According to the latest New Residential Sales Report from the Census Bureau, new construction sales in August were up 3.5% from July and 12.7% from last year! This marks the second consecutive month with double-digit year-over-year growth (12.8% in July).
The report also showed that builders have ramped up construction with an increase in new construction starts and completions. The summer months are often a busy time for builders as they capitalize on the warmer weather to be able to finish projects.
Below is a table showing the change in starts, completions, and sales from last August.
Other notable news from the report is that the percentage of new construction sales in the $200-$299k range has continued to break away from the $300-$399k range.
This shows that builders are starting to build lower-priced homes that will help alleviate some of the inventory challenges in the starter and trade-up home categories. The chart below shows the full breakdown.
What does this mean for buyers and sellers?
If you are thinking of buying or selling in today’s market, you no doubt have heard that there is a shortage of existing homes for sale which has been driving home prices up across the country. The additional new construction coming to the market could help alleviate this shortage, but we are still not back up to pre-crisis levels.
Whether buying your first home or your fifth, having a buyer’s agent who is an expert in their market on your side is your best bet to make sure the process goes smoothly. Let’s talk about how we can make your dreams of homeownership a reality here in St Johns County Florida (serving St Augustine, Nocatee and Ponte Vedra, Ponte Vedra Beach and St Johns)!
Give us a call today and we will be happy to put you on the track of a new home here in St Augustine, St Johns, Nocatee or Ponte Vedra. For Buyers Only Realty is the oldest and most respected Exclusive Buyer’s Agents in Northeast Florida. 100% Buyer Representation at no cost to you! We are the Wife-Husband team of Dedicated Buyer’s Agents!
Call Sharon Stevens at 904-687-5220 or Dwight Cole at 904-466-4630
The Fairy Tale… Once Upon a Time
When I was a young boy, one of my favorite stories was the one about the big bad wolf and the three little pigs in which “Big Bad Wolf” tries to destroy the pigs’ homes so he could have a nice meal. The wolf easily blew down the house made of straw and had no problems mowing over the home made from sticks. When the wolf attempted to destroy the house made from bricks, he was unsuccessful and could not blow it down even with all of his huffing and puffing. The pigs in the brick home lived happily ever after.
Now for the Reality…
We would all agree that a straw home would not be a good choice in Florida. While the wolf was able to blow down the house made from sticks (wood) this was in the good ol’ days before building science and engineered wood framing techniques. The brick home that was spared was just a brick home. Brick is non structural and simply a face on the exterior that supports no weight other than its own. (A roof does not attach, nor does it “bear” or weigh on brick)
Most of Florida’s residential exteriors are built using one of two structural methods. One method is engineered frame wood construction and the other method is concrete block construction or CMU construction (short for concrete masonry unit).
Engineered Wood Frame Construction
The exterior walls are constructed with 2 x 4 or 2 x 6 dimensional lumber. The lumber member is spaced between 12″ and 16″ on center and is determined by the engineer using required building codes. The wall is anchored from the bottom of the wall at the slab to the top of the wall. The wall sits on a pressure treated 2×4 on top of a weather barrier that sits on the concrete slab itself.
Structural engineers design a new home for wind loads, sheer value, up lift and hold down protection. Rods, cables, clips and other hardware are incorporated into the design. The use of fasteners and nail spacing and patterns are also part of the design.
On both wood frame and CMU construction, the same wood roof trusses/rafters, sheeting and interior lumber walls are used. In the case of CMU homes, the second floor is usually built in wood frame for cost savings.
The exterior of the wall has OSB or plywood as sheeting with a certain nailing pattern applied to penetrate the wood studs for maximum strength and rigidity.
Concrete Block Construction (CMU)
CMUs are cement blocks made from a mold in a factory. Typically a residential exterior wall made from CMUs measures 8″ x 8″ x 16″ and is 80 % hollow.
The CMUs are laid on top of the slab in an interlocking staggered method and the wall is raised to its desired height. Mortar holds each block in place.
Once the CMU wall is constructed, some of the hollow block cells are filled with concrete in the cells that hold vertical rebar. The top of the wall consists of a “poured in place” concrete lintel that ties everything together.
