November 12, 2015 Posted by Matt

Homebuilders gathered for the Urban Land Institute’s 18th annual Emerging Trends in Real Estate conference yesterday and at this point, they remain optimistic about the economy and their own building initiatives.  Naples real estate economic adviser Michael Timmerman told attendees that although home prices are expected to grow at a slower pace than they did over the past 12 months, new jobs are attracting new residents. He also expects population and employment to continue to grow over the next three years.  “Short supply has been underpinning skyrocketing resale prices in both Collier and Lee counties”, Timmerman pointed out.

In Collier county, inventory of existing homes fell to 4,498 units this year from 5,452 in 2012. In Lee, it dropped to 5,598 from 7,525.  However, over the same period, new homes have been replenishing the supply: to 4,589 from 2,459 in Collier and to 4,700 from 2,350 in Lee.  The burst of new home starts seems to have slowed in Collier County. There are only 2,750 home starts this year compared with 2013 when there were 5,081.  Lee County followed a similar path.  In 2014 builders began work on 4,061 homes and year-to-date only 2,300 homes have been started.

Another trend in real estate in Collier County is a shift from single family homes to multifamily homes to provide more affordable options.

According to Timmerman, there is still a lot of space to build in Southwest Florida.  There is still approximately 23,000 development units in Collier county. Based on the current average sales rate of 2,800 units per year, it would take eight years to build out the area.  Lee County has less room to build, with only 10,000 development units remaining. That’s a four-year supply at the current average sales rate of 2,500 units annually.

While there is plenty of reason to be optimistic, 10 to 12 percent price increases Southwest Florida has been experiencing the past few years is not sustainable.