Naples and Ft. Myers, once written off for dead, are in the midst of a bona-fide rebound. On top of the stories of people camping out to buy homes again at Riverstone (we hadn’t seen this since 2005!), and of widespread price increases, we see numeric proof.
New home construction is up 23.7% versus a year ago in the two-county area. Metrostudy’s Naples/Ft. Myers data come from a 100% count of all of the new subdivision activity in Lee and Collier Counties. The pace of move-ins rose in both counties, and finished inventories are under 2.5 months of supply.
The result of this rebound in demand and tight supply: higher home prices. Builders in the Naples and Ft. Myers markets HAVE to charge more, because lot prices are up huge, and because labor and materials costs are rising fast as well. In the “A” locations, lots cost twice what they did a few years ago. The “B” lots also have multiple bidders, and, well, as for the more remote lots, let’s just say “C” is the new “B.”
The one “headwind” that we are still facing is anemic job growth. This presents a particular challenge to the first-time home-buyers, who are also hampered by onerous demands for documentation in order to get mortgage approval, difficulty with downpayments, black marks on their credit, and, for the youngest of them, massive student loan debt. The rental market is the haven for many of the would-be first-time buyers.
Move-up buyers seem to have adequate job security, savings, and credit scores. They are driving demand, seizing the opportunity offered by 4% mortgage money and attractive home prices. Many of them have lost interest in trying to buy short sales and foreclosures.
Retiree buyers, once they shook off the post-Lehman jitters, started to once again play a major role in the housing market, and they are a growing share of buyers today. This segment of buyers has the most equity, and in some cases, is buying with cash.
Here are the top 10 communities in the market, ranked by annual starts:
Lee County constitutes the Ft. Myers market. Active subdivisions in Cape Coral, and Lehigh Acres are included in this research, but scattered lot activity is not.
In Lee County, housing starts rose to 371 in the latest quarter, up 70% from the previous quarter, and up 63% from four quarters ago. The pace of move-ins fell 18% compared with the prior quarter, returning to essentially the same pace as a year ago.
Finished, vacant new home inventories rose to 168, from 155 in the prior quarter, but still works out to only 2 months-of-supply.
Home prices in the Ft. Myers market are rebounding, having overshot on the down side (at the lowest, hitting a median resale price under $90,000). The extreme affordability of housing in this market triggered a flurry of buying activity (heavily driven by investors) that has soaked up much of the excess inventory in this market. The supply of vacant, developed lots fell to 7,830, almost 1,000 below the peak in 2007.
There are an additional 50,833 ‘future’ lots that are in the pipeline in Lee County, and we continue to monitor the progress on the small share of those that are currently moving forward.
Collier County builders initiated construction on 269 homes in the second quarter, which is 47% more than in the first quarter, and 42% higher than a year ago.
The pace of move-ins has remained flat, but will likely increase substantially in the next two quarters, as buyers start to move in to homes purchased earlier this year.
The supply of finished, vacant new homes has fallen 11% in the past year, and is down to only 159 homes. This compares with nearly 900 back in 2007.
There are 5,161 vacant, developed lots in Collier County, down from 5,526 a year ago. We continue to monitor the progress of another 21,915 ‘future’ lots that are in the pipeline.