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Increase in home building near 5-year high
Developers across Southwest Florida are back to the business of building homes, adding jobs to the region’s largest employment sector and creating inventory for a hungry market.
Although just a crumb of its boom days, new home construction through October has muscled its way to the steepest annual improvement in nearly five years.
Market watchers point to a tight supply of existing real estate — bridging the price gap between new and used homes, while leaving slim options for buyers to choose from. That has increased demand for residential construction.

“The housing market has started to show signs of a recovery,” said Sean Snaith, an economist with the University of Central Florida. “Inventory is falling and prices are gaining traction. Those two trends are sending signals to builders that it’s time to get going on these projects again.”
Contractors pulled 50 new single-family building permits in unincorporated Sarasota County during October, the latest figures available.

Although it was down from the 76 in September, that tally represents a jump of two-thirds from the same month a year ago and a 163 percent surge from October 2010.
Through 10 months, Sarasota County’s cumulative totals this year are on track to outperform those from 2011 by 55 percent and 2010 by 48 percent, according to a Herald-Tribune analysis of permit reports.

The resurgence has been even stronger in Manatee County.
The county issued 164 single-family permits last month, a 29 percent rise from September and 76 percent increase from the same time a year ago.

There have been 1,306 new permits issued in Manatee through Oct. 31, a total that already beats the yearly tally from 2011. This year’s numbers are 42 percent higher than in 2010, 105 percent higher than 2009 and up 144 percent from the peak of the recession in 2008.
Charlotte County, hit the hardest by the housing slump, also has been the slowest to emerge from it. The modest 13 single-family building permits reported for October, valued at $2.5 million, is relatively flat from the same month’s totals going back two years.

But Charlotte’s 220 permits, year-to-date, are similarly the best since 2009, records show.
“We have seen slow, steady growth,” said Jim Evetts, Charlotte’s chief building official. “Nothing to jump up and down about, but it’s getting better.”
None of this is like the rush of 2004, when developers were building entire residential subdivisions on speculation — banking on a wave of retirees to move down to Florida and absorb them.
Instead, builders now are feeding a demand that has been growing since early spring as a result of the shrinking supply of homes for sale.

That has helped properties to appreciate and choices to virtually vanish — two traits of the market that bode well for new construction.
There was just 4.4 months’ worth of existing housing inventory between Sarasota and Manatee counties in October. The equilibrium between a buyer’s and seller’s market is about a six-month supply. Several years ago, that figure was upward of 20 months.
Traditionally new homes come at a 10 percent premium over resales. The lack of viable inventory has cut that mark in half, housing records show.

Existing sale prices in Sarasota are now up a median of $26,162 from a year ago.
“There are just not a lot of homes for sale so people are looking for custom properties,” said Gary Jackson, an economics professor at Florida Gulf Coast University and director of the school’s Regional Economic Research Institute. “It’s an indication we’re in a recovery. Construction is a very important part of our economy.”

Although builders will take the gains as they come, Southwest Florida’s construction rebound still remains subpar compared with other real estate hot spots in Florida.
In the North Port-Sarasota-Bradenton metro area, 659 single-family units were started by builders in the third quarter, a 16.8 percent increase from last year’s rate, according to a report by Metrostudy, a real estate research firm.

Those improvements, however, were bested by Fort Myers-Naples, where new home starts swelled 24 percent; Tampa, which saw a 31 percent surge; South Florida, 41 percent; and Orlando, 58 percent. Of the major metros in Florida, only Jacksonville had a softer third-quarter recovery, the study shows.
Housing officials expect the area’s progress to become more evident as major projects ramp up, like the 1,999-unit Grand Palm development by Neal Communities in Venice, which just opened its first phase.

Neal is also building Fairfield, a 140-home community just west of Interstate 75 on State Road 70 in Bradenton.
The company has 110 speculative homes now move-in ready.
“We’ve always had a demographics boon that’s now been superimposed on top of an economic recovery,” said Pat Neal, founder, owner and chief executive of Neal Communities. “We always had the baby boomers, they just postponed their decision. That dam has broken.”
Others, like Taylor Morrison’s 247-home Esplanade by Siesta Key near Gulf Gate, are to open early next year.

But Southwest Florida’s busiest area for new home construction remains Lakewood Ranch, where the 479 builder retail contracts so far this year already have topped the 391 from all of last year, 229 in 2010, 150 in 2009 and 92 in 2008, according to Schroeder-Manatee Ranch Inc., the developers of Lakewood Ranch.
“People are starting to see value in new homes,” said Jimmy Stewart, vice president of sales for LWR Communities LLC, SMR’s residential arm. “If you can do it, and the numbers work, everybody always wants to go new.”

The revival of construction in Florida pumped 4,200 new jobs into the sector in September alone, according to government figures.
Many laborers from flat work to block and roofing are also being sought again. Those labor costs, coupled with fierce demand, will likely push new home prices higher in 2013.
“We’re certainly seeing increases,” said Craig Cerreta, a Realtor with Premier Sotheby’s International Realty in Lakewood Ranch.

“The builders that are financially positioned are taking advantage of it.”
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