SOUTH FLORIDA HOUSING 4Q18: Affordable Product Remains in Demand – while Townhomes become an Increasingly Important Part of the Housing Mix
- Quarterly new home starts are up 13% over 4Q17 levels – while annual starts decreased 1% in 2018.
- Quarterly closings are up 17% from 4Q17 – but down 2% in 2018 overall.
- The lack of inexpensive, developable land has plagued this market for the past two decades, and improvement in this metric is unlikely -the median new home started this quarter was $381,545, which includes single-family attached product.
- Townhomes are the new entry level product, with many builders including townhome product at 50% of the total units in their master planned communities.
Metrostudy’s 4Q18 survey of the South Florida housing market – which includes activity in Indian River, St. Lucie, Martin, Palm Beach, Broward, and Miami-Dade counties – shows that quarterly new home starts decreased 14% to 1,900 from 3Q18, but increased 13% when compared to the fourth quarter of 2017. The annual starts pace increased 3% over the previous quarter to 7,993, but decreased 1% from 4Q17.
Quarterly closings increased 16% from the previous quarter to 2,305, and increased 17% from 4Q17. The annual closings pace of 7,937 decreased 2% from 4Q17. Finished, vacant inventory increased 2% from last quarter to 1,332 units, but decreased 11% from 4Q17. Finished, vacant inventory has hovered in the 2 months-of-supply (MOS) range for the previous twenty-three consecutive quarters and is holding steady at 2.0 MOS. Metrostudy has observed over the years that when MOS rises above about 3.0 and stays there, builders tend to reduce prices or make concessions, so Metrostudy monitors this metric closely.
As can be seen with the accompanying chart, year over year gains in the annual starts pace occurred in the $200-299K and the $500-599K price ranges. The $300-399K price point remains popular as well. Demand for affordable homes (those under $500,000) remains robust, while demand for expensive homes (those over $700,000) is less so.
County by county breakdown is below:
- MIAMI-DADE COUNTY: Quarterly starts in Miami-Dade County fell 45% from the previous quarter to 354, and quarterly starts were down 43% y-o-y. Quarterly closings increased 13% from the previous quarter to 656, but decreased 8% y-o-y. The annual starts pace of 2,034 decreased 12% from 4Q17 and the annual closing pace of 2,351 decreased 21% from a year ago. Northwest Miami-Dade was the most active submarket this quarter, with 188 starts, followed by South Dade, with 108 starts.
- BROWARD COUNTY: Quarterly starts in Broward County increased 8% from the previous quarter to 415, and are up 41% from 4Q17. Quarterly closings increased 18% from the previous quarter to 488, and increased 62% from 4Q17. The annual starts pace increased 9% y-o-y to 1,487 units, and annual closings were up 8% y-o-y to 1,591. Northwest Broward was the most active submarket this quarter, with 222 starts, followed by Southwest Broward with 105 starts.
- PALM BEACH COUNTY: Quarterly starts in Palm Beach County increased 28% from the previous quarter to 585, and are up 42% from 4Q17. Several large, master planned communities such as Weslake, The Fields, Arden, Dakota, Valencia Bay, and Palm Meadows contributed to the increase in starts this quarter. Quarterly closings increased 7% from the previous quarter to 568, and increased 15% from 4Q17. The annual starts pace increased 12% y-o-y to 2,135 units, and annual closings were up 15% y-o-y to 2,033. Boynton-Delray was the most active submarket this quarter, with 198 starts, followed by Central Palm Beach with 158 starts and North Palm Beach with 111 starts.
- TREASURE COAST: The Treasure Coast is comprised of Indian River, St. Lucie, and Martin counties. Quarterly starts decreased 25% while quarterly closings increased 26% from the previous quarter. St. Lucie west was the most active submarket, with 214 starts this quarter, followed by Indian River South with 120 starts.
“The lack of inexpensive, developable land has plagued this market for the past two decades, and improvement in this metric is unlikely,” said David Cobb, Regional Director of Metrostudy’s South Florida market. “The median new home started this quarter was $381,545, which includes single-family attached product. Townhomes are the new entry level product, with many builders including townhome product at 50% of the total units in their master planned communities. The Treasure Coast is the most affordable submarket, where single family detached product can be purchased for less than $300,000. The land constraints have prevented this market from becoming overbuilt, and affordably priced product remains in demand.”
The Top 10 single family communities in the South Florida market, ranked by the past 12 months’ starts through the fourth quarter of 2018 is shown in the following chart. Tradition continues as the top community, a position it held last quarter as well. Westlake moves into the top five, and Downtown Doral and PGA village make the list this quarter.
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