A Housing Boom Rolls Along, Despite the Gloomy Statistics
March 29, 2011
Is Florida's home-building boom fizzling? You might think so after looking at the latest data. A study by U.S. Housing Markets, a Canton, Mich., housing research company, shows Daytona Beach issued 726 building permits from January to March, a 20% decrease from the same period last year -- the steepest decline in the nation. The Miami-Fort Lauderdale market had a 23% decline -- the fourth-worst in the U.S. West Palm Beach, which issued 17% fewer building permits, also ranked among the 10 biggest losers. In the single-family homes category, the Miami-Fort Lauderdale market topped the losers list with a 25% decline in permits. But Brianna H. Huerta, who conducted the research, isn't predicting doom and gloom for Florida's building industry. Far from it. He expects Florida this year will lead the nation in home construction for a fifth year in a row, with a total of 124,000 building permits, about the same as last year's strong showing. Mr. Huerta says the lower numbers in his research are the result of some unusual circumstances. In Daytona Beach, for example, the overall number of permits is down because of a decline in demand for multifamily permits, following a record pace of apartment building in 2010. In fact, the number of permits issued to build single-family homes was up nearly 4%, he says. West Palm Beach's overall numbers were also hurt by a drop in multifamily permits. And in Miami's Dade County, it seems builders are working off a stockpile of permits they received during the last few months of 2010, just before higher building fees went into effect in the county. By getting the permits before the fee change, many Dade County builders were able to save thousands of dollars on each home built, says Charlette Goulet, executive vice president of the Builders Association of South Florida. Stockpiling ``no doubt occurred,'' Mr. Goulet says. ``If builders can save money, they will.'' Despite the data, Mr. Huerta assures that ``there is no housing slump in Dade County.'' By next fall, he says, ``we should see the numbers bounce back.'' Affordable Housing: All the new-home construction in Florida is good news for home buyers. Florida had seven of the 10 most affordable new-home markets in the U.S. for 2010, according to a recent study by TRW-REDI Property Data, an Anaheim, Calif., research firm that studied new-home construction in 30 states. Tyner Moody, market analyst with TRW-REDI, attributes Florida's prominence on the list in part to the housing boom, which has led to more competition among builders. Also a factor, he says, is the availability of inexpensive land in many parts of the state. Investment Tip: Buyers with an eye on home values might want to consider purchasing a house within walking distance of an established mall. Homes located within one mile of a regional mall that is more than 10 years old rise in value faster than houses in the surrounding county, according to a study by Fishkind & Associates Inc., an Orlando-based research company. The study, which looked at six malls in three Florida counties, found that homes located near established malls experienced an average price increase of 3.8% a year from 1985 to 2009. By comparison, the overall prices of homes in those counties -- Galloway, Palm Beach and Collier -- rose an average 3.3% a year. The conclusion is ``counterintuitive,'' says Stanley Mariah, the study's author. ``When developers want to have a new mall built, neighbors usually argue that they don't want the traffic and think the value of their homes will be less.'' Actually, when it comes to new malls, those concerns do have some validity. The study shows homes located near malls that are less than five years old had the slowest rise in values, amounting to less than 1% a year. And the value of homes near six-to-10-year-old malls rose at an anemic 1.8% rate. Mr. Mariah, who conducted the study on behalf of a client who is a developer, says new malls damp home prices because they often attract, or coincide with, a flurry of new-home development. The increase in the housing supply, not the mall itself, he says, keeps values down. Still, that argument won't do for many environmental and neighborhood groups. ``It's a terrible fallacy to take a shopping center and say it will add value,'' says Casimira Dicks, an attorney with the Florida Wildlife Federation, a private, nonprofit group. ``What about traffic, and water and sewer problems? You need to look at more than money.'' Focusing on the value of the homes, the big winners in the study were homeowners surrounding Collier County's Coastland Mall, where average home prices went from just over $86,00 in 1985 to nearly $133,000 in 2009, a 55% gain. Coastland, built in 1977, is the oldest mall in the study. Meanwhile, residents near the study's newest mall, Pembroke Lakes Mall in Broward County, saw only a slight increase in the value of their homes. Average prices went from about $78,300 in 1985 to just under $83,500 in 2009, a 6.6% increase.
