More new construction needed in the Miami-Fort Lauderdale area
Shortage of new construction in most Florida metropolitan areas
Extracted from FloridaRealtors.org – Sept. 20, 2016
The National Association of Realtors (NAR) released a study indicating that in most U.S. measured metropolitan areas, new homes under construction are below the demand based on generation of new jobs.
In our state, Miami is in the top ten areas needing more homes to be built.
The study looked at job gains between 2013 and 2015, in 171 metropolitan area through the U.S. According to the National Association of Realtors, “single-family home construction is startlingly underperforming in most of the U.S.”
“Inadequate single-family home construction since the Great Recession has had a detrimental impact on the housing market by accelerating price growth and making it very difficult for prospective buyers to find an affordable home – especially young adults,” says Lawrence Yun, NAR chief economist. “Without the expected pick-up in building as job gains rose in recent years, new and existing inventory has shrunk, prices have shot up and affordability has eroded despite mortgage rates at or near historic lows.”
Employment growth was compared to single-family housing starts. Historically, the average ratio for the annual change in total jobs to permits is 1.6 for single-family homes. However, 80 percent of measured markets had a ratio above 1.6, which indicates inadequate new construction. Overall, the average ratio for areas examined was 3.4.
In Florida, only the Pensacola area was in balance with a ratio of 1.6, and no state metro area had more construction than needed.
Using each metro area’s jobs-to-permits ratio, NAR then calculated the amount of permits needed in each metro area to balance the ratio back to its historical average of 1.6. The higher the number of permits required, the more severe the shortage and the higher the ratio.
NAR study concluded that in Florida the following metro areas ranked at the top in the U.S. list
Miami-Fort Lauderdale-West Palm Beach: 11.4 ratio, 118,937 permits needed
Port St. Lucie: 5.7 ratio, 6,012 permits
Tampa-St. Petersburg-Clearwater: 4.1 ratio, 39,034 permits
North Port-Sarasota-Bradenton: 4.0 ratio, 14,073 permits
Orlando-Kissimmee-Sanford: 4.0 ratio, 47,351 permits
Cape Coral-Fort Myers: 3.9 ratio, 13,609 permits
Gainesville: 3.7 ratio, 2,277 permits
Deltona-Daytona Beach-Ormond Beach: 3.5 ratio, 4,487 permits
Tallahassee: 3.3 ratio, 2,158 permits
Ocala: 2.8 ratio, 1,769 permits
Jacksonville: 2.7 ratio, 13,736 permits
Punta Gorda, 2.3 ratio, 702 permits
Naples-Immokalee-Marco Island: 2.2 ratio, 3,020 permits
Sebastian-Vero Beach: 2.1 ratio, 493 permits
Lakeland-Winter Haven: 2.0 ratio, 2,142 permits
Palm Bah-Melbourne-Titusville: 1.9 ratio, 974 permits
Crestview-Fort Walton Beach-Destin: 1.9 ratio, 731 permits
Pensacola-Ferry Pass-Brent: 1.6 ratio, 168 permits
According to Laurence Yun, NAR chief economist, most of the metro areas with a big need for increased construction have strong appetites for buying, home-price growth that outpaces incomes and common instances where homes sell very quickly.
Their healthy job markets continue to attract an influx of potential homeowners, fueling the need for more housing.
“Although a few small cities with high ratios did not make the national rank for absolute permit shortages, their supply shortages are still meaningful at the local level and could become a bigger issue if job gains hold steady and the current pace of construction remains at its nearly non-existent level,” adds Yun.
“The limited number of listings in several markets means that many available homes are receiving multiple offers and going under contract rather quickly,” says NAR President Tom Salomone.
But there are some good news: The ratio in many areas moved downward slightly in 2015 compared to 2014 as builders started to respond to local demand.
However, it’ll likely be multiple years before inventory rebounds in many of the markets because homebuilders continue to face a plethora of hurdles, including permit delays, higher regulatory and labor costs, difficulty finding skilled workers and the exhausting process many smaller builders go through to obtain financing.
It are interested in the purchase of Pre Construction Condo in the Miami-Fort Lauderdale area, please call:
Henry B. Nathan
United Realty Group Inc.