SARASOTA / BRADENTON HOUSING 3Q17: Hurricane Irma Impact is Limited as Quarterly New Home Starts are at Post-Recession Highs
- Quarterly New Home Starts are up 3.4% YoY while Annual Starts are down 0.4% from 3Q16 levels
- Affordability is getting squeezed in the lower price points as new home starts under $250k are down 20% YoY.
- Despite Hurricane Irma, quarterly starts were the best we have seen post-recession. Sarasota-Bradenton is now building about 120% of the twenty year moving average. Irma may push some closings into 2018, but she did not materially impact our forecast for increasing housing starts in 2018 for Sarasota.
Metrostudy’s 3Q17 survey of the housing market in Sarasota-Bradenton shows that 1,514 single-family units were started in the quarter, an increase of 3.4% compared to 3Q16. It also represented a 4.1% increase versus the 2Q17 quarterly starts pace. The annual start rate compared to last year decreased by 0.4%, from 5,561 to 5,539 annual starts. Single-family quarterly closings totaled 1,327 units, which was 2.2% higher than 3Q16. The annual closings rate was 5,397 units per year, which was 5.4% above the annual closings rate of 5,120 units per year in the same quarter last year. Irma likely affected closings as closings fell by 211 units from the 2Q level.
For the twelve months ending September 30, 2017, new homes starts in price ranges under $250k totaled 1,211 units, down 20% from the 3Q16 levels. Annual new homes starts in prices over $250k were up 6.9% for the twelve months ending September 30, 2017 versus 3Q16. The marginal 22 unit decrease in the annual start pace was split: 302 less units under $250k and 280 more units above $250k. The chart below shows the price distribution of annual housing starts for the third quarter this year compared to the three previous years:
“Hurricane Irma impacted jobs and the local economy in September, but this is expected to be a short term impact, although with a 3.3% local unemployment rate, new job creation is highly dependent upon new population growth,” said Tony Polito, Regional Director of Metrostudy’s Sarasota/Bradenton market. “Irma resulted in lost sales and closings in September, which is reflected in our U/C months of supply, which grew from 4.6 months as of June to 5.1 months as of September. Last year between 2Q and 3Q, quarterly closings fell by 158 units, as retirees avoid Florida summers. This year the number of closings fell by 211 units between 2Q and 3Q. The market is carrying two weeks more UC inventory this year than last. Despite Irma, quarterly starts were the best we have seen post-recession at 1,514 starts, up 59 units from 2Q. Sarasota-Bradenton is now building about 120% of the twenty year moving average. Irma may push some closings into 2018, but she did not materially impact our forecast for increasing housing starts in 2018 for Sarasota.”
This quarter 1,763 lots were delivered to the Sarasota-Bradenton market compared to 1,251 in 3Q last year. Vacant developed lot inventory stands at 36,977 lots, an increase of 0.2% compared to 36,904 VDL last year. Based upon the annual start rate, this level of lot inventory represents an 80.1 month supply, an increase of 0.5 months compared to last year. Most VDL are in Charlotte County. At the end of 3Q17, Manatee County had a 22.2-month supply, down from a 22.4-month supply of VDL in 3Q16. Sarasota County had a 24.6-month supply at 3Q17, up from a 23.1-month supply at 3Q16. During 3Q17, Manatee County recorded 747 housing starts, up 19.5% versus 2Q17 and up 19. 5% compared to 3Q16. During 3Q17, Sarasota County recorded 600 housing starts, up 24.5% versus 2Q17 and up 7.1% compared to 3Q16. Venice remains the second most active sub-market to SE Manatee.
The table below ranks the top ten communities in the market by annual starts.
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