By Carole Hawkins, [email protected]
The chart’s red line for the number of new homes built in Northeast Florida tilts way up from its 2011 recessionary low. Then it turns down again in the second quarter of 2014, despite the fact that other stats for the region look strong.
Anthony Crocco of market research firm MetroStudy believes the leveling off means new home prices are catching up with demand.
“Activity slacked, but it slacked in a marketplace that’s doubled its sales in the $350,000 and higher price segments,” Crocco said. “Prices are going up and usually that tempers demand.”
Crocco — the stats guru known for delivering reams of multicolored graphs — talked about local market conditions at the NEFBA Sales and Marketing Council’s September breakfast.
A year of strong demand, rising prices and now, a flattening in the number of new home starts were among the highlights.
Here are a few key statistics and what they mean.
13%. The increase in closed homes sales year over year in June. It went from 1,684 a month to 1,886 a month.
It means: Demand is strong. While inventory levels are staying flat, more listings are coming on the market and region is seeing a rebound in pricing, from an average of $155,000 now compared to $143,000 last year, Crocco said.
“We’ve got the same amount of inventory, but we’re turning over more sales so you know demand is very strong,” he said.
$250,000. The price range of $250,000 and up is growing the fastest for home starts. It’s grown by 35 percent to 40 percent overall since last year.
It means: New home construction is shifting to higher price points. Starts of homes priced below $200,000 are now dropping. Part of that rise is due to replacing cheap lots, bought at fire sales during the recession, with newer lots.
“Those cheap lots aren’t going to be replaced so cheap,” Crocco said. “As builders work through their inventory in the next round, they’re going to have to keep pushing prices up.”
5,376. The number of annual housing starts on a rolling quarterly basis as of June. The number went down for the first time since the recession. In the second quarter of 2013, Northeast Florida builders started about 1,400 houses compared to about 1,200 in the second quarter of this year.
It means: Prices are now flattening demand. The drop isn’t being created by an inventory problem, Crocco said. A six- to seven-month supply of new homes is optimal. Northeast Florida has 6.5 months of new home inventory. A two-year supply of developed lots is normal. The region stands at just above two years. That leaves price growth as the likely driver, Crocco said.
“Buyers must get used to the sticker shock of rapidly escalated prices,” he said. “To continue to increase construction activity, builders must help the consumer accept the pricing growth, and many builders are doing so through the use of incentives.”