ORLANDO – Once upon a time – say, about eight years ago, when Florida’s housing market went bust and the state’s foreclosure rate soared – it was difficult to sell newly built homes, and the construction industry went into a painful tailspin.
According to a new report by Metrostudy, which does annual surveys of Central Florida’s housing market, the construction industry is undergoing a very healthy boom period. The boom is spreading across every county in the Orlando area.
Metrostudy’s First Quarter 2016 survey of the new home market in the Orlando area — which includes the counties of Lake, Orange, Osceola, and Seminole – shows that 3,096 single-family housing units started construction in the first quarter of this year. As the agency noted, that’s a 40 percent increase over the same period in the first three months of 2015. In fact, throughout 2015, the annual construction start rate for new homes increased by 24 percent, well below the 40 percent jump in the first three months of this year.
As the number of new homes being built increases, so do prices, the report noted. There were 2,968 new home starts for properties in the $250,000 to $299,000 range, which is up by 37 percent from the first quarter of 2015. On the other hand, the number of construction starts for homes in the price range of $150,000 to $199,000 actually dropped, from 713 to just 25.
“Builders are generally holding the line on prices,” the Metrostudy report noted, “although base price increases seem to be slowing and a few more concessions are being offered.”
The timing of the increased building is significant as well. The Orlando Regional Realtors Association just reported that home prices and sales were up in May in the Orlando area, but one key area of concern is inventory, which is low. The growing number of newly built homes in the region will help provide more options for buyers, whether they are first time buyers, snowbirds, or foreign investors.
As Metrostudy noted, in the first three months of the year, the total amount of single-family inventory – including homes under construction and finished but vacant units – was 6,888, which is equal to 8.7 months of supply. In the first few months of this year, the inventory of homes increased by 32 percent compared to last year. New housing starts were up throughout the region – by 20 percent in Orange County to 4,809 starts, 27 percent in Osceola County for 3,278 starts, and 20 percent in Lake County for 2,188 starts.
“Strong growth in the construction services sector is a recent phenomenon is this market,” noted Anthony Crocco, the director of Metrostudy’s Orlando region, in the report.
“As housing production continues to grow, particularly in Southwest Orange County, the construction engine will help support growth in the other categories,” Crocco added. “Builders are finally replacing prerecession developed subdivisions with new offerings in the ‘A’ and ‘B’ locations. However, the pricing of newly developed lots will continue to push up asking prices and drive more demand into the suburban submarkets of Lake and Osceola counties.”
Metrostudy is the leading provider of information to the housing market. The agency based in Orlando provides research, data, analytics and consulting services to builders and developers.
Michael Freeman is an Orlando journalist, playwright and author of the book “Bloody Rabbit”. Contact him at Freelineorlando@gmail.com..