People wonder why Florida has a combination of both wood frame and concrete block homes. The northern part of the state as well as the panhandle and some central Florida areas are mainly built in wood frame. The other areas in the state generally build CMU homes even though the majority of homes with a second floor are constructed out of engineered wood frame construction.
In my opinion, either method is acceptable because both methods meet all current building codes which require the structure to withstand 120 mph winds. Some people prefer CMU because they think they will be safer in a hurricane. It is true that the exterior walls in a CMU home are more durable than a wood frame home, but just because a CMU home might have some exterior walls still standing after a hurricane, doesn’t mean the home wouldn’t be missing a roof, windows and doors, rendering it a total loss. Of course, the best idea for all of us is to leave town if a “Cat 4” hurricane (winds over 131 mph) is about to strike and let the our homeowner insurance folks sort out the details later.
Pros and Cons about Block (CMU) vs Wood Frame
Concrete Block (CMU)
- Better sound proofing
- Durability during a hurricane
- A “simple box” one-story home could be less expensive that wood frame. (Not always the case with more intense design, angles and varying wall heights.)
- Some say CMU has a better fire rating however the roof and interior walls are still wood frame.
- Better protection from termites. This is true but most builders on all homes now provide termite colony elimination systems that ward off termites and provide very sizable insurance bonds if termites strike.
- Not as energy efficient as a wood framed home
- Possible dampness in areas of the walls that can be trapped within
- Higher cost on larger, high-end homes due to more complicated design elements
- The block size dimension is wider that a 2 x 4 or 2 x 6 thus robbing a couple of inches from a room located on an exterior wall area.
- Harder to rout mechanical rough-ins such as electrical and plumbing or retro-fitting wiring
Engineered Wood Frame
- Meets building code wind requirements just like CMU homes
- Much more energy efficient due to having deep wall cavities for various types of insulation
- Allows greater freedom in design for multiple wall heights, angles, curves and other detail at an affordable level
- Improved moisture protection due to advancements in house wrapping products in the last several years
I am comfortable with both methods of construction, but prefer wood frame mainly due to the ability to maximize energy efficiency. Insurance cost is similar these days in both methods. Like most trade industry associations, the masonry association may be at odds with the wood frame industry and each will have opinions that one is better that the other. When you build your Florida home, you should feel at ease with either of the two methods described here because your builder will have a reason as to why they specialize in one or the other….or both.
So, who’s afraid of the Big Bad Wolf? You shouldn’t be.
Homes prices in St. Johns County rising as building accelerates
The price of a home in St. Johns County is growing at a rate that threatens to eliminate a large swath of potential buyers, yet the permitting of new homes continued at a record pace last month.
According to a report from the St. Johns County Building Services Division, there were 366 permits issued in June for single-family, detached houses. That number is higher than in all but two other months in the last five years.
Through the first half of the year, the county has permitted 2,076 single-family homes. That puts the county on pace to equal the record 2005 pace when 4,152 new single-family homes were permitted.
And it’s happening while selling prices are on the rise.
The Northeast Florida Association of Realtors reported that the median sales price of a home in the county was $324,900 in June. For the year, the median price is up to $310,000.
By comparison, the median sales price in Clay County year-to-date is $185,000 and for Duval is $176,250. In Nassau County, the median price is $220,950 year-to-date.
Don Wilford, North Florida Division president of ICI Homes, said St. Johns County is desirable enough to command a premium compared to other parts of North Florida.
“St. Johns County has such a great reputation, and people know that the land is more expansive there,” Wilford said. “They know there are more developments with high amenities. They’ve come to expect that’s new norm there.”
As for the market prices, Wilford said it’s easy to forget just how far the prices plunged during the recession 8-9 years ago.
“You have to go back to how far we’ve overcorrected,” Wilford said. “Markets fell 35 percent, and we’re just getting back to that point.”
Looking back, NEFAR statistics show the median sales price of a home in St. Johns County was $231,450 in 2012.
Prior to that year, the median prices were broken up by single-family homes and condominiums. But it’s easy to see that the current price range is hardly unprecedented.
