Old pastures, tired citrus groves and vacant land are quickly transforming into metro Orlando neighborhoods, with about 4,000 new houses underway during the most recent quarter, a new study shows.
Even though Central Florida's housing market has not fully bounced back from the recession, the region had 14 percent year-over-year growth in houses being built and 28 percent growth in closings, according to a second quarter report by MetroStudy.
"For the last five or six years, we've been refilling housing stock that was left vacant when people had to leave" or when they consolidated households, said Anthony Crocco, who oversees Central and North Florida for MetroStudy. "We left a lot of excess housing supply on the ground, but my sense now is that we've absorbed most of the excess supply we had created."
He added that he anticipates a sharp uptick in closings during the third quarter and a strong year end.
The story of the region's continuing home-construction recovery is based partly on visitors.
"Quite a bit of our success is going to be tied to what happens and what continues to happen with tourism," said Brock Nicholas, division president for Lennar Homes. Two of its communities — Storey Lake and ChampionsGate — were among the region's fastest selling, and both include vacation homes.
The potential for tapping at least part of the 60 million-plus visitors is just as great — or greater — than selling to the 2.5 million full-time residents in the region, he added.
From the outskirts of St. Cloud to the rolling hills outside Mount Dora, land is being gobbled up by national production builders. At the current pace of construction and sales, the region had a 21-month supply of home sites, which was down six months from a year earlier.
The biggest changes in Orlando's ever-evolving landscape last quarter: southwest Orange County with the Horizon West collection of neighborhoods, south Orlando with Lake Nona-area growth, and Leesburg-Mount Dora with a push from The Villages senior community.
In addition to The Villages, the Osceola County developments of ChampionsGate, Storey Lake, Tapestry and Reunion Resort and Club had top construction starts for the quarter, and they all market to vacation-home buyers and other purchasers from out of the area.
The biggest chunk of new houses being built last quarter were priced from $250,000 to $299,999, which is not considered affordable for most workers in the region's biggest industry — tourism — but is a prime price point for vacation-home buyers, studies on international buyers show.
One telltale indication of increased demand is the 565 model homes in Orange, Seminole, Lake and Osceola counties. For every one of those sales centers, builders sold an average 23.3 houses in the second quarter, which was five more sales than last year, according to MetroStudy.
Brad O'Connor, chief economist for Florida Realtors, said a shortage of existing homes on the market in Central Florida and elsewhere can only benefit the new-home market. The real estate industry is relying on new homes to help satisfy the need for inventory.
"Orlando has been one of the bright spots in the state," said O'Connor said.
Even with the boost in sales, Central Florida's home construction is nowhere near its peak more than a decade ago when mortgages were easier to come by. For now, O'Connor said he had no concerns about rising prices creating another bubble because so few houses are on the market.
The outlook for construction overall was for 7.4 percent growth during the budget year that ended in July. Projections call for the growth to taper off by half during the following year, according to the Florida Economic Estimating Conference early this year.
"With a slow and steady recovery and foreclosures still affecting the marketplace, housing starts do not recover to their previous peak level at any time during the 10-year forecast period," this year's outlook stated.
