Land Shortages Threaten South Florida Home Construction
Written by Marilyn Bowden on May 27, 2004
By Marilyn Bowden
Florida tops the nation in home-building activity, according to data released by a national research firm, but local housing experts say land shortages may lead to a slowdown in Miami-Dade and Broward counties.
The theory about dwindling amounts of available land seems to be echoed in a continued rise in the number of sales of existing homes in South Florida, according to a report released Tuesday by the Florida Association of Realtors.
While home-building may be tapering off, the sale of existing homes by Realtors rose 19% in Miami-Dade and 9 % in Broward when compared to the same month last year, the report said. The median resale price of the homes rose 24% in both counties when compared to April 2003.
Statewide, the number of existing homes sold jumped 29% from a year ago with the Sarasota-Bradenton area leading the increase with a 70% jump in home resales.
Aside from a pending lack of new land locally, the Meyers Group, a national housing-research firm, still expects the home-building industry to have a positive year, due to an improving economy and low mortgage rates.
"As the national economy heats up and inflationary pressures increase, economists expect the feds to raise interest rates in their next meeting on June 30," Meyers economist Kyu Kim said in the company’s Housing Market Key Indicator Alert. "Although mortgage rates have risen by nearly 1 percentage point since mid-March, they are still relatively low by historical standards.
"And while higher mortgage rates have the effect of slowing down the housing market, we expect increased job growth and household incomes to offset the decline. Consequently, the outlook for housing remains upbeat and builder confidence should remain relatively strong for the remainder of the year."
According to statistics released by the US Census Bureau, housing starts increased nationwide 1.2% in April from the previous month. While single-family permits declined 0.7% from March, total permits were 11% higher than in April 2003.
The bureau measures housing starts by the number of new construction permits issued.
In March, the last month for which state-by-state statistics are available, more housing permits were issued in Florida than in any other state, the bureau reported, and showed a 33% increase from March 2003. Florida, Texas California, Georgia and North Carolina accounted for more than 40% of all single-family permitting.
Brad Hunter, director of the South Florida region for American MetroStudy, a Houston company that counts housing starts, said construction in Miami-Dade "has jumped pretty dramatically in the past few months.
"Based on the last four quarters ending in first-quarter 2004, there are 7,000 new housing starts per year. For years before that, it was averaging 5,000-5,500 a year."
Mr. Hunter said the sudden increase in Miami-Dade may be attributed to a scarcity of land in South Broward.
"Miami-Dade used to be able to rely on South Broward to supply land for new homes for its workers," he said, "Now South Broward is running out of land and so Miami-Dade has to rely on its own territories to house its growing workforce."
David Dabby of the Dabby Group, a valuation and consulting firm, said constant population growth continues to drive single-family permit activity statewide. "In Miami-Dade and Broward, new single-family home sales are actually down," he said, "not because of demand but because single-family land supplies are scarce. For example, from 2002 to 2003, new-home sales in Broward dropped from 6,400 to 4,300 during a time when demand was rising."
In the tri-county region, Mr. Dabby said, only Palm Beach County sales are up. He attributed that to higher land inventories.
"Miami-Dade and Broward cannot satisfy pent-up single-family demand, yet people still want to move here," he said. "This is why the new trend is for increased multifamily permit activity to accommodate growth."