The high, according to NEFAR, was in 2006 when the median price for detached, single-family homes in St. Johns County was $360,000. In 2005, it was $347,310. For condos, it was $214,925 and $195,000, respectively.
Those building new homes in the county feel the current momentum can continue, said Mike Taylor, North Florida Division Manager of GreenPointe Communities. GreenPointe has developed TrailMark and Eventide in St. Johns County.
Due to the popularity of the county and its school system along with the general health of the jobs market in Northeast Florida, both Taylor and Wilford said the current growth rate appears sustainable.
“It (St. Johns County) has seen explosive growth in the last few years,” Taylor said. “We know the last five years have been tremendous. The projections are it’s going to continue to grow because of the quality of life that Northeast Florida has to offer.”
So far this year, each monthly total of single-family, detached homes permitted has been the highest since the recession.
Although the high rate of growth might seem overwhelming to longtime county residents, both Taylor and Wilford praised the county’s efforts for keeping up with the infrastructure needs caused by that growth.
St. Johns County collects impact fees on every new home built in the county and often imposes concurrency fees for developments to pay for roads and schools. It does drive up the cost of homes here, but that hasn’t slowed the buying much.
“I’m bullish on St. Johns County because of its land sizes and discipline the county has in making sure there is enough roadways for people,” Wilford said.
Taylor acknowledged that the growth has to slow at some point but doesn’t see it stopping soon. There are still a lot of very large developments that are in the early stages of building. And there are others looming on the horizon.
With so much competition in the area, it is possible that the product lines offered will be adjusted to accommodate lower-income buyers if the market slows down in the future.
“We all have to be mindful that we’ve got to deliver to what the market can afford,” Taylor said.
Added Wilford: “I think developers will be smart enough to offer something for everybody.”
****Article From St Augustine Record Posted July 23, 2017 ****
The Windward Model is not unlike other homes built by Emerald Homes. With solid construction and attention to detail, this 3 Bedroom, 3.5 Bathroom, 3 Car Garage Home, complete with an elevator will amaze you. But what will really grab your attention, is the outstanding water views!
Many real estate economists have called on new home builders to ramp up production to help relieve the shortage of inventory of homes for sale throughout the United States. The added inventory would no doubt aid buyers in their search to secure their dream home, while also helping to ease price increases throughout the country.
Unfortunately for builders, there are many forces that are making it difficult for them to do just that!
Last week at the National Association of Real Estate Editors 51st Annual Conference, CoreLogic’s Chief Economist Frank Nothaft broke down the 4 ‘L’s of New Home Construction: Lots, Labor, Lumber, and Lending.
The concept of supply and demand is ripe in the new home construction industry. The four ‘L’s of new home construction are each suffering a supply problem, and with that comes added costs. Let’s break it down!
Lots – There is a shortage of land near metros at an affordable price, causing builders to move farther and farther away from cities to keep costs down. This isn’t always an attractive option for those who want to stay close to work.
Labor – The Great Recession forced many skilled construction and trade workers to find other sources of income once their jobs were lost at the time of the crash. Even though the overall housing market has recovered, these workers have not returned. Those who remain are starting to age out and retire, causing even more of a shortage and additional costs.
Lumber – The cost to build a new home is directly tied to the cost of the lot and the cost of the supplies needed to build the home. Lumber costs continue to escalate due to policies restricting the importation of Canadian lumber, making larger luxury homes an attractive option to recoup costs when selling, rather than building smaller single-family homes and making less profit.
Below is a graph showing the increase in cost of 1,000 board feet of framing lumber.
Year-over-year, lumber costs are up 13% after reaching a high of $433 in the second week of April.
Lending – During the Great Recession, many small community banks were forced to close their doors. These banks were a great source of capital and lending for builders looking to borrow money at a low interest rate in the community in which they were building. Tougher lending standards have made borrowing funds more expensive and more difficult for builders.
Additional costs across all 4 ‘L’s have made building luxury properties more attractive to builders as they are able to make a larger margin with the higher sales price. The move to scale down to starter and trade up homes to help with supply will mean any additional costs are absorbed by the builders unless the supply of the 4 ‘L’s can increase!