The Southwest Florida market is seeing the largest number of newly constructed single-family homes since the Great Recession. The United States Census Bureau has indicated in the 2017 Characteristics of New Housing report that the number of newly constructed single-family homes increased by 7.7 percent from 2016 to 2017. The average square footage of these newly built homes has increased slightly as well, from an average of 2,422 square feet in 2016 to an average of 2,426 square feet in 2017.
Chief Economist Danielle Hale of Realtor.com says, “It’s good that there’s more construction, but there’s still plenty of room for more building.” Hale adds, “Builders are obviously catering more toward wealthier buyers. But we know that there’s plenty of housing demand on the more affordable end.”
The larger single-family properties have a higher price point than older, already existing homes, so the tendency is that they garner the attention of potential buyers who have already owned a home. The median price of a new home in the United States was $312,400 for April of this year, while the median price of an existing home in the United States was $257,000 for an already existing home – a 21.1 percent difference that is usually fueled by the high cost of materials, construction labor and land.
The majority of the new homes on the market have multiple bedrooms. The U.S. Census Bureau report shows that 45 percent of these newly constructed homes have three bedrooms and approximately 46 percent have four bedrooms. The report shows that approximately 37 percent of the newly constructed homes have at least three bathrooms, while 29 percent of the homes have two and a half bathrooms and 31 percent of the homes have two bathrooms. Another point to note regarding newly constructed single-family homes today is that 65 percent of these newly built homes have two-car garages and approximately 25 percent of them have a full or partial basement space.
The existence of a homeowners association in relation to the majority of newly constructed homes is more and more common as well. The 2017 Characteristics of New Housing report indicates that approximately 487,000 of the newly constructed homes were part of a homeowners association. This is possibly attributed to the fact that a majority of new construction is likely to occur in outer suburban areas where there is more land that is available and costs are generally lower.
Issi Romem, Chief Economist for BuildZoom, an online homebuilding and remodeling marketplace, says, “Construction is slowly shifting back from the core of metro areas to the outer suburbs. It’s because that’s where your normal buyers look for houses.” Romem adds, “They’re going to be larger than the homes you’ll find in the center of town.”
With this news of larger new construction single-family homes, arrive reports that homebuyers seeking a brand new home may be able to find a deal. Despite the fact that real estate prices in many metro areas across the nation have been increasing, there are some exceptions that should be noted. realtor.com® reports that the cost of buying a new construction home has fallen to the lowest point within the last year. The median price of a new home decreased by close to 6.9 percent from March of this year to April of this year. The median price is just 0.4 percent higher than it was one year ago.
Hale says, “This could be a sign that builders are trying to build at lower price points.” This is great news for those potential homebuyers who are on a stricter budget. “The largest share of homebuyers and home shoppers in the market are looking to buy entry-level homes,” Hale adds.
Additional important points reported by Realtor.com include:
- Five percent of new construction home sales for April 2018 were comprised of properties listed for less than $150,000
- Although the price of new construction single-family homes has decreased, existing homes are still more affordable
- There are still a greater number of options of existing homes for sale than new construction single-family homes on the market
New construction homes are approximately 24.8 percent higher in price than the $250,400 median cost of an existing home, according to data reported by the National Association of REALTORS®.
The Southwest Florida Regional Economic Indicators report prepared and distributed by Florida Gulf Coast University shows a 30 percent increase in single-family building permits for Southwest Florida from April 2017 to April 2018. The three counties of Lee, Collier and Charlotte issued a total of 866 permits in April 2018. Lee County issued 452 permits (indicating an increase of 28 percent over April 2017), Collier County issued a total of 292 permits (indicating an increase of 21 percent over April 2017), and Charlotte County issued 122 permits for April 2018 (indicating an increase of 74 percent over April 2017).
Though there is still vast room for further increases to fully meet the market demand, with the price of newly constructed single-family homes decreasing slightly and the number of new homes built increasing, there are certainly a greater number of options for homebuyers to consider in the Southwest Florida market.