Home Front by Duff Rubin: Florida remains a strong market for new construction
We are experiencing one of the most exciting, and at the same time, challenging times in housing market history. The demand from homebuyers across the nation, historically low mortgage rates, and rising equities for homeowners has allowed the real estate market to flourish in new ways following the uncertainty of the pandemic.
On the other hand, limited inventory of existing homes amidst an enduring high level of demand has led to an increase in home prices that has left some people exhausted in their home search. The new construction and development industry is also facing some challenges. Demand is far exceeding supply in the nation’s housing market – it’s reported that the U.S. is short 5.24 million homes. But the gap between new supply and demand had already been growing long before the pandemic, largely due to severe labor shortages in the construction industry. Adding to the issue are the supply chain disruptions that have caused delays and have increased the cost of building materials.
But there’s good news for Florida: It remains a strong market for new development. Despite the challenges, we’re seeing growth and confidence from consumers and builders in the market. Prolonged periods of time and difficulties during the entitlement process have slowed down the pace of construction, but demand persists. Vice President of Coldwell Banker Development Services in Florida Alec E. String shares that even with the rise in price, land in Florida is in high demand from developers.
He says, “We’ve noticed the steady increase of land entitlement for the last 18 months. Even if these projects are taking longer than usual and home prices are increasing due to the rise in cost of materials, we’re seeing that consumers across the state are willing to pay it, and developers feel strongly about the opportunity that the Florida market represents.”
The fact is that Florida has already had one of the biggest portions of growth within the new construction industry. Residential construction volume has been rising across the state. For single-family homes, the number of filed building permits has been on the rise since 2009, after it hit its lowest point during the recession. Between 2015 and 2020, Florida saw over 800,000 permits issued, according to a U.S. Census Bureau Building Permits Survey – and it continues to rank among the top states with requested permits in 2021.
The same factors that make Florida a prime relocation and investment market are contributing to developer and consumer confidence in new construction opportunities across the state. Factors like no state income tax, the possibility of remote work, and the availability of land to develop, solidify Florida as leading market for new construction. For developers, the population growth is a key factor. According to U.S. Census data, Florida’s population grew by 14.6% in the last decade – and the pandemic has only accelerated this, as migration from high-density markets brought a high volume of people to Florida.
Purchases of townhomes and single-family lots are outpacing sales in places where there is greater land for development, like the Florida Panhandle, East Central Florida, and the Gulf Coast. Southeast Florida does not lag, in fact, it continues to see exponential growth in the redevelopment and new condo space, especially across the coast. Simply put, Florida is reaping the benefits of a robust real estate and new development market.
Duff Rubin is the president of Coldwell Banker Realty in Florida.
This article originally appeared on Sarasota Herald-Tribune: Duff Rubin: Florida remains a strong market for new construction
