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This article will help you navigate the economic forecast for home builders in Florida and Tampa Bay to lead to a prosperous future.
Recently, the Tampa Bay Builders Association hosted a webinar centered around the 2021 economic forecast. I have examined it entirely and am here today to enlighten you on what you need to know for the economic future of home building and development. Continue reading to learn the impacts of the economic climate in your area.
Local Industry Updates by TBBA:
Let’s first begin with local, industry updates you need to be aware of. According to Jennifer Motsinger, Executive Vice President to Tampa Bay Builders Association, Pasco county is seeing a successful shift in getting a temporary incentive of eliminating the $600 administrative fee for the use of private providers.
“This is a step in the right direction”, Motsinger says while they are currently working on the log jams you might be seeing in your building permits. Another big update is with Hillsborough. After nearly 10 years of starts and stops, the county is finally launching Isella which aims to streamline the process intake forms.
She also shared some concerns about the Hillsborough county commissioners. For some reason, they still can’t reach a consensus on several issues related to growth. Motsinger expects homebuilders and developers to see downzoning as the commissioners are denying building schools and residential homes. This might create problems down the road.
Nonetheless, as you will soon find out by reading, the overall Tampa market has been an outliner in a very positive way. I will discuss this in more detail later, but I wanted to inform you that Tampa’s housing market recovered almost immediately from COVID-19. Before I dive into Tampa specifically, let’s take a look at Florida as a whole.
Economic Forecast for Home Builders in Florida’s Real Estate:
According to Lesley Deutch, Managing Principal for John Burns Real Estate Consulting & Research Firm, there’s a very bullish outlook for 2021. She predicts strong housing demand just like 2020 coming from primarily homebuyers, investors, and rental households. She predicts this for the whole country but was impressed with Florida’s market.
Deutch was amazed to see Florida’s booming real estate market. A specific example is Lakewood Ranch, a master-planned community in Bradenton, Florida. Lakewood Ranch has made 2,100+ in sales in 2020, making it a 30% increase from year over year and a very popular area to move to.
Sarasota is not the only market considered very strong; Tampa is too. In comparison, other cities such as Naples, Orlando, West Palm Beach, and Jacksonville are considered moderately strong, while Fort Myers, Fort Lauderdale, and Miami are normal with slow and steady sales. For the Fort Lauderdale and Miami areas, they have limited land constraints.
Essentially, people are moving from New York, San Francisco, and other big cities to areas like Tampa and Sarasota. It’s no secret that Florida is doing so well. Deutch continues to state that there are many corporate relocations. For example, Goldman Sachs, Elliott, and Blackstone are moving from New York to southeast Florida, which is a good sign for the state’s economy.
For Florida’s home building and developing market, some statistics useful to you are that new home starts are up by 45%, which is great. However, 25% of Floridian homebuilders are intentionally limiting sales because of land constraints and their low inventory.
It’s a known trend during the pandemic that many lost their jobs. In fact, it’s estimated that as many as 7.7 million jobswere lost in the country. When it comes to Florida, the unemployment rate varies by city quite dramatically. As you would expect, Tampa and Sarasota are doing well. Tampa has an unemployment rate of 5.7% while Sarasota has an unemployment rate of 5.2%.
However, areas such as Orlando and Miami are suffering from unemployment rates. Orlando has an unemployment rate of 7.7% while Miami has an unemployment rate of 7.4%. Most of the jobs that were lost were in the hospitality sector, making Orlando an easy target. Now that you know a bit more about how Florida is doing, let’s dive into the Tampa market.
Tampa’s Housing Forecast:
Like I mentioned earlier, Tampa almost outshines every other market in the country. The only other places where success is also happening are Austin, Texas, or Salt Lake City, Utah. Recent research shows that single-family permits are rising rapidly up to 8%, however, they’re not exploding.
Another trend worth noting is that a lot of investors are buying up all of the resale inventory in Tampa and putting it back up as rental properties, which leads to price appreciation. Plus, the FHA just increased their loan limits up to $356,362, making Tampa an affordable market still because the median new home price is sitting at $294,200 with resales at $261,900.
Tampa’s Economic Forecast:
Thankfully, we as a city are doing a lot better than most. The employment rate is up to 1.9%, adding approximately 25,700 more jobs. This puts us at 60-70% of where we were before the pandemic hit. In terms of income, Tampa residents see an average of $57,600. Not terrible considering everything that happened in 2020.
When it comes to construction, the total number of permits is down 1.5% which is driven mostly by the multifamily side. Single-family home permits are up 6.5% due to land availability and builders holding back sales. According to the Burns Home Value Index, the resale market is up by 7%, with volume up 14%.
For those with a focus on renting, apartment rents are down 4.3% while single-family rents are up by 3.4%. This is a lot of really great news for Tampa, but Deutch wanted to share some cautionary tales to keep all aware and informed on what could happen next.
Words of Caution:
The median home price is affordable right now but keep an eye out for some areas going forward into this year and next. There are also some economic present risks such as an artificial economy boosted by government stimulus, record high debts in student and auto loans, and there are still 20 million people receiving unemployment benefits in the country.
Some local market risks to be aware of include municipality delays and impact fees, construction costs with lumber spikes, and increased competition with new builders moving into the area. Again, Florida’s growth is no secret, so expect to see a push for build to rent investors as well. Plus, now is the time to up your ante with digital marketing to stay ahead of this competition.
Moving Forward from the Economic Forecast for Home Builders:
As a home builder or developer in Florida, you should consider creating more work from home spaces in your models. Along with an increasing number of employees working from home, there’s also an upswing of multi-generational living. Adult children are moving back home with their families or parents are moving in with their adult children for extra care.
You must conform to these consumer trends by adding kitchenettes to guest bedrooms or in-law suites and possibly having two master bedrooms. At least give your customers the option to add these trending features down the road easily.
Lastly, another big trend right now in the home building industry is the increase in outdoor living. Outdoor living has always been popular, but not as nearly as it’s expected to be. This includes creating outdoor living quarters in the home and within the community. Incorporating more outdoor living areas is a real competitive advantage that consumers will be eyeing more and more.
Do you have any questions about the local economic forecast for home builders? Let us know in the comments below.
To learn more about industry trends and digital marketing, check out the following resources: