Construction Activity Sends Signals to SW Florida Home Sellers. When we are keeping tabs on SW Florida’s real estate scene, it’s only natural to go directly to the portion of the market we are most connected to. If we are a renter or investor, our eye is drawn to trends affecting that segment. SW Florida home sellers (or potential home sellers) can be counted on to pretty much ignore that information, instead concentrating on the latest single family residential listings, asking prices, and news related thereto.

Yet some trends in one sector can significantly impact the others. That’s the way it is with construction—any kind of construction. Whether it comes in as new building or remodeling, when construction goes up, lots of impacts can find their way to SW Florida —some right away, some after a significant lag.

Last week there were reports and reactions to some recent national readings:

HUD reported that March building permits were 4.6% stronger than in last year during the same period. Permits is one of those lagging indicators—a timelier statistic comes in the form of actual housing starts. Starts are bird in the hand numbers, as opposed the permits, which are birds in the bush. U.S. single-family starts came in at more than a million (1,089,000)—a happiness-inducing number if you are a builder. That’s a full 14.2% stronger than in the previous year, though not as robust as in February.

Investors would be more apt to notice starts for buildings with five or more units. Like the single-family starts, they were down from the month before but stronger than in 2015. Usually, availability of more rentals relieves price pressure on the single-family residential market. But in today’s situation, where listings for starter and trade-up homes has been decreasing for four long years—the overall inventory shortage makes that effect less likely for SW Florida home sellers (at least anytime soon).

In the same way that it’s simple to imagine the builders smiling at the year-over-year building starts statistics, it’s equally easy to picture the bankers as less exuberant. Let’s face it, the nature of the banking industry is to be more restrained. After all, when we put our own money in the bank, we definitely want them to be cautious. Risk-averse. Stingy, even.

The BankersOnline website (“For Bankers/From Bankers”) played into the prototype, concentrating on housing completions rather than will-o’-the-wisps like permits or starts. And although the numbers there were even stronger (a whopping 31.6% gain over the previous year), a word of caution about over-reading the meaning of that leap is in order. A year ago March, residential completions had been unusually dismal.  

Construction Activity Sends Signals to SW Florida Home Sellers. All in all, even The Associated Press—who for some reason framed the same numbers into a gloomier cast than seemed reasonable—couldn’t help reporting what the National Association of Home Builders sentiment index showed: “an overall optimistic outlook for new homes as the industry heads into the all-important spring sales season.” That construction industry assessment might not seem to directly affect what SW Florida home sellers will encounter, but a lively market is good news for each. I hope you will give me a call if this summer’s market is one you are interested in exploring further!