Monday, October 3, 2011

With Nat'l New Home Sales At 50 Year Low, Media Outlet for Builders Overlooks Charlottesville's 16% Annual Decline in Sales, Deems Market "Healthy"

"Builder Online" is a website for those in the construction business, run by Hanley Wood, which describes itself as "The No. 1 Media Company Covering Construction."

On Sunday, October 2, the regional daily newspaper, The Daily Progress, published a story that proclaimed the "health" of this area's market, based on Builder Online's opinion/projection that 2012 would see stronger permitting and building.

The actual data for this market contradicts the website's enthusiasm--and The Daily Progress' repeating of the opinion.

BACKGROUND: In MayBuilder Online termed the Charlottesville Area* new home construction market as "worsening." In June, the website stated that the market decrease was "slowing."

NOW: the trade organization has produced its bi-annual forecast, and opines that the Charlottesville Area is the "6th healthiest market" in the USofA.

"Healthy?"  Really?   

Not when you look at the actual numbers:

The Charlottesville Area's new home sales in 2011 are lower than in 2010:  
  • 194 2011 
  • 230 2010
  • Decline of -16%
The building of new homes has dropped off a cliff due to lack of demand:
  • In Sept 2006, there were 252 new home for sale.  
  • In Sept 2011, there were 65 new home for sale. 
  • That's 75% less.
Sales of new homes as total of all home sales has declined, for y/y June:
  • In 2010, new home sales were 15.3% of total market
  • In 2011, new home sales were 9.7% of total market
  • That's a Decline of -5.6%
    Apparently in a nation where new home sales just hit a 6 months low, and the year is on track to be the worst in 50 years, the Charlottesville Area may be termed "healthy."
    Stop laughing.

    Builder Online states, in its methodology section, that it's privileging markets that have Universities and Military.  That's true of C'ville.  Add the two hospital systems and it seems like this should be a "healthy" market.  It's years away from "balance" (equal # buyers and sellers) however.  Think 2015. 
    Image below copyright Builder Online.  Click for larger version in new window.
    Sure, there are folks buying new homes.  And this area--and most housing markets in the United States--may be called lots of things.  But most of them can't be called "healthy."

    *The Charlottesville Area for these purposes includes the City, Albemarle, Louisa, Greene, Fluvanna, Louisa, and Nelson Counties.  It is #206 smallest of 367 Metropolitan Statistical Areas in the US.

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