Home builders pass along higher costs to buyers.
The good news is that the real estate market has been hot, with the number of sales and prices up over last year. The bad news is that there are fewer houses to choose from.
There are a couple of reasons for the shrinking inventory, according to John Adams, of Adams, Cameron and Co. Realtors. There have been a couple of good years of sales, and the homes that were underwater in their mortgage (owing more than the house is worth) are virtually all sold.
Ron Wysocarski, of Wyse Home Team Realty, agrees, saying 10 years ago that 70% of the market was foreclosed homes and now it’s 10%.
He said this has caused prices to rise and it’s a concern for the average buyer. He called under $200,000 the “sweet spot” for home sales.
“A lot of people are priced out of the market,” he said.
Wysocarski said land is being cleared around the area for housing developments, and this new construction will be great for the area, but new houses tend to start at over $200,000.
Adams said higher prices make it a challenge for first-time home buyers. But he said it doesn’t make sense to wait to enter the real estate market.
“It’s like waiting to get into the stock market,” he said. “The prices keep going up.”
He said the rising prices are in favor of people who are downsizing. Also, people can get more for their present home.
Another result of the high demand is a shorter time on the market, especially lower-priced homes, according to Debbie Callahan, president-elect of the Daytona Beach Area Association of Realtors.
“If a house is priced right, it sells in two to three days,” she said.
Another reason for the low inventory, Wysocarski says, is that many people are staying where they are because they have a good interest rate on their current mortgage.
Builders face higher costs
Martin Pham, of Geosam Capital US LLC, local developer, said more housing is on the way. His company plans to build on 600 lots near their Coastal Woods Community in New Smyrna Beach next year, and other builders are also busy.
“With all that Minto and ICI are doing, I think the inventory levels will be there to meet demand,” he wrote in an email.
Minto Communities is a planned development of almost 7,000 homes near LPGA Boulevard, west of Interstate 95. ICI is planning the 1,200-home Mosaic Community also on LPGA Boulevard.
Pham cautions, however, that prices on new constructed homes will reflect cost incurred by developers.
“Pricing for land, site development, regulatory fees and design costs keep rising and builders are facing the same challenges. We are trying to bring on communities that will have single family homes starting at $200K, but I suspect we'll see very limited new single family homes below this amount and as a result more duplex/townhomes will be coming online at this price point,” he wrote in the email.