With a growing demand for new homes in Central Florida, builders are ready to move a little further from the core market of Orlando in 2018 in search of affordable land with both an address and entitlements.
And because there is no state income tax in Florida and because of other attributes, this area is soaking up jobs and businesses from high tax northeast cities which continue to go down the wrong route. Philadelphia, NYC, and Baltimore (watch the amazing show The Wire) have become unlivable in some parts or in most parts of those cities as crime rates rise and tax rates remain unappealing.
According to a recent MetroStudy report, vacant as well as developed lots declined by more than eight percent for the region in the third quarter compared to the previous year. This has led to a renewed scramble for where to build next.
Anthony Crocco, the Director for MetroStudy in Central and North Florida, said that the pace of developing new lots has somewhat reduced in Orlando. However, builders continue to actively search for lots replacement for the next year as well as delivery lots for 2019.
New housing starts marginally declined in South Orange County, but remained firm in the Leesburg-Mount Dora area. However, the research analytics group found that the southwest Orange County witnessed a surge in the annual construction activity, and jumped more than eight percent during the third quarter.
Buyers are willing to pay at least eight percent more for the right address, regardless of whether or not the builders pay a premium for lots in Windermere, Winter Park, or other exclusive areas.
Analysts suggest that when people move to Orlando, they have clear idea of the areas they are willing to consider, and those they do not want. In Windermere, this appears to be a really big deal. Buyers here seek not just Winter Park, but they also want the postal code 32789 that makes up this much-coveted area.
Outside the town limits of Windermere, communities spring up showing deference to the Windermere name (such as Windsor Landing, Wesmere, and Winder Oaks). The power of an address has traditionally influenced the buyers across Central Florida. Besides, the trend is that buyers prefer to be around community activities, nightlife, restaurants, entertainment options and a municipality.
Seniors and Vacationers Push Up Demand
Holidaymakers and senior citizens are primarily behind an increase in Central Florida’s new housing construction. Champions Gate, Tapestry, Storey Lake and Reunion Resort and Club, the four Osceola communities that are popular for vacation rentals — were among the most active ones in Central Florida for construction during the third quarter.
In general, the vacation rental market seems to be returning to where it was about two decades ago, with at least 1,000 to 1,500 closings every year. Nearly five years ago, buyers from Canada and the UK started trickling back into the region. Central Florida is likely to witness see a further increase in this trend in 2018.
You have the Orlando Magic to watch. You have Disneyworld, restaurants, clubs, the animal park, and so on in Orlando. This is a mighty city with plenty to do.
In the third quarter of 2017, the Villages continued to dominate the entire residential construction in Lake, Seminole, Orange and Osceola counties. As many as 785 housing starts were reported in the most recent quarter. However, competition is likely to get hotter in this retirement mecca. Latitude Margaritaville is an exciting new the project that could ignite Ormond Beach and Palm Coast with builders positioning related projects.
Latest data shows an uptick in the number of seniors who are moving to the state. The housing bust had derailed the migration of seniors in the region, but now it seems to back on its feet.
For the housing sector in Orlando overall, the home construction industry is clearly turning a corner in terms of a sustainable, long-term recovery. The new housing starts rate is gathering pace and a vast majority of unsold lots that had been lingering on in semi-built neighborhoods have been built on and sold.
Older communities are turning over, and now the scenario includes all new lots, models, features, and amenity centers. Even Hurricane Irma has not been able to put brakes on the growing momentum. During the previous four quarters, new home closings rose by 20 percent compared to a year before.
The power of low taxes or no taxes in some cases is a powerful draw to many people who work hard for their money.
Prices are a Challenge
For many prospective buyers and renters in the low wage economy (but low wages will rise with tax cuts and the erosion of the ACA health care law which has kept wages down), the challenge is that the new home prices are becoming a stretch. During the last quarter, the price range that drew the maximum number of buyers was $250,000 to $290,000. The median household income as per the Fed data is $58,121. The number of new homes being constructed and sold was delicately balanced within that price range.
To match with the needs of the prevailing service sector economy, builders are creating smaller products as well as products with fewer features. They are also doing town homes. Houses have also become costlier because of the rise in land costs and impact fees of the government. Cities that are growing like Orlando have to have measured growth since if growth is too fast it could have a terrible effect on the resources in the area and the infrastructure for example.
Communities in Central Florida are busy for several reasons, and tourism growth is one of the major ones. Perceived resale value, transport infrastructure, and quality and range of available product options also make a difference.