Multifamily home construction will still lead the way in 2012, according to Jeffrey Otteau, president of Otteau Valuation Group, but recent increases in the number of existing home sales may turn into 2013 a new-home construction boom.
"There is a powerful indication there that the entry-level price range is beginning to churn," Otteau said. That's significant, he said, as "for a housing recovery to be sustainable, it must be rooted in first-time buyer purchases, because they in turn trigger trade up sales into higher price ranges."
Otteau said the increase in new-home buyers entering the market, without any major tax credits available, is a positive indicator.
Otteau said research by his valuation firm shows most of the uptick in existing home sales during the past five months is coming from the $400,000-and-less market, in which sales have risen by more than 9 percent from the same time period in 2010. In New Jersey, most new homes cost between $500,000 and $600,000, he said.
Otteau gave the example of a first-time buyer purchasing a home for $300,000, which enables the seller to purchase a $400,000 home, allowing that house's seller to look into new construction.
HornRock Properties, a new commercial and residential development firm in Paramus, announced Monday it is beginning a $125 million portfolio expansion focused on new construction in New Jersey and New York in 2012. The firm is partnering with Ontario, Canada-based Fieldgate Homes to pursue the new development opportunities.
HornRock has already purchased plots within the HighPointe Woodbury Junction neighborhood in Central Valley, N.Y., where new, single-family homes are already being built.
"We have a long-term outlook on the market, so we're leveraging our access to capital to gain a strong foothold in the northeast marketplace," said Maurice Hornblass, principal at HornRock.