by Mike Sharkey
The decade-long, steady increase in residential housing permits in the First Coast area may be coming an end this year.
According to Ray Rodriguez, a local real estate consultant who specializes in residential properties, the number of permits pulled in Clay, Duval, St. Johns and Nassau counties each month may continue to rise, but not at the pace of the past 10 years. Some leveling off will occur.
“They will keep going up as long as they (developers) keep building attached homes and condominiums,” said Rodriguez, who doesn’t think the current pace of well over 1,000 new permits a year in the Metropolitan Statistical Area will continue past this year. “I don’t think so. Interest rates are increasing and there is enough time left this year for them to go up even more. The market is slowing down and housing projections are showing a downward turn.”
Rodriguez is a one-man, real estate statistics machine.
“I keep track of everything that goes on,” he said.
Virtually everything Rodriguez does professionally revolves around residential real estate in some capacity. He serves as a consultant to builders, developers and investment groups as well as appraisers and surveyors. The City hired him to produce last year’s downtown housing study and he’s done research for the developers of The Strand project on the Southbank.
Rodriguez has also worked for Publix, who hired him to do what he calls “project justifications” where he studies an area Publix is considering and tells them whether a store is feasible or not. And, he produces quarterly housing statistics for the Northeast Florida Association of Realtors.
Permits, says Rodriguez, are one of the most accurate ways to measure an area’s true growth.
In 1993, the Northeast Florida Builders Association began tracking the monthly and yearly permits pulled for residential housing in Clay, Duval and St. Johns county. In 1999, Nassau County was added to the mix that Rodriguez considers the MSA and the numbers are nothing short of astonishing. That year in the MSA, builders pulled 7,121 permits for new residential homes, attached homes (townhouses) and condos. In 2004, just five years later, that number nearly doubled to 13,636 permits.
The increase has certainly been spread around, but not evenly. In 1999 and 2000, the number of permits pulled in Duval County dropped, but not enough to counter the increase in Duval from 3,644 in ‘99 to 6,101 in ‘04.
Conversely, St. Johns County has more than doubled its numbers (1,676 to 3,610) without any kind of decrease.
Rodriguez said new developments have contributed mightily to the overall increase but that doesn’t mean people are actually buying residences.
“Many of them,” he said, “are simply starting the paperwork in anticipation of being bought out, sometimes even before the property is developed.
“It’s misconstrued as a housing boom.”
However, a new trend in residential real estate — the conversion of apartments to condominiums — is having an effect.
“The conversion of the Florida Club condos in St. Augustine did well,” said Rodriguez. “And, the Preserve at Anastasia Island sold 300 units in three months. Most of the market was already living there at the time of the conversion and they bought.”
While many are getting rich in real estate these days -— realtors, developers, builders, designers, mortgage brokers — Rodriguez warns that the trend is going to slow first and then possibly reverse itself. The market, he says, simply cannot continue to support what essentially amounts to speculative development.
“My concern is, this is accounting for a good percentage of the market,” he explained. “When it slows down, the market of renters who can buy now won’t be able to. That will create a housing bubble and it’s coming in the next two to three years.”
Rodriguez also says that when the downward trend starts, those that are getting rich now better have something set aside. He says too much money is tied up in the real estate market with nothing tangible to show, and when the bottom falls out he’s not sure there will be enough safety nets available.
“I have no sympathy,” said Rodriguez. “They are taking all the money out of the market.”
The top line of this graph illustrates the total number of permits pulled each year starting in 1993. The graph also shows that Duval County is starting to level off after a steady increase since 2000, while St. Johns and Clay county are still seeing an increase in permits. Nassau County has remained relatively level since data was collected in 1999.