Palm Beach County Home Builders Scale Back Dramatically, Study Finds
A decade-long home building boom in Palm Beach County has slowed greatly in recent months as builders adjust to the reality of the housing slump, the Palm Beach Post reports.
From 1996-2005, builders routinely broke ground on 2,000 homes a quarter. But in the first three months of 2007, builders began only 836 new homes, according to numbers released today by research firm Metrostudy.
Home starts and Florida mortgage activity took pronounced dips in the third and fourth quarters of 2006, too.
Home building long has been crucial to the Palm Beach County economy, and the lower numbers suggest that builders are girding for an extended period of slower home sales.
“Everyone is being super-cautious,” said Bruce Malasky, head of Malasky Homes in West Palm Beach and past president of the Gold Coast Builders Association. “We’re building what we’ve sold, and if we’re not selling it, we’re not building it.”
In other words, builders have scaled back the pace of construction to match the tepid demand for new homes amid decling Florida home loan interest. Builders have been laying off workers and pulling the plug on projects.
DiVosta Building Corp. today said it’s laying off nine workers from its Palm Beach County operations. That follows a layoff of 218 workers last year.
In the meantime, Brad Hunter, head of Metrostudy’s South Florida division, said St. Lucie County faces “one of the most troublesome housing inventory problems in the nation.”
St. Lucie County has a 16.6-month supply of homes for sale, even after home builders cut the pace of construction from 777 starts in the third quarter of 2006 to 387 starts in the first quarter of 2007.
Hunter blamed the wave of speculation that hit Port St. Lucie’s relatively affordable housing market.
“The county attracted an enormous amount of speculators,” Hunter said.
“The speculators put down deposits on homes and builders started construction. But by late 2005, a lot of those speculators said, ‘Ah, I don’t want the house anymore.’”
Martin County builders likewise pulled back on housing starts. There were 95 starts in the county in the first quarter, well off the all-time high of 345 starts in the third quarter of 2005.
Even with Florida home mortgage rates at or near record lows, demand for housing has not returned - and won’t, until the long-running inventory problem subsides.
SOURCE: Palm Beach Post
