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Metrostudy: Housing fundamentals remain strong

South Florida Business Journal - 2/2/2007 12:00:00 AM
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Metrostudy said its fourth quarter housing data show early signs of hope for the South Florida housing market, which it considers to be Palm Beach, Broward, Miami-Dade, Martin, St. Lucie and Indian River counties.

"The annual pace of new home starts in the six-county region fell to a level that can allow inventory to decline - a milestone on the path to equilibrium," said Bradley F. Hunter, director of Metrostudy's South Florida division.

Metrostudy, which bases its South Florida division in downtown West Palm Beach, said regional starts have fallen to 17,525, which it said is significantly below the level of demand for marketwide move-ins, which numbered 19,417.

"The reduction in starts was the first step," Hunter said. "Soon, inventory of both unsold homes and homes that have been sold but are still vacant will diminish."

The housing information firm counts home starts and move-ins by driving past each lot or home in each active subdivision to verify the construction status of each new home every quarter.

The number of local resale listings is still increasing, but Metrostudy said it expects a peak in that supply indicator during the next few months - and not just because of the winter season.

"Many MLS listings are those of market testers - sellers who were hoping for a high bid, but who are now letting their listings expire. The reduction in this number will be a reassuring sign," Hunter said.

He targeted the to move back toward inventory equilibrium starting in the first or second quarter, and continuing throughout the year."

However, Metrostudy noted its research suggests there will still be "months of adjustment" ahead.

Metrostudy said the top 10 South Florida communities, ranked by annual new-home starts, are:

  • Tradition, in St. Lucie, with 1,043 starts and 301 move-ins
  • Keys Gate, in Miami-Dade, with 810 starts and 425 move-ins
  • Canyon Isles, in Palm Beach, with 425 starts and 251 move-ins
  • Oasis, in Miami-Dade, with 425 starts and 252 move-ins
  • Mandarin Lakes, in Miami-Dade, with 409 starts and 152 move-ins
  • Silver Palms, in Miami-Dade, with 353 starts and 421 move-ins
  • Newport Isles, in St. Lucie, with 337 starts and 365 move-ins
  • Isles @ Bayshore, in Miami-Dade, with 327 starts and 316 move-ins
  • Coconut Cay, in Miami-Dade, with 270 starts and 258 move-ins
  • Abacoa, in Palm Beach, with 261 starts and move-ins

For tri-county South Florida, Metrostudy reported:

  • Palm Beach County with a total of 522 starts and 976 move-ins during the fourth quarter. Starts of detached homes fell to 262 units during the fourth quarter, less than half the rate of absorption. The annualized starts rate has declined each quarter since the fourth quarter of 2003, Hunter noted. Also, Palm Beach County has 566 finished vacant detached homes, a 1.7-month supply, as detached move-ins declined from a typical base of more than 1,000 units to 583 units during the fourth quarter. Starts of attached homes (primarily townhomes) declined to 260 units during the fourth quarter, falling below the pace of absorption. A wave of completions brought the level of finished vacant inventory to 690 units, an increase from the 433 units reported during the third quarter 2006 and from the 164 units reported at the end of the fourth quarter 2005.
  • Fourth quarter, single-family starts in Broward County declined to 569 units, an 8.8 percent drop compared to the third quarter of 2006 and a 24 percent decrease from the fourth quarter of 2005. The annual pace of 2,717 units is almost identical to the pace recorded during the year-ago fourth quarter. However, move-ins increased during each quarter of 2006, with a gain of 50.7 percent reported during the fourth quarter. Quarterly move-ins were 370 units higher than quarterly starts during the fourth quarter of 2006, which Hunter said indicated there will soon be a significant net reduction of inventory homes. Broward County had 430 finished vacant homes during the fourth quarter of 2006 - a two-month supply. Metrostudy deemed the count of 2,199 homes under construction as normal for recent years, likewise for the current 5.9-month supply of vacant developed lots.
  • Hitting its lowest level since 2002, single-family housing starts in Miami-Dade County totaled 994 units at the end of the fourth quarter, down 24.8 percent from the third quarter and 28 percent from the fourth quarter the year before. The annual starts pace was 5,135 units, down 38 percent from the year before. The pace of absorption (move-ins) was 1,259 units, which was higher than the number of new housing starts. However, the pace of move-ins declined 21.6 percent from the third quarter and .6 of a percent from the year-ago fourth quarter. The annual pace of move-ins was 6,912 units, down 11.9 percent from the year before. Metrostudy said there were 1,405 finished vacant homes in Miami-Dade at the end of 2006, a 2.4-month supply it said is comparable to the level reported during the third quarter. Hunter noted the number of new homes under construction - 3,250 for the fourth quarter - continued to decline.

As far as the nation as a whole, Metrostudy President Mike Inselmann said slowing growth within the U.S. economy is evident.

The company said most recent GDP numbers (from the third quarter 2006) indicate the economy is growing at 2 percent, below the Federal Reserve's target range.

However, job growth is steady, with the addition of 1.8 million new jobs during 2006.

"Excluding housing, GDP growth is actually quite strong," Inselmann said. "The Fed's goals of cooling down overheated housing markets and controlling price inflation in the economy will dictate its future actions, but whether an overcorrection will materialize remains to be seen. The duration and intensity of the slowdown in some regional housing markets is likely to have some effect on the overall economy, and thus, the Fed's rate policy."