1Q 2016 Sentiment Survey

April 28, 2016

Beginning its third year of gauging housing sector sentiment in the Mid-Atlantic region, JBREC received 61 responses from residential home building executives, developers, and private equity investors to its most recent Sentiment Survey. Respondents from Virginia Beach to Vermont shared their thoughts on the state of their local markets, based on 1Q 2016 sales performance.

About 75% of the respondents hold positions of vice president or higher, including 15% who are CEOs, principals, owners, or partners. Broken up by state, 34% were from Maryland, 59% were Virginians, 5% responded from Pennsylvania, and 1% call Vermont home. Please note that while many respondents operate in more than one state, our counts represent the respondents’ office locations.

Showing some market resilience after up and down results in 2015, the industry’s sentiment improved last quarter, even with similar or more aggressive sales goals. And the recent stock market declines seemed to have had little or no impact on new home sales in the region as of yet.

Most participants (62%) met or exceeded their 1st quarter sales goals.

Only 38% did not meet their net sales goals. Parsing the results by state, 52% of Maryland respondents met or exceeded their sales goals and 69% of Virginia respondents did the same. All Pennsylvania and Vermont respondents exceeded their goals last quarter.

JBREC has asked this same question every quarter since 1Q 2015, and the responses indicate a sharp increase in the share of respondents who exceeded their goals last quarter, up from 18% in 4Q 2015 to 34% in 1Q 2016.

Only 7% of participants started 2016 with lower sales goals than 2015.

When asked how their 1Q 2016 goals compared to their 1Q 2015 goals, only 7% of respondents had less aggressive goals this year, 41% considered them more aggressive, and 53% designated them as about the same. Maryland respondents were evenly split between more aggressive and about the same (48% each). The majority of Virginia respondents, on the other hand, have more aggressive goals this year than last (53%). Approximately 75% of Pennsylvania and Vermont respondents had sales goals in 1Q 2016 similar to their 1Q 2015 goals.

The graph below shows responses to this question over time. The share of respondents with more aggressive goals last quarter declined, while the share with similar goals increased quarter over quarter.

Many of our respondents provided explanations for the differences between their 1Q 2016 and 1Q 2015 sales goals.

Few participants report a negative impact from the stock market decline.

In addition to the standard questions JBREC asks every quarter, we typically ask a final question concerning recent trends in the home building industry. This quarter, we asked about the stock market. Almost half of our respondents believe the downturn in the stock market had no negative effect on their sales performance, with another 34% seeing a slight negative effect. Most Maryland respondents noticed a slight effect last quarter, while most Virginia and all Pennsylvania respondents saw no negative effect at all. Vermont was somewhat affected.

We have seen some evidence that the stock market has impacted discretionary buyers across the country, but our respondents have not yet identified it as a threat.

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