merced County, or about 24%. With the recent increase in new home starts in Madera County, there are only 782 finished lots, or about 46 months of supply. Just one year ago the lot supply was 9 years.”
According to Metrostudy, the Central Valley housing market should remain steady over the course of the next year, adding that Kern, Fresno, Stanislaus and San Joaquin counties will be most stable and consistent housing markets in all of Central Valley. Buyers looking for more affordable homes will be drawn to the suburban markets in Madera, Merced and Kings counties.