Home Starts are Erupting
New home construction across Southwest Florida has climbed to its highest level since the Great Recession began battering the industry seven years ago.
Builders in the region enjoyed an uptick in May, amid pent-up demand from buyers and a shortage of existing single-family homes for sale.
As a result, builders are breaking ground on new homes at a pace not seen since the housing boom in the mid-2000s.
"We're ramping up, and I still don't think we have seen the peak at all," Lakewood Ranch-based homebuilder John Cannon said. "For many years, people were looking at distressed property, and that inventory has decreased drastically. We are seeing increased demand across the board."
Builders in unincorporated Sarasota County pulled 86 new single-family building permits in May, a 5 percent increase from April and a 46 percent gain from the same time last year, according to county records.
The 255 new residential building permits in Manatee similarly were up 9 percent from the previous month and jumped a whopping 98 percent from May 2012. The bulk of new permits in Manatee were issued for Lakewood Ranch and Parrish, the two most popular areas for new-home buyers this year.
The combined totals from both counties were a post-recession high in May, as builders scramble to complete homes in time for next winter's busy selling season. Permit activity measures homes that are expected to begin construction within three months.
The local activity dovetails with national trends. On Tuesday, the U.S. Commerce Department said housing starts increased nearly 7 percent in May, to a seasonally adjusted 914,000.
That news followed an announcement Monday by the National Association of Home Builders and Wells Fargo that builders are optimistic about sales for the first time in seven years.
Their builder-sentiment index leaped from 44 in April to 52 in May, the largest monthly gain since 2002 and the highest reading since April 2006. A reading above 50 indicates companies consider conditions for building to be favorable.
Both locally and nationally, the surge has put contractors back to work, boosted tax revenues for local governments and improved sales for housing-related retailers.
"There's just been more national relocation that has spurred local growth," said Paul Mason, an economist with the University of North Florida, in Jacksonville.
"Interest rates are climbing back up, and that has got people off the fence to start looking. Institutional investors also have decided the market is looking up, and that has prompted people to buy."
Economists say the recent lift has been fanned largely by demand by baby boomers, who put their Florida retirements on hold during the economic crunch. As their northern homes regain equity, more homebuyers are trekking south.
Improvements in the financial markets also have bolstered wealth for potential retirement buyers, who tend to pay cash.
At the same time, the supply of existing homes for sale has shrunk to just 3.9 months worth in Sarasota and 4.2 months' worth in Manatee -- the lowest level in almost a decade.
Most builders consider six months' worth of inventory as a signal to begin new construction.
With conditions ripe again, the industry is expanding its labor force for the first time since the Great Recession caused 350,000 construction workers to be dumped onto state unemployment rolls.
Pockets of Southwest Florida have done exceptionally well.
In Lakewood Ranch, for instance, community developer Schroeder-Manatee Ranch Inc. has recorded 290 new-home retail contracts this year, 13 percent ahead of 2012 and on pace for its best year since 2004.
More 300 homes now are under various stages of construction in Lakewood Ranch, an 8 percent rise from just mid-April, the developer noted.
"What a difference a day makes," said Jimmy Stewart, vice president of sales for LWR Communities, SMR's residential arm. "The market has really turned."
Nationally, the pace of new building is about 21 percent ahead of last year, according to Commerce Department data.
"We still have a ways to go, but we're working through the issues with foreclosures, and home prices have been rising over the past year," said Gary Jackson, an economist with Florida Gulf Coast University.
"Part of the drive also has been population growth, with people waiting to have the financial and housing issues resolved before moving down to this area."