By Michael Bonts
Special To Realty/Builder Connection
Home construction and sales in Northeast Florida were at high levels in 2002 and the lofty figures raise the anticipation for another strong year in 2003.
The number of single-family building permits recorded last year jumped 9 percent from 2001, setting a record for the second consecutive year. Duval, Clay, Nassau and St. Johns counties recorded 10,600 single-family permits in 2002 compared with 9,749 a year earlier.
“Home building finished 2002 with a bang,” said Denise Wallace, president of the 1,600-member Northeast Florida Builders Association. “The numbers on housing starts and permits in December were remarkably strong across the board — even better than we had expected. That provided us with a another record-breaking year in Northeast Florida.
“We believe 2003 will be a strong year. Maybe not as strong as 2003, but with continued low interest rates and our battle locally to provide affordable housing, the value of home ownership should remain high.”
According to the Florida Association of REALTORS®, sales of existing single-family homes across the state rose from 9,798 in December 2001 to 11,981 last month, a 22 percent increase. The statewide median price for homes rose 13 percent between the two periods, from 128,300 to $145,300.
Jacksonville, meanwhile, saw a 17 percent increase as the number of home sales rose from 1,048 to 1,231. Fort Lauderdale led the state with a 27 percent increase in homes sold.
“Home prices have gone up consistently in markets across the state,” said Sandy Kahle of Keller-Williams Realty in Orange Park. “It’s all part of supply and demand economics.”
In 2002, the average for a 30-year, fixed-rate mortgage was 6.54 percent, a drop from the 6.97 percent average for 2001.
“In what has been a year of recession for most of the nation, that fact that we are seeing record levels of new home sales and permitting, existing single-family home sales and housing starts — all across the board — is really amazing,” said NEFBA member and veteran market analyst Charlie Clark. “What’s important about this is it makes the future very bright for us here in North Florida.
“So, we should see another six months of extraordinary housing market activity continuing into 2003.”
Sometimes lost in the impressive sales figures, permit numbers and starts is the level residential construction stimulates the economy in Northeast Florida directly by generating jobs, wages and tax revenues.
“Interest rates have fueled homebuyer activity. Here in Northeast Florida, we are not dependent on one sector of the economy, such as manufacturing or service industries. This diversification helps,” said Wallace. “We also have been successful in providing affordable housing in the neighborhoods and communities we develop. Unnecessary and unwarranted fees and taxes that do nothing more than drive up the cost of housing. Locking many out of the American Dream of home ownership.”
Although it’s difficult to gauge the indirect impact, the direct impact of residential construction on the economy in Northeast Florida is significant. According to the National Association of Home Builders, the construction of 1,000 single-family homes generates 2,448 full-time jobs in construction and construction-related industries, $79.4 million in wages, and $42.5 million in combined federal, state and local revenues and fees.
In 2002, the impact of single-family construction in Duval County, where there were 5,196 Single Family Permits issued, equates to 12,500 full-time jobs, $405 million in wages and $217 million in combined federal, state and local revenues and fees.
Last year’s impact in the Jacksonville MSA of Duval, Clay, Nassau and St. Johns counties of 10,600 permits meant 26,000 full-time jobs, $841 million in wages and $450 million in combined federal, state and local revenues and fees.
And that is single-family construction, not including the amount commercial, multi-family or remodeling activity in our area.
Wallace noted that the gains extended across all market sectors and every region of the country. She attributed this exceptionally good showing to the best mortgage rates in 40 years and solid house-price performance. In December, national starts rose 5 percent to a seasonally adjusted annual rate of 1.84 million units, with a nearly 5 percent increase on the single-family side and a 5.5 percent increase on the multifamily side.
“The latest builder surveys show that the single-family market remains strong in January, and we’re looking for 2003 to be another excellent year,” said Greg Matovina of Matovina and Company. “Nationally, we are expecting housing production to slip only slightly in 2003 as interest rates firm up later in the year, but that forecast does not assume passage of a fiscal stimulus package.”
2003 could even be better if Congress passes such a package on a timely basis. The bottom line: the housing sector provided solid support to the economy in 2002 and should continue to be a positive factor in 2003 as well.
The housing and construction industry had plenty of momentum heading into 2003. More newly built homes were sold in 2002 than in any other year in history, with December posting the strongest sales pace for any month on record.
“We now know that 2002 was the year of hearth and home,” said Roger Day, president of Rosewood Homes and Clay Builders Council chairman. “The lowest mortgage rates in years and solid house-price performance highlighted the tremendous investment potential of homeownership and kept demand for new homes very strong amid tough economic times and jitters in other sectors of the economy.”
The result was homeownership across the nation reached its highest level yet — 68.3 percent — in 2002’s final quarter.
“Housing remains one of the sole pillars of strength for the U.S. economy,’’ said Arnold Tritt, NEFBA executive vice president. ‘’Consumers remain willing to undertake longer-term commitments to buy homes, while low mortgage rates have stimulated home sales.”
Nationally, total new home sales for 2002 reached 976,000, up 7.5 percent from the previous annual record of 908,000 units set in 2001.
“A sales pace above the million-unit mark was unheard of prior to August 2002. Now we’ve had five months in a row above that, capping the period with the strongest sales pace ever. That’s some powerful momentum heading into this year, particularly in light of the tight inventory situation, builders‚ positive views of the marketplace and expected low mortgage rates through most of this year,” said Matovina, NEFBA’s first vice president.
“We are currently forecasting that new-home sales in 2003 will edge down to a solid 942,000 units, still the second strongest number on record,” said National Association of Home Builders Chief Economist David Seiders. This projection does not factor in the potential effects of an economic stimulus package.
Builder confidence in the market for new single-family homes remains quite strong amidst an array of generally weak economic indicators, according to results of the latest National Association of Home Builders‚ Housing Market Index (HI). These monthly gauges of builder sentiment notched down a single point from December’s two-year high to a 64 reading in January.
“Builders are pleased with the way the market for new homes in most price ranges is holding up at this time,” said Wallace. “Favorable interest rates on home mortgages and solid house-price performance continue to lead more people to consider a new-home purchase, as evidenced by the higher traffic of prospective buyers through model homes this month. But lingering concerns about the economy are keeping builders‚ optimism in check, as the flattening of today’s index represents.”
January’s high fell one point to 64, returning to November’s solid level after hitting a two-year high of 65 in December.
(Michael Bonts is communications director for the Northeast Florida Builders Association.)