Pent-up demand and the lowest interest rates on record have sent sales of new homes in Southwest Florida soaring. Charlotte County has experienced a surge in new-home permits with sales of single-family homes setting a new record. These county and regional trends mirror a tendency seen across the US.
Charlotte County sets record
One of the most popular locations in Southwest Florida for families is Charlotte County, particularly on the Gulf Coast. Sales of single-family homes in the county skyrocketed by 46% in the year to July, the highest monthly rise since records began in 2005. Prices also soared with a year-on-year increase of 11% in July bringing the median to US$255,000.
Permit applications echoed the demand seen in single-family home sales. In July, they rose by 16.6% compared to June and by 14.8% in the year. The graphic below from the Charlotte County Economic Development Organisation clearly shows the upward trend for new homes in this part of Southwest Florida.
Shifts in trends
Real estate markets throughout the year have experienced shifts in trends since the outset of the pandemic. These reflect in sales of new homes in Southwest Florida where space and privacy have premium values.
Homes are now viewed as sanctuaries and give owners the chance to customise the space to suit their needs. These include designated rooms for home offices and/or schooling plus private yards for outdoor space during lockdown recommendations.
New properties offer homeowners the opportunity to personalise the space and create a home to suit their needs. This is one of the factors behind the surge in transactions.
Low interest triggers sales of new homes in Southwest Florida
Another reason for the marked rise in sales of new builds comes in record low interest rates. Would-be homebuyers can now access more funds for the property giving them more purchasing power.
“The strength of the new home market, even amid a serious economic downturn, is attributable to low mortgage rates,” said Brad Hunter from Hunting Housing Economics. “This combines with a heightened focus on being able to socially distance.”
Demand outstripping supply
The surge in demand for new homes has put further pressure on the market. Southwest Florida, like many parts of the US, already suffers from a lack of supply. Florida Realtors recently reported that in some parts of the state, inventory levels stand at 45% lower this year compared to last.
“Builders are hard-pressed to keep up with demand, as the supply of remaining developed lots has dwindled year after year,” said Hunter. This pressure is expected to continue as demographic trends also push demand upwards. As a result, analysts believe that new-home demand will remain high in the medium term.
New-home sales rise across the US
The Commerce Department reported a similar trend across the country. Like new homes in Southwest Florida, new-build property in the US generally is experiencing an uptick in sales. Transactions went up by a massive 13.9% in July followed by an increase of 4.8% in August.
This brings the total number of units sold so far in the year to 1.01 million, the highest for 14 years. “The August figure is the first reading above 1 million since 2006 and both new and existing home sales registered their best results,” said Stephen Stanley. The Chief Economist at Amherst Pierpont also added that the figures “beat expectations by over 100,000”.
In late September, shares rose on almost all of the major home builders in the US, indicating confidence in the sector. The National Association of Home Builders Housing Market Index reached a record high in September, registering 83 points. This is the highest in 35 years. New-home sales in the US are now up 43.2% in the year and the average price stands at US$312,800.
Cater for the demand for new homes in Florida
Investors have the opportunity to invest in developed lots in Rotonda Lakes, a sought-after neighbourhood in Englewood. Plot prices start at US$26,500 for prime lots with infrastructure already in place. BRIC Group offers investors a build-upgrade for the construction of a single-family home, currently in high demand in the area. Find out more about investing in land in Florida.
(Source: Commerce Department, Florida Gulf Coast University)
