A Cooling South Florida Market: By the Numbers

The cool breeze continues to linger in the South Florida housing market, although the figures vary greatly from one county to the next.

Metrostudy, a housing industry market research and information firm, said builders started construction on 5,549 homes Palm Beach, Broward, Miami-Dade, Martin, St. Lucie and Indian River counties during the second fiscal quarter alone.

Metrostudy’s division director, noted an insignificant 0.9 percent drop in housing starts during the quarter, but said activity declined 18.6 percent compared to this time last year.

Nevertheless, Metrostudy has analyzed an abundance of data and ranked its top 10 South Florida real estate communities in terms of annual new-home starts. Here is the company’s current list:

1. Tradition, in St. Lucie — 795 starts / 291 move-ins
2. Keys Gate, in Miami-Dade — 597 starts / 402 move-ins
3. Newport Isles, in St. Lucie — 529 starts / 256 move-ins
4. Oasis, in Miami-Dade — 454 starts / 31 move-ins
5. Canyon Isles, in Palm Beach — 441 starts / 121 move-ins
6. Abacoa, in Palm Beach — 399 starts / 433 move-ins
7. Valencia Palms, in Palm Beach — 389 starts / 344 move-ins
8. Martin’s Crossing, in Martin — 388 starts / 311 move-ins
9. Waterstone, in Miami-Dade — 371 starts / 804 move-ins
10. Majorca Isles, in Miami-Dade — 351 starts / 64 move-ins

As far as the pace of absorption, or actual move-ins, Metrostudy said the numbers picked up during the second quarter, 2.5 percent to be exact.

However, the move-in pace declined slightly from the year before, which may possibly reflect some buyer anxiety. The absorption figures are collected from evidence of actual signs of occupancy. Hunter said move-in statistics are a better measure of real user demand than deed recordings and contract sales, both of which can be inflated by speculative purchases.

Investor units without users are a main reason the Florida housing market is so bloated with inventory right now. Completed but vacant homes are up a stunning 67 percent from last year. New research suggests there will be a period of “digestion,” during which the inventory is absorbed, but the fundamentals of demand are still in place and will help the market recover. Below, we’ll take a look at Metrostudy’s findings for Palm Beach, Broward and Miami-Dade counties.

In Broward County:

• Housing starts rose during the second quarter, despite the scarcity of land for development. The 900 quarterly starts posted marked a 53.8 percent gain from the second quarter of 2005.
• The annual pace of 3,024 units marked a 23.8 percent drop from last year.
• The pace of move-ins is down 27.2 percent from the second quarter of 2005, while the annual move in pace declined 49.4 percent.
• There were 477 finished vacant units, a 2.5-month supply and an increase of 130.4 percent from the 207 units reported last year at the end of the fiscal second quarter. The recent surge in starts and completions generated the increase in finished supply, much of it owned by investors.

In Palm Beach County:

• A smaller number of housing starts — 1,508 — were recorded during the second quarter, marking a sharp decline (35.6 percent) from the 2,341 units reported in the second quarter of 2005.
• The area saw 6,972 units of annual starts, a decline of 26.5 percent from 9,246 units reported at the end of the second quarter last year. The drop primarily reflects the depletion of lots and land for development.
• An 8 percent decline in move-ins was reported, compared to the first quarter, a decline that can be attributed to dwindling land supply.
• The county has 653 finished vacant homes, up from 353 such units recorded three months ago and nearly four times the level of a year ago.

In Miami-Dade County:

• During the second quarter, there were 1,505 starts, a 44 percent drop from the all-time high of 2,689 housing starts reported during the second quarter of 2005.
• Housing production peaked a year ago when housing starts hit an annual pace of 9,443 units. The pace declined to 6,917 units during the last four quarters ending in June.
• South Miami-Dade County’s resurgence drove the county’s increase during the last three years, but now it is winding down.
• Investor inventory, which had been problematic, has declined, promising improved supply conditions in the near future.
• There are 1,463 finished vacant homes, a decline of 9.3 percent, or 150 units, from the second quarter of last year.

All in all, despite a mass exodus of investors and the triple whammy of rising insurance, energy and Florida home loan costs, the market here in South Florida has staved off a major disaster. A return to the levels of 2004-05 may never be seen, but a return to normalcy was bound to happen. Hopefully, it can do so softly throughout the remainder of the year.