NEWS

Laura Layden

Naples Daily News

Friday October 2, 2020

New home sales have surged in Southwest Florida.

After taking a brief pause due to the coronavirus pandemic, sales have been brisker than usual, even setting records in some communities, such as Ave Maria, east of Naples. Babcock Ranch, near the Lee-Charlotte county line, is also seeing strong sales this year.

Overall, residential permit activity has remained strong in Lee and Collier counties.

Real estate experts attribute the heightened demand for housing to several factors, from the historically low interest rates to the exodus of Americans from larger cities, sparked by the spread of COVID-19.

In July, Barron Collier Cos., developers of Ave Maria, reported that new home sales in the town hit a milestone, surpassing 200 for the year. At that point, they’d risen 40% year over year.

Sales quickly rebounded in the town after falling off a bit in March and April due to the pandemic — and buyer interest has been strong ever since then, said Brian Goguen, chief investment officer for Barron Collier Cos.

 

In August, 60 new homes sold in Ave Maria — making it the best month ever in the town.

With the continued momentum the total number of home sales has now surpassed 335 for the year, with a few months still to go. That compares to 259 sales in all of 2019.

“Sales keep growing. It’s really been interesting to watch,” Goguen said.

 

He expects the town to end up with 400 to 450 new home sales this year — setting yet another record.

“People are really looking at new homes as an opportunity to really make sure that where they are is a place where they enjoy being,” Goguen said. “It’s new and it’s a great environment for the family.”

A sanctuary and sometimes the office

A home isn’t just a home anymore.

Home has taken on new meaning amid the pandemic, with more time spent inside of its walls for school, work — and even play, due to heightened health and safety concerns tied to COVID-19.

“More and more the home is being viewed as a sanctuary from all the craziness that has been going on with the coronavirus,” Goguen said. “A new home offers the opportunity to customize your personal space to be exactly what you want it to be for you and your family. That, plus the very low-interest-rate environment, has driven a lot of the increased home sales both locally and nationally.”

Nationally, sales of newly built, single-family homes surged by 4.8% in August over the month to a seasonally-adjusted annual rate of 1.01 million units — the highest level seen since September 2006, according to the latest data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Sales rose by more than 43% over the year last month nationwide.

Ave Maria continues to attract new residents moving from other parts of Florida, Goguen said, especially from heavily-populated South Florida, which has taken the biggest hit from the coronavirus pandemic in the state.

Good schools, a relaxed and amenity-rich lifestyle and value-driven home prices continue to be among the community’s biggest draws, Goguen said

“We are providing attainable housing,” he said. “I wouldn’t use affordable, I would use attainable because people are able to afford the houses there.”

At Ave Maria prices start in the low-$200,000s — with the average home going for $330,000. Elsewhere, the same kind of quality homes could easily cost twice as much, due in part to higher land costs, Goguen said.

Asked if there’s a typical buyer in the town, he said: “It’s a mix. We are attracting a lot of families and we’re also attracting a lot of empty nesters.”

While it’s hard to know what the future holds, there’s plenty of room for future growth in Ave Maria.

“We can build up to 11,000 homes. We’ve sold more than 2,500 to date. There is still quite a ways to go,” Goguen said.

From east to west

Ave Maria, a sprawling master-planned community, has four residential builders — CC Homes, Del Webb Naples, Lennar and Pulte Homes. Single-family homes are seeing the most demand.

Newlyweds John and Marshana Spavento recently bought a house in the town at Maple Ridge by CC Homes. Stretching 3,987 square feet under air, their new digs will include three bedrooms, plus a den they plan to use as an extra bedroom for guests.

The couple, who will relocate from Plantation in Broward County, started their search for a home in their own backyard, but struggled to find everything they wanted at the price they wanted to pay in South Florida. So they decided to look on Florida’s west coast.

They discovered Ave Maria from a billboard John saw countless times off the highway on his route to work at Telemundo, where he works in sales. After the pandemic hit, he started working remotely from home, opening the door for him to live farther away.

“We looked at Ave Maria and we looked at the community and everything just fell into place,” said John, 50. “The price, the community, the lifestyle we’re looking for.”

Marshana, 39, emphatically agreed.

“It’s the home of our dreams,” she said.

The same house by the same builder would have cost over $1 million in South Florida, she said, but in Ave Maria she’ll get it for $531,000, which includes a premium lot, a pool and many design upgrades to make what they expect to be their forever home just right inside and out.

With a baby on the way, the couple wanted to live in a safe place for raising children — and a place that had more of a small-town feel — and Ave Maria checked those boxes.

“Safety is so important, especially with the civil unrest that has been happening in some parts of the country,” Marshana said. “It’s peace of mind.”

Marshana and John both hail from Brooklyn.

“Being from the inner city, we love Florida,” she said. “The west coast just feels like more small town, less big city, more Florida, more residential, more neighbors, more palm trees, more sunshine. It just feels like what we moved from the Northeast for.”

Ave Maria advertises itself as a big kind of a small town, with small-town charm and big conveniences, such as a Publix supermarket, a gas station, medical offices, schools, restaurants and shops.

