4Q 2015 Sentiment Survey | John Burns Real Estate Consulting

4Q 2015 Sentiment Survey


In early January, 38 residential home building executives in the Mid-Atlantic and 6 from across the country shared their thoughts on the state of their local markets based on 2015 year-end sales performance.

The responses, dominated by builders from Maryland and Virginia, provide some insight into the health of the Mid-Atlantic housing market. About 53% of respondents reported that they met or exceeded their 2015 sales goals, a sharp increase from our 3Q 2015 results. For comparison, about 57% of respondents from outside the region failed to meet 2015 sales goals.

Looking forward, over 55% of Mid-Atlantic respondents expect to increase sales activity in 2016 compared to 2015. Another 40% expect sales to remain flat. Outside the region, expectations for 2016 are similar.

pie chart 2 final

How do your 2016 Mid-Atlantic goals compare to 2015?

Outlook
Why?
More Agressive 53.3%
  • We expect that marketing programs and new product options (to stimulate sales) implemented in late 2015 will produce results in 2016.
  • We are opening 3 new communities that will provide us with additional deliveries.
  • We have more projects opening.
  • Large number of unit projects, so it is critical that we achieve absorption goals.
  • Confident the rate environment spurs buying decisions in our market. Need job growth (non-service) to improve.
  • Higher demand from improved jobs market
  • More absorption on the community level
  • Job growth, consumer confidence
  • Good land position
  • New sales management with more accountability
  • More product is available in some price ranges.
  • Increased staffing, better training and execution. Plus market uplift.
  • We feel that one of our communities should have performed better, and we have created more aggressive sales goals reflective of this greater expectation.
  • We expect the market to continue to improve and we want to grow as an organization.
  • Better positions in the market
  • Opening new communities
About the Same
39.5%
  • Not as good land position/availability plus change of product line.
  • We are not seeing tremendous growth in demand.
  • We have land and community growth in some of our region but assumed no material increase in absorptions. The community count growth takes us above our 2015 sales, so we are focusing on rebuilding margin, not pace, in 2016.
  • Appears to be a relatively flat recovery in Richmond, VA.
  • Cautious planning. Burned last year due to no spring market.
  • The DC suburban market is flat with the exception of a few choice communities. Inside DC is booming, but we don’t build in the city. The federal government is tightening their budget.
  • Sales plan is about the same; sales team goals are incrementally above plan.
Less
5.3%
  • We have curtailed building new homes.
  • Job creation remains sluggish.

2015 Ended on a Positive Note

4Q 2015 Question of the Quarter: By what percentage did your average base prices change over the course of 2015?

updated bar graph

  • Roughly 66.7% of Mid-Atlantic respondents reported increases in average base prices during 2015, and the largest share (27.8%) reported average base price increases of 3.0% or more. Less than 8.5% reported average base price decreases last year, and prices stayed flat for the remaining 25.0% of respondents.
  • By contrast, 85.7% of respondents outside the region increased average base prices last year. (57.1% reported increases of 3.0% or more.)

 


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