Volusia County/Daytona Beach New Homes – Permits Down 20% for 2008
The Daytona Beach real estate market has been in a slump for about 2-1/2 years. The latest news is that building permits are down from 5138 in 2006 and 3750 in 2007 to 2983 in 2008. That’s a drop of 20.5% over 2007 and a whopping 41.9% over 2006.
These are the building permits reported for the Daytona Beach, Ormond Beach, Deltona statistical area that includes Deltona, Port Orange and the remainder of Volusia County.
This is really bad news for builders and developers and those who work in the trade, and for buyers it means that selection and availability of new homes will continue to decrease. By not building, builders are lowering inventories and waiting for prices to rise before building. Further, they will want to see definite demand before they will risk building again.
The reasons for the drop could be many, but we see it simply as follows:
Builders can’t afford to build homes with current prices.
Most current sales are foreclosures, short sales, and distressed properties. These homes are being sold for less than a builder could build a new home. The builder must pay impact fees and build to current code. These add significant costs to a new home versus a home built before 2000.
Many builders have not sold their existing inventory that were built at even higher costs. They are not going to build more.
Florida New Home Building Will Stay Down for Years
Florida new home building will remain depressed for a number of years. Our estimate is that it will be 2011-2013 before we see a significant rise in building. We hope we’re wrong, but with over 5600 homes on the market in Daytona Beach and up to 11 million more foreclosures possible nationwide between now and 2011, we can’t see building picking up until these foreclosures have worked through the system.
Prices and demand will rise again, but we doubt we’ll see double digit annual price appreciation for a long time. The trick for everyone, including the builders, is to know when we’ve hit the bottom of the market. We now believe that will be late this year or early next year.