Metrostudy’s 4Q14 survey of the South Florida housing market shows that quarterly starts decreased by 16% from 3Q14 to 1,691, but are up 19% from 4Q13. The annual pace increased 6.4% to 7,334 from the annual starts rate observed in the fourth quarter of 2013. This marks two consecutive quarters of measurable annual starts growth. Lot shortages in Palm Beach, Broward, and Miami-Dade are likely to have a dampening effect on the starts rate in the near term, however.
The annual closings rate of 6,852 was up 18% from the previous quarter and is up 21% from one year ago, which extends this upward trend to eleven consecutive quarters. Finished, vacant inventory increased 6% to 1,310 units from last quarter, and this figure is 12% higher than the fourth quarter of 2013. Finished, vacant inventory has hovered in the 2 months-of-supply (MOS) range for the past nine quarters, and remains unchanged at 2.3 MOS for the current quarter. Metrostudy has observed over the years that when this number rises above about 3.0 and stays there, builders tend to reduce prices or make concessions, so Metrostudy monitors this metric closely.
When it comes to rentals, South Florida apartment rentals are currently increasing faster than most of the country’s biggest metro areas. In the third quarter of 2014, Palm Beach rent rose 5.3% from the same time in 2013, placing the county ninth among the 50 biggest metro areas, according to MDF Research. During the same period, Broward rents grew 4.4%, a 13th nationally. What caused this increase in rentals? The housing bust created growth in apartment rentals due to the fact that owners began renting out units in large numbers. Rentals are also extremely popular for the growing millennial market.