Florida is expected to see the steepest drop in housing starts according to the forecast just released by the National Association of Home Builders on Tuesday. While the national average is expected to drop 24.8% this year, Florida is expected to drop 48.1%. Sarasota-Bradenton area is projected for the steepest decline in Florida with 67.5%. Finally, Florida is home to 9 out of 10 areas projected to see the sharpest decline in housing starts.
The reason the market is so awful in Florida is the oversupply of homes which were caused by speculative buyers who came from out of state. There are not enough buyers locally to absorb this supply so builders have to cut back on building and the existing inventory needs to drop to a normal number which is around a 6 month supply. Orlando currently has a 24 month supply. We’ve got a long way to go before recovery.
Hank Fishkind noted in the Orlando Sentinel that the slowdown in building will allow our market to burn off the excess supply more quickly. He also states that the Orlando market is better positioned to recover more quickly than the bust years of the early 90’s.