a look at why South Florida is suffering from a severe lack of inventory – Sun Sentinel

A severe housing shortage has plagued South Florida home buyers, helping to fuel the insane real estate market.

Growing demand from out-of-state buyers and local residents has only added more pressure to a market that has been severely underdeveloped for years.

Why is the region lagging behind, and is there hope for a more balanced market? It is complicated.

Experts say that a balanced market (where sellers and buyers are on equal footing) should have about five months of inventory in the market. Currently, each of the three counties in our region are dealing with about a month’s supply of single-family homes, and the South Florida area has only seen supply dwindle further over the past two years.

According to a Zillow study on permits and population growth, South Florida’s housing deficit has been simmering for years.

When they compared the number of building permits since 2008 that the region should have issued to keep up with population growth, and compared it to the rate from 1985 to 2000, their numbers indicate that South Florida has experienced a shortfall. of 142,650 homes since then. .

“The implications of this shortfall are being felt now that house prices are rising across the country. A limited supply of housing as demand has increased is the main driver of rapid house price growth during the pandemic,” Zillow said.

The lack of available building land, along with supply chain issues, rising costs and zoning laws make it difficult for developers to deliver new housing.

Supply chain issues – an offshoot of the Covid pandemic – have made it harder for developers to get the materials they need and have also increased the cost of construction, explained Nelson Stabile, president of the Builder’s Association of South Florida.

“It’s a real challenge,” said Ignacio Diaz, owner of GroupP6 at Boca Raton Supply Chain. “It’s our job to try to build as much as possible, but that makes it more difficult. Fewer projects make sense and those that do are less profitable, so naturally you get into fewer projects and fewer new starts.

Additionally, there is very little open land left to build on, which only compounds the problem. According to Sun Sentinel analysis, less than 1% of the land in Broward and Palm Beach counties is both open land and residential areas.

Palm Beach County is 2,383 square miles, but only about 20 square miles of vacant land is zoned for residential use, according to figures provided by the Palm Beach County Property Assessor’s Office. And in Broward County, at 1,323 square miles, it’s even less: There are currently about five square miles of vacant land zoned residential, the real estate appraiser’s office said.

“We’re practically running out of land,” said Alex Yokana, developer at Akai Estates. “There really is nothing left. And one of the few remaining pockets are golf courses.

Zoning laws can make it difficult for developers to build units because the process of rezoning for different land uses, such as rezoning golf courses for residential use, can take years.

“We can only provide housing as an industry as fast as we can approve it,” Stabile said.

Figures from economist Sean Snaith of the University of Central Florida indicate that construction rates across the state will rise slightly in coming years.

His research suggests that Florida should see 182,663 single-family home starts (new residential projects) in 2022, followed by 162,425 starts in 2023 and 156,911 in 2024. Single-family home starts are expected to increase slightly in 2025 to reach 157,178.

This is a slight increase from previous years’ projections: in 2018, they estimated there would be 133,656 single-family home starts in Florida, while in 2019 there would be 148,610. and about 154,958 in 2020.

But if inventory levels increased, would that have an effect on the market? Experts say that in theory this should be the case, but it is unlikely that enough units can be built.

“You would see prices go down if the inventory balance met demand, but the likelihood of that happening is very low,” Ken said. H Johnson, real estate economist at Florida Atlantic University. “We need to build more units to live in and rent out, and it’s really difficult for a number of reasons such as supply chain issues, labor costs, labor availability. work.”

One of the drivers of the housing market has been the migration of out-of-state buyers.

Projections show that South Florida’s population is expected to continue to grow over the next ten years. Figures from StatsAmerica show that in 10 years, Palm Beach County’s population is expected to grow by 12%, Broward County’s by about 8%, and Miami-Dade’s by about 5%.

Johnson says if population growth slows due to continued house price increases, house prices are likely to moderate for some time, but he warned that population growth would begin again in response to these prices, revealing unforeseen factors.

“We have the shortage of inventory but we have this wild influx of people. I believe South Florida and Florida in general will experience this prolonged period of financial inaccessibility,” he said.

Developers are working to launch new projects, sometimes through the rezoning of open land such as golf courses, sometimes through urban redevelopments. Several have either failed or been approved this year. Here are a few:

  • Enclave at Sherwood Park: A collection of 79 single-family homes on a vacant golf course in Delray Beach from national builder PulteGroup. Construction of model homes is expected to begin later this year.
  • Berkeley landing: Construction of a three-story affordable apartment complex in Riviera Beach is set to begin this summer. The project will have 110 units with prices based on a percentage of the area’s median income.
  • Mayla Pompano: The grand opening of this luxury apartment building took place in March and construction is expected to be completed by July 2023. The two-building complex in Pompano Beach is expected to market 355 units, ranging from studios to three bedrooms.
  • Casamar- Sales have begun at Casamar in Pompano Beach with groundbreaking work expected to begin on the upscale 20-story building later this year.
  • Yamato Villas: A collection of 16 townhouses and three single-family homes have been approved for construction near Yamato Road in Boca Raton.
  • Municipalities of Cassia: This 44 townhouse development will be built in Lauderdale Lakes on five acres of land by PulteGroup. Townhouse sales are expected to begin later in the year.
  • Island Cove – 60 affordable apartments are expected to head to Delray Beach. Rents are mostly expected to be between $1,200 and $1,600, depending on the unit.