In many markets, 2014's Local Leaderstbvxwqvqdqrqdrafwyrvtdqcrzqtbbcdf probably played to the upper levels of the home buying public as demand surged in the move-up and active adult categories. And, looking at 12 key U.S. metros, that probably will be the case in many markets again in 2015.
Take the ultra-expensive San Francisco market. After seeing less than 200 homes close above $500,000 over the six-month period running from October to March in both 2012–2013 and 2013–2014, home closings in that category jumped to 261 in 2014–2015. The story is the same in Miami, where above $500,000 closings jumped from 60 to 147 to 456 from the October to March period over the past three years. In both Miami and San Francisco, the $250,000 to $499,000 levels were squeezed.
But in other places, that level stayed strong, as homes under $250,000 saw sales slow. Under $250,000 new-home sales in 2014 fell to 44 in Chicago, 21 in Philadelphia, and a measly eight in the pricey Washington, D.C.tbvxwqvqdqrqdrafwyrvtdqcrzqtbbcdf, market. High-rise condos, once thought of as entry-level housing, are coming online in Washington, but those are hardly affordable to the entry-level buyer. "Generally, builders have been more successful with the move-up and higher-end market," says Ben Sage, director of Metrostudy's Mid-Atlantic region, who says new home prices in the market are about where they were in the mid 2000s (which is mainly because builders aren't producing homes for the first-time buyer).
In the expensive San Diego market, the $250,000 to $499,000 range grew slightly this year, after falling off. "In addition to mid-higher end new products being delivered, there is also townhome-sized product that is moving into the market to help fill supply at lower end of price spectrum.," says Dennis Handler, director of Metrostudy's San Diego market.
In a few markets, like Austin and Atlanta (which still has finished lots available from the previous cycle) markets, new homes of less than $250,000 have grown so far this year, indicating that builders that hit that point of the market can gain more share in 2015.
While opportunity may exist for builders of lower-priced new homes in many parts of the country, Atlanta looks to be a hot spot. From October 2014 to March 2015, builders producing homes below $250,000 in Atlanta saw sales jump to 388 after hitting 305 the year before and 168 two years ago.
"Consumer confidence and jobs are increasing enough where now you're going to start seeing more building taking place in the exurban portions of metro Atlanta," says Eugene James, Metrostudy's Atlanta regional director. "Once you get further out you can build at a lower price point."
Who will be the big movers in 2015? In most markets, it will be builders at the $250,000 to $499,999 level. It's easy to see that this is the tier of homes that dominated sales in new community openings in 12 major metropolitan areas from October through March over the past three years. From October 2014 to March 2015, the middle tier (or lower tier in some markets) continued to experience growth, but as you can see in the map with each metro, sales for new community openings were geographically dispersed.