New construction’s long road back
Home builders have a glimmer of hope that new construction is on the rise, with a light at the end of the tunnel after going through the dark days of the recent recession.
“We’re seeing good, positive trends,” said Paul Thompson, CEO of the Florida Home Builders Association. “It’s not going gangbusters, but we’ve seen a 29 percent increase in new construction.”
More-affordable housing appears to be a statewide trend, Thompson said, whereas residential homes priced at $400,000 or more remain a tough sell throughout the state.
While new single-family construction is coming back in Sarasota and Charlotte counties, Miami-Dade and South Florida are seeing condominium markets “bouncing back,” Thompson said. Jacksonville and other urban areas also are seeing upswings in new residential development.
Trends suggest the state will see a more sustainable level of construction than what was seen before the recession, Thompson said.
Robert Denk, a senior economist with the National Home Builders Association, tempered his enthusiasm about recent trends.
Before the building bubble — what Denk described as a feeding frenzy — throughout the 1990s and early 2000s, the U.S. averaged 1.3 million annual new residential building starts. But by 2009 after the bubble burst, Denk said new residential construction dropped to 27 percent of that previous level.
In 2010, Denk said the temporary tax credit — up to $8,000 for some first-time home buyers — helped to slow the housing industry from free-falling downward.
In late 2011, the home-building industry started inching upward, but it remains well below what was seen in the 1990s. By the end of 2013, Denk said the home-building industry is expected to reach 51 percent of what it was. Not until 2014 is the industry expected to reach the 70 percent mark.
“It’s been down so long that there’s only one way to go,” Denk said. “There’s still plenty of room to grow.”
However Denk said he has been surprised at the gains Florida is making, especially since Florida, like Las Vegas and Southern California, took the hardest hit with the housing-industry collapse.
Traditionally, Florida could expect to see an average of 127,000 new building starts annually. When the building bubble burst, the building starts dropped to 15 percent.
“We expect Florida to get to 40 percent by the end of 2013, and 50 percent in 2014,” Denk said, adding that Florida is making greater strides than either Las Vegas or Southern California.
Locally, the long-term demographics are good, said Tom Danahy, president of Kitson Babcock, a subsidiary of Kitson and Partners.
“We took a hit in the 2008-2009 period, but it was a temporary blip,” Danahy said. “If you look at the long-term demographics, historically 300,000 to 400,000 people a year move to Florida. People still want to live here.”
The residential inventory supply has shrunk, and that brings things back into equilibrium, Danahy said. Existing housing supplies in Southwest Florida are at their lowest levels in years.
For new construction, Danahy said, “the trend and outlook is favorable.”