To the east

Builders at Ave Maria stand in a good position to capitalize on the growing demands for new housing, especially when there’s a shortage of supply in many other areas of Southwest Florida, said Brad Hunter, with Hunter Housing Economics, a housing market consulting firm based in West Palm Beach, in an email.

He  noted that Ave Maria’s handful of builders sold 52 homes in July, then topped that number in August. A big attraction to the town, he said, is the “greater feeling of space,” especially for buyers relocating from such areas as Miami and Fort Lauderdale.

More space can offer many benefits, including making it easier to social distance and to limit contact, avoiding dangerous threats such as COVID-19.

“Builders are hard-pressed to keep up with demand, as the supply of remaining developed lots has dwindled year after year — and the supply of developable land in the western areas of Collier County has all but disappeared,” Hunter said.

The shortage of new housing in the county’s coastal areas has forced development eastward, as well as northward, Hunter said, pointing to Babcock Ranch as a good example of where it’s gone.

Once considered “remote,” the community — located just northeast of Fort Myers off State Road 31 — sold 230 homes in the first six months of this year, demonstrating the strong demand from buyers, he said.

“My analysis suggests that the work-from-home trend is going to be a permanent shift, and not just a temporary means of adjustment, which will free many thousands of white-collar workers to live farther from an urban core,” Hunter said. “Watch for more development in areas that were not previously considered prime locations.”

Setting records

In late August, Kitson & Partners, the developers of Babcock Ranch, announced the community’s new home sales had surpassed the 800 mark — in total.

Marketing for its new homes started in 2017, with the first residents moving into the town in January 2018.

Today, Babcock Ranch, marketed as America’s first solar-powered town, offers homes from nine homebuilders in seven neighborhoods.

The traffic coming into the community from serious buyers was “off the charts” in January, February and March, said Laura Keller, a senior vice president for marketing and sales.

Even in March, the community racked up 26 sales — and they’ve been on the rise ever since then, despite having to go into a virtual-only sales mode for more than a month due to the COVID-19 outbreak.

“In May, we had our best month ever, with 57 sales. May was just like whoa,” Keller said.

Sales stayed strong even through Southwest Florida’s traditionally slower summer months. In August, for example, the community logged 45 sales, despite new safety protocols that require visitors to wear masks and limit capacity inside the sales center.

Babcock Ranch landed on RCLCO Real Estate Advisors’ list of the country’s 50 top-selling master-planned communities for the first time this year. It debuted at No. 39 after making 230 sales in the first half of the year.

About 70% of the buyers who have purchased homes in the town this year already had a Florida address, Keller said.

“It doesn’t mean they are all from here. They might have another home, a second home, they own here,” she said.

However, many of the buyers are indeed Floridians in search of a new place to put down their roots.

“We do definitely see people moving over from the east coast,” Keller said. “But the majority are still in Lee County. Cape Coral is a big area where people move from here.”

Some of the other states buyers are coming from? Illinois, Michigan, Massachusetts, Pennsylvania, New York and New Jersey, to name a few.

Breathing room

Like Ave Maria, Babcock Ranch is seeing the greatest demand for single-family homes. However, multi-family sales are expected to pick up in the town with the introduction of its newest community Babcock National by Lennar.

Babcock National will have a little over 1,000 homes, 60% of which will be multi-family, Keller said.

The Lennar community will be the first one to offer golf in the town, creating a new draw. Golf membership is included in the purchase price of the homes.

“What I think resonates with the buyers in Babcock Ranch is the wide-open space, the trails,” Keller said.

Besides the hiking and cycling trails, the community has a 4.5-acre park, a neighborhood school and high-speed Internet in every residence, which has become more of a necessity with so many parents working remotely from home, alongside their children who are attending school virtually.

The community provides fiber Internet connectivity with speeds up to 1 gigabit per second.

“The feedback we get is that it’s ‘absolutely essential to this new world we’re in,'” Keller said.

A survey of residents in February showed that 18% of them worked from home full time, with another 3% doing so part-time. That was before the pandemic hit, Keller said, so she suspects those numbers have only grown.

With so many housing options to choose from at Babcock Ranch, prices run the gamut, starting at just under $200,000 and topping out at more than $1.5 million.

Like Ave Maria, Babcock has a long way to go to reach buildout. The community can have up to 19,500 homes — with less 1,000 sold so far.

Looking ahead, Keller said she expects a busy fall based on current economic conditions and the shrinking number of coronavirus cases.

“It’s definitely our best year,” she said.

Going up

More new home sales mean more permits.

As a result, permit activity remains robust in Southwest Florida.

In the first half of this year, builders in Lee County pulled 2,913 permits for single-family homes and 2,453 permits for multi-family homes, including townhomes, villas, condos and apartments, according to an analysis by Hunter Housing Economics.

“The pace of construction of detached single-family homes is running about 3.5% above last year’s pace. And the pace of construction of attached homes is running 18% higher than last year’s, heavily driven by townhomes and villas,” Hunter said.

