By Carole Hawkins, [email protected]
New homebuilding is taking off in Duval County and leveling off in St. Johns.
The reason? Price appreciation.
It’s become the defining difference between the market this year and one year ago.
Anthony Crockett of Metrostudy — an analyst who shows the numbers behind the trends many builders already sense — spoke at the Nassau Builders Council’s August meeting.
The company pulls permit records on new developments in Northeast Florida and inspects communities every quarter to see what’s actually coming out of the ground.
The results end up as blue, red and black lines on Crocco’s many charts and graphs.
This time, the story they tell is how construction’s rising costs are changing the landscape.
Duval replaces St. Johns as homebuilding giant
St. Johns County dominated new homebuilding through the recovery, led by Nocatee, which built 850 homes a year. Now recession-priced lots are gone and construction costs are rising.
Three quarters ago St. Johns County was selling 2,500 homes annually. Today, it’s selling 1,700, Crocco said.
Duval, which lagged in the recovery, is now taking a turn, selling more than 2,200 homes annually. With Duval’s cheaper pricing, buyers are looking at options and steering a different course.
It’s back to the way it was during the housing boom, Crocco said, when Duval led growth with new neighborhoods on the Northside, Westside and the Baymeadows area.
Cheaper resales are curbing construction
There are typically three or four existing home sales for every new home sold. So resales drive the market.
When new home prices started rising in the summer of 2012, resales didn’t.
The price gap curbed new home demand. REO inventory was abundant and the difference in average price between new and existing homes grew as high as $60,000.
But, with buyers now burning through foreclosures, the gap is tightening. A turnaround will boost the new home market, and it’s going to come quickly, Crocco said.
“Resale inventory has gone from 11,500 units to 9,500 — we’re running out,” he said.
The stories behind the numbers
5,330: The annual new home starts in Northeast Florida as of June 2015. That’s down slightly from 5,376 a year ago. Construction growth flattened starting in early 2013, a sign, Crocco said, that new homebuilding is hitting headwinds from pricing.
$250,000: Home starts above this price are growing. Below it, they are falling. A year ago the threshold was $200,000. The rising price for homes combined with flattening demand suggests cost pressures have hit home builders and are curbing sales, Crocco said.
450: The number of annual new home starts now in Nassau County. Nassau’s homebuilding bottomed at 200 at the end of 2012. It has been trending upward ever since.
Nassau’s market remains a mix of active adult, second-home and first-time buyers.
During the building boom, Nassau’s bubble came in the form of active-adult developments on the mainland, just west of Amelia Island. It was over-build.
“The active adults are not going to come there in that volume and the family buyer can’t afford that price,” Crocco said.
Family buyers in Nassau are not a $300,000 or $400,000 homebuyer. They buy in the $150,000 to $200,000 price range and in areas near Interstate 95, where the commute is shorter.