Housing Starts Decline in Palm Beach County
In yet another sign that the Palm Beach County housing market is faltering, new housing starts are falling fast throughout the county -— but soaring in the nearby Treasure Coast of Florida. The Palm Beach Post reports that the number of new homes started in Palm Beach County fell to 1,750 in the first three months of this year, down a significant 24 percent from Q1 of 2005.
Bradley Hunter, head of the South Florida division of Metrostudy (a real estate research firm), pointed to what he calls a “double whammy” in the Palm Beach County supply-and-demand equilibrium. The region, along with much of South Florida, has a dwindling supply of lots available to build upon. At the same time, fewer buyers are eager to buy with the investor speculation frenzy subsidizing.
In the Treasure Coast, however, housing starts picked up significantly. St. Lucie County has no shortage of building lots available, a fact reflected in the number of starts, which jumped to 747, up a whopping 61 percent from a year ago. Martin County starts, meanwhile, leaped forward to 161 units, up 13 percent from a year ago. For a look at how the region stacks up to new starts in the rest of the U.S., please see this March breakdown of U.S. home building.
The Florida housing market was due for a slowdown, Hunter said, and Palm Beach County is certainly no exception. The “inflated” prices for homes and the wave of speculation that have washed through the Sunshine State in the past several years had to come to an end sometime. The only question now is how severe the fallout will be.
Analysts expect home sales to fall and prices to remain flat through much of 2006, but many think the market should perk up by early 2007. Yet even as things cool down, prospective Palm Beach buyers are looking like “deer in the headlights” as the sticker shock of $400,000 single-family homes still resonates. They’re waiting for median prices to fall, a process that takes a lot longer than it does for them to rise.
“I think it’s going to be longer than that,” said Orlando economist Hank Fishkind. “In Florida, we’re going to see some slowing of population growth, so that will magnify the impact.”
Increasingly expensive Florida home loan options have also contributed to the lack of demand in the early part of 2006, a trend that may continue for the next 6-12 months.