Some of the more affordably-priced townhome communities in Lee County have been averaging six to eight sales a month, which Hunter characterized as “very strong.”

In neighboring Collier County, builders pulled 1,343 permits for single-family homes and 701 permits for multi-family residences in the first half of the year.

“The pace of construction of detached single-family homes is running about 13% lower than last year, but the pace of construction of attached homes is ahead of last year’s,” Hunter said.

He doesn’t see the strong demand for new homes in Southwest Florida stopping any time soon.

“The strength of the new home market, even amid a serious economic downturn, is attributable to low mortgage rates combined with a heightened focus on being able to socially-distance,” Hunter said.

“Demographic trends add to the surge, with support for housing demand coming from millennials, as well as empty-nesters,” he said. “We expect this long-term strength in the demographic trends to continue to support new-home demand for years to come.”

In the first quarter of this year, new home permit activity in Collier, Lee and Charlotte counties hit a record high, increasing by 64% year over year, according to a report by Fort Myers-based LSI.

The report shows a pullback in permit activity in April and May, due to the fallout from the pandemic. However, it bounced back quickly, with many builders seeing record sales in May, likely due to pent-up demand.

“What’s occurred so far doesn’t follow any historical data,” said Justin Thibaut, LSI’s president. “This is something new for all of us. So we are pleasantly surprised to see the rebound that’s come about in the real estate market here.”

He emphasized that much of the demand is coming from buyers who want to live here year-round.

“It’s not necessarily a push for a vacation home,” Thibaut said. “It’s a push for a relocation of where they live.”

Rising costs

New home prices are edging up and it’s not just because of the strong demand for them. One of the biggest reasons for it is rising construction costs, driven by a shortage of supplies caused by the coronavirus outbreak.

With many mills shut down for weeks after the pandemic hit, lumber supplies have gotten even tighter. As a result, lumber prices have risen by more than 170%, driving the cost of building an average house up by more than $16,000, said Nelson Taylor, LSI’s research director.

However, he said, lower interest rates can help soften the blow, making it easier for buyers to absorb those extra construction costs if builders pass them down.

“Buyers have increased purchasing power because interest rates are so low,” Taylor said. “That translates to more money available to them to buy a house.”

Over the past few months, mortgage rates have hits record lows. On Thursday, Freddie Mac reported the average rate for a 30-year home loan stood at 2.9%, up from 2.87% a week ago.

Homebuilder confidence for single-family homes is at a record high in the United States, Taylor noted.

The National Association of Home Builders/Wells Fargo Housing Market Index hit an all-time high with a score of 83 in September, up 6 points from August — and the highest number in the survey’s 35-year history. Any number above 50 is considered positive sentiment.

A rebound

Much has changed for homebuilders over the past few months.

With stay-at-home orders in effect in many of its markets across the country in April, national homebuilder D.R. Horton saw its canceled contracts rise and sales fall.

The situation turned around quickly, however, starting in May, as coronavirus-related restrictions eased.

“Our national weekly sales pace during May and June increased significantly and cancellation rates returned to normal levels. In both May and June, our company-wide net sales orders increased by more than 50% compared to the prior-year periods,” said Justin Robbins, division president of D.R. Horton Southwest Florida.

Through the summer D.R. Horton continued to see strong sales nationally — and locally.

D.R. Horton remains one of the largest and most active builders in Southwest Florida. The builder is seeing the greatest demand for homes at Entrada in Cape Coral, Lindsford in Fort Myers and the Preserve at Wellen Park in Venice.

“Many homebuyers are simply looking for additional bedrooms, an office or expanded personal outdoor living space, while others are looking for more contemporary interior features and don’t want to go through the hassle of having to remodel,” Robbins said.

The builder’s Express Homes value-driven brand, offering smaller homes at more affordable prices, has also seen a surge in demand. The homes, starting at less than $200,000, are going up on select lots in Lee, Collier and Charlotte counties —  in such areas as Cape Coral, San Carlos Park, Lehigh Acres, Golden Gate Estates and Gulf Cove.

“With much of the nation spending more time at home, many homebuyers are looking to improve their current housing situation, including renters looking to make the transition to homeownership,” Robbins said.

As of June 30 — the end of D.R. Horton’s fiscal third quarter — sales through its Southwest Florida division had risen nearly 20% year over year. Permit activity had increased by a little more than 20%.

Traffic into the builder’s sales and information centers is also heavier.

To keep up with the heightened demand for housing in Southwest Florida, D.R. Horton is now building more homes on spec, or speculation, without a buyer.

“We prefer to have a selection of inventory homes available at different stages of construction to meet the demand of homebuyers, regardless of their preferred move-in date,” Robbins said.

With demand so strong, some spec homes are selling before they’re even finished.

Eager buyers are also snatching up finished models in some communities.

At Miromar Lakes Beach & Golf Club on the edges of Estero, nine model homes have sold since the onset of the pandemic.

“Buyers are telling us they have fast-tracked their plans to buy a vacation home or move to Florida full-time,” said George Mato, vice president of sales for Miromar Realty, in a statement. “They’re planning ahead and simply don’t want to wait.”