SARASOTA / BRADENTON HOUSING 2Q18: New Home Starts at Highest Levels Since 2006; Affordability is the Only Concern for Future Growth
- Quarterly New Home Starts are up 17.2% YoY; Quarterly closings are up 8.9% from 2Q17 levels. The starts pace is the best single quarter for starts since 3Q06.
- Every price band over $250k saw increased annual volume with one exception, the $350k to $400k price band. The biggest concern is the inability to produce product under $250k, as just over 20% of all new home construction is considered “affordable.”
- Last year Irma interrupted some closings. Barring a major storm, year-end closings should be up 5 – 10% over 2017.
Metrostudy’s 2Q18 survey of the Sarasota-Bradenton housing market shows that 1,782 single-family units were started in the quarter, an increase of 17.2% compared to last year’s 2Q rate. It also represented a 27.6% increase versus the 1Q18 quarterly starts pace. The annual start rate compared to last year increased by 5.6%, to 5,913 annual starts.
Single-family quarterly closings totaled 1,696 units, which was 8.9% higher than the same quarter last year. The annual closings rate was 5,485 units per year, which was 2.0% above the annual closings rate in the same quarter last year. 4Q is typically the biggest quarter for closings but 2Q18 was the best single “post-recession” quarter for closings.
“Second quarter starts are typically a strong reflection of “snowbird season” sales,” said Tony Polito, Regional Director of Metrostudy’s Sarasota / Bradenton region. “The quarterly starts pace was the single best quarter for starts since 3Q06 and we are not yet to the middle of the “baby boom” turning 65, that occurs in 2020. The quarterly closing rate represented the best single quarter for closings since 3Q07. Typically 4Q closings are the highest each year. Because of retiree demand, there will continue to be growth in starts and closings in Sarasota over the next few years. Potential road bumps include rising interest rates, rising costs, affordability issues, public sentiment towards growth, the overall economy and the ability to sell homes ‘up north.’ Last year Irma interrupted some closings. Barring a major storm, year-end closings should be up 5 – 10% over 2017.”
The chart below shows the current distribution of annual starts by price range:
For the twelve months ending June 30, 2018, new home starts in price ranges under $300k totaled 2,535 units, up 2.5% from 2Q17 levels. Annual new homes starts in prices over $300k were up 8.1% for the twelve months ending June 30, 2018 versus 2Q17. The marginal 314 unit increase in the annual start pace was split: 62 more units under $300k and 252 more units above $300k. Every price band over $250k saw increased annual volume with one exception, the $350k to $400k price band. The bigger concern is the inability to produce product under $250k. Just over 20% of all new home construction is considered “affordable.”
During 2Q 2018, Manatee County recorded 801 housing starts, up 27.6% versus the 628 starts in 2Q 2017 and up 8.4% compared to the 739 units built in 1Q 2018. During 2Q 2018, Sarasota County recorded 648 housing starts, up 18.7% versus the 546 starts in 2Q 2017 and up 18.3% compared to the 548 units started in 1Q 2018. Venice is now building 144% of the volume in North Manatee but 61% of the Southeast Manatee sub-market.
The table below ranks the top ten communities in the market by annual starts, not including condo product:
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