Before the coronavirus outbreak, local builders were on their best pace since 2006.
New home construction remained solid in Southwest Florida in early 2020, but the housing outlook has changed dramatically over the last several weeks.
Housing starts in the Sarasota-Manatee-Charlotte region are now likely to resemble a Nike swoosh — a big crash with a slow recovery, according to a new report from data supplier Metrostudy.
The sharp downturn — driven by the economic shutdown from the coronavirus pandemic — come after the region’s pace of annual home starts during the January-March period was the highest level since the housing bust in late 2006.
Builders poured slabs on 1,892 local single-family homes in first-quarter 2020, down 4% from the previous quarter but up 39% over the year, Metrostudy said.
The annual starts pace of 7,529 homes rose 8% from the previous quarter and 21% for the year. The annual starts rate was 156% of the 18-year average, tops in all Florida major markets, Metrostudy said.
But that demand, driven in large part by retiring baby boomers, has stalled for now.
“It appears that the first quarter of 2020 will be the high water mark for economic growth and housing activity in the U.S., including the Sarasota market,” said David Cobb, regional director with Metrostudy. “The economy falls fast, as it has, but the recovery will be gradual, and not a quick bounce back. It could be very similar to what we saw in the housing market between the years 2009 and 2019 — a big crash with a slow, steady recovery.”
Home builders could be challenged by growing levels of vacant developed lots — ready for homes to be built — during the economic recovery.
In Manatee County, for example, if starts drop 50% from current levels, and the supply of vacant developed lots remains where it is today, that would raise the months supply of those lots from 21 months to about 43 months, well above equilibrium and the highest in eight years.
“Similar results would occur in Sarasota and Charlotte counties,” Cobb said. “Thus, the need for brand new communities would be muted as builders work more slowly through the existing VDL inventory.”
Lakewood Ranch, which straddles Manatee and Sarasota, led the region with 1,383 annual starts in the first quarter. The West Villages in south Sarasota County was second, with 809, and Palmer Ranch third, with 378.
All of the top 10 communities are multi-builder projects.
Both developments were ranked among the top-selling master-planned communities in the country in 2019 studies by real estate analysts.
Buyers in the three-county region closed on 1,764 new homes in the quarter, ahead by 25% over last yer but down 3% from the previous quarter, Metrostudy said.
Total housing inventory stood at a 6.3 months supply, below the seven to eight months that is considered normal for this market.
“New construction is going to see a slowdown,” said Michael Bourre, president of the Florida Home Builders Association, during a virtual town hall Thursday with Manatee-Sarasota builders. “Hopefully, the lull will be short.”
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New home activity expected to stall in Southwest Florida - Sarasota Herald-Tribune
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