The month of March 2012 saw an increase in construction starts for both single-family residences (SFRs) and apartments and condos. 4,170 apartment/condo starts took place in March 2012, the highest number of apartment/condo starts to take place in a single month since 2008. The overall trend for SFR construction remains flat, with little change from 2010 expected until 2015. Multi-family construction is expected to rise in 2012, as the demand for rentals increases with rising employment, “Generation Y” enters the urban workforce, and the rate of homeownership continues to decrease.

FOR THE MONTH OF March 2012

SFR and Multi-Family Residential Construction

Chart last updated 5/11/2012

	March 2012	February 2012	March 2011
SFR Starts	1,922	1,520	1,825
Apt/Condo Starts	4,170	1,998	2,781

 

Chart last updated 2/27/2012

	2012 (Forecast)	2011	2010	2005
SFR Starts	21,000	21,538	25,526	155,322
Apt/Condo Starts	27,500	25,554	19,236	53,650

first tuesday Analysis

Data courtesy of Construction Industry Research Board

Forecasts are made by first tuesday in January and adjusted periodically based on current new homes sales trends, actual construction starts and government measures taken in reaction to national and state economics. The two-month moving average depicts the averaged construction numbers of the current and preceding months in order to show current trends.

Detached single family residence construction trends:

• 1,922 single family residence (SFR) starts took place in March 2012, a 26% rise from February’s numbers.

• The present trend in the number of SFR starts is flat, though characterized by rises and falls from month to month, following a slight bounce in mid-2009.

• A total of 21,538 SFR starts occurred over the course of 2011, down from with 25,526 in 2010. The most recent peak year in SFR starts was 2005, with 155,322 starts.

• Average dollar value of an SFR start in March 2012 was $291,483. This is 4% more than one year ago, and 1% more than the peak year of 2005 (based on 2011 dollars). Builders cannot currently compete with prices in the low- or mid-tier SFR markets.

Detached single family residence forecast:

• The forecast for total SFR starts in 2012 by the Construction Industry Research Board (CIRB) is set at 25,400.

• first tuesday’s own forecast for total SFR starts in 2012 remains 21,000, down 2% from 2011. 

• The trough year for SFR starts following the Great Recession of 2008 will most likely be 2011 or 2012, and the next peak year for SFR starts is likely to occur during the three-year period of 2017-2019, as forecast by first tuesday.

Apartment/condo construction trends

• 4,170 apartment/condo starts took place in March 2012. This is up 108% from February, and is the highest number of apartment/condo starts to take place in one month since February 2008.

• The present trend in the number of apartment/condo starts is a slow upward annual movement, following a downward trend that lasted from late-2004 until mid-2009. Apartment/condo starts over the last year have been characterized by abrupt rises and falls from month to month.

• 25,554 apartment/condo starts took place in 2011, up 33% from 2010. The most recent peak year in apartment/condo starts is 2004 with 61,543 starts, and the most recent trough year is 2009 with a total of 10,967 apartment/condo starts.

• Average dollar value of an apartment/condo start in March 2012 was $151,192. This is 5% less than one year ago, and 39% more than the peak year of 2004 based on 2011 dollars.

Apartment/condo forecast:

• The CIRB forecast for total apartment/condo starts in 2012 remains set at 31,600. This is up 23% from 2011.

• first tuesday’s own forecast for total apartment/condo starts in 2012 is 27,500, up 7% from 2011. Our forecasts were set in November 2011.

• The trough year for apartment/condo starts in the Great Recession occurred in 2009, with the next peak year for apartment/condo starts likely to occur during the two-year period of 2018-2019, as forecast by first tuesday.

Statistics related to California housing:

• There were 7,035,371 owner-occupied housing units California in 2010 (from the US Census Bureau (the Census)).

• Population growth in California is currently at an annual pace of 427,000 (according to the Census).

• The number of people employed in California in March 2012 was 14,226,000 (from the California Employment Development Department (EDD)), down 1,122,200 (7%) from the December 2007 peak of 15,348,200. The trough month for employment was January 2010, with 13,686,400 people employed state-wide.

• The Census reports that the rental vacancy rate in 2011 was 6.1%, and the SFR vacancy rate in 2011 was 2.1%.

Related articles:

California Residential Vacancy Rates

Jobs Move Real Estate

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Tagged as: condominium, residential property, single family residence (SFR)