TAMPA HOUSING MARKET: 1Q16 Quarterly Starts Pace Strengthens with 50.7% YoY – Best Quarter for Starts Since 1Q07
- Tampa’s 1Q16 Quarterly New Home Starts Up 50.7% YoY – Best Quarter For Starts Since 1Q07
- Annual new home starts in price ranges under $200K increased 12.8% YoY & annual new home starts in prices over $200K increased 42.3% YoY
- Inventory will be watched closely as the growth in closings was not enough to offset the growth in FV units in 1Q16, resulting in increases in FV inventory and MOS QoQ.
MAY 2016 – Metrostudy’s 1Q16 survey of the Tampa housing market shows that 2,131 single-family units were started in the quarter, a 50.7% increase from 1Q15. The annual rate of 8,203 starts, showed a 34.6%, increase compared to last year. Single-family quarterly closings totaled 1,700 units, which was 23.1% higher than 1Q15. The annual closings rate was 7,161 units, 25.7% above the annual closings rate for the twelve months ended 1Q15.
“The quarterly starts pace of 2,131 units was the single best quarter for starts since the first quarter of 2007. Tampa is now building about 82% of the twenty-year moving average,” said Tony Polito, Director of Metrostudy’s Tampa market. “The quarterly closing rate of 1,700 units was down from 4Q but remained better than all of 2014 and the first part of 2015. Metrostudy is still anticipating that there will continue to be growth in starts and closings in Tampa over the next few years. Demand should continue to grow, but not at boom-year levels. Competition, especially at the low end comes from apartments. Townhomes are an attractive alternative to renting and the average townhome sells for $234K for 1,771 square feet. There was a 60.5% increase in the annual starts pace for townhomes during 1Q16 versus 1Q15, up to 1,356 annual units from 845 annual units.”
For the twelve months ending March 2016, annual new home starts in price ranges under $200K totaled 1,792 units. This was up 12.8% from the 1Q15 annual activity of 1,588 units in prices less than $200K. Annual new home starts in prices over $200K numbered 6,411 units as of 1Q16, up 42.3% from 4,505 units as of 1Q15. The marginal 2,110-unit increase in the annual start pace was split: 204 more units under $200K and 1,906 more units above $200K.
Total single-family inventory, which is composed of units under construction, finished vacant and models, equaled 4,504 units on the ground at the end of the 1Q16, representing a 7.5-month supply. Inventories grew by 30.1% YoY. Compared to last year, the number of units under construction rose by 875 homes to 2,744 homes. Finished vacant (FV) inventory numbered 1,328 units in 1Q16, up by 8% from 1,230 units last year. Compared to a year ago, the FV months of supply declined from 2.6 to 2.2 months. The number of completions exceeded move-ins during the quarter and FV inventory grew by 115 units versus 4Q15 and the MOS grew from 2.1 to 2.2 months. The growth in closings was not enough to offset the growth in FV units.
Hillsborough County remained the most active county within the Tampa market with 4,754 annual starts, but has continued to lose market share, down from 61.3% for 1Q15 to 58% for 1Q16. Market share in Pasco grew from 25.9% for 1Q15 to 28.9% for 1Q16 as quarterly starts increased from 510 in 4Q15 to 609 for 1Q16. The VDL supply throughout all of Hillsborough County stood at 22.1 months as of 1Q16, down 9.1 months from 1Q15. The VDL supply in Pasco stood at 34.2 months as of 1Q16. One year ago, Pasco had a 47.3-month supply of vacant developed lots. These two major counties accounted for 86.9% of all annual start activity in Tampa Bay during 1Q16.
“Solid job growth, a falling unemployment rate compared to a year ago, record level employment and low interest rates all fueled an impressive quarter for housing activity in Tampa,” said Polito. “We did see a significant trend in new housing inventory in 1Q16. Closings fell in 1Q16 versus 4Q15. Coupled with the sharp increase in starts, Finished Vacant units grew by 98 units from a year ago and 113 units from December. The result was an increase in the months of supply from 2.1 months in December to 2.2 months in March. This trend will bear watching as ideally the supply of FV units would be nearer to 1.5 months. The backlog of under construction remains strong and points to solid closing numbers in 3Q and 4Q 2016. The good news is that long term interest rates should not fluctuate too much during the balance of 2016.”
The table below ranks the top ten communities in the market by annual starts:
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