By NADIA GERGIS
Construction throughout the Treasure Coast soared in the first quarter, pushing inventory levels to a record high, according to an industry report released Tuesday.
The number of starts adds more inventory to an already saturated market for existing single-family homes, said American MetroStudy, a Boca Raton-based provider of information on real estate and housing.
Brad Hunter, a housing economist for American MetroStudy, said it could take six months in one county and more than a year in two counties, to sell all the new homes.
"Historically, these are very high figures. They're actually the highest amount of finished inventory I have ever seen," Hunter said. "I think builders should be concerned."
Levels were high in St. Lucie County, with 747 homes started during the first quarter, compared to the 528 during the first quarter of 2005. There were 844 finished vacant homes in the county on March 31.
At the current rate of closings, there's a six-month supply of new homes in the St. Lucie market, the report said.
"This is not the time to build commodity homes unless they (developers) can build them better and/or less expensively than anyone else," Hunter said.
"Speculators have an overabundance of commodity homes, all at competitive prices. To be successful, builders must sell something that is different from currently available supply."
Housing starts in Martin County rose to 161 in the first quarter from 143 in the same period last year, a 13 percent increase. There were 897 homes under construction or finished and vacant in Martin County, about a 14-month supply.
Indian River had the smallest quarterly growth in home starts on the Treasure Coast. Inventory levels rose to 569 units, up slightly from 546 in the first quarter of 2005, a 4.2 percent increase.
The number of finished, vacant homes rose to 598 units during the first quarter, which drove the inventories to a 13-month supply.
Housing experts said the numbers don't bode well for builders on the Treasure Coast.
"This is the reason we're seeing builders offer so much in incentives," said Richard Hope, president of Treasure Coast Builders Association and president of The Hope Co. in Vero Beach. "Buyers are seeing a widening of choices, so builders are really having to stand out with their products."
Builders also are competing with investors who want to flip properties they bought at lower prices last year, said Jack McCabe, president of McCabe Research and Consulting, a real estate consulting firm in Deerfield Beach. A stagnating re-sale market isn't helping builders, he said.
"Builders who continue to put up spec homes without a signed contract, well, that's just foolery on their part," McCabe said. "There has been a dramatic shift in the market since the speculators left the market."
McCabe said that with sellers no longer able to push up prices, the rental market is changing. He said the growing trend of South Florida re-conversions — apartments converted to condos and put back on the rental market by their investor-owners — has entered the Treasure Coast.
"The Estates at Stuart has entered the re-conversion market because people realize that they can make some money with the rental rates being so great," McCabe said, referring to the Estates at Stuart, a 237-unit apartment complex that sold for a record $45 million last year.
"The Treasure Coast is just saturated with for-sale and for-rent signs. What does that tell us about the reality of market conditions?"
The report listed three Treasure Coast communities that had the most new home starts in South Florida. The subdivisions of Martin's Crossing in Martin and Newport Isles by Centex Homes in St. Lucie, and Core Communities' Tradition in St. Lucie County were part of the top 10 South Florida communities with the most home construction starts.
Shawn Reilly, vice president of marketing for Core Communities, developer of the master-planned communities of St. Lucie West and Tradition said he wasn't surprised at the rankings.
"I think people realize that we offer good value and people love our way of life here," Reilly said.
As for St. Lucie County having the highest inventory levels on the Treasure Coast, Reilly said he wasn't concerned.
"This isn't affecting us. It's happening to scattered lots in Port St. Lucie," Reilly said. "We see this as a good thing because we really tried to prevent flippers from buying here. Now that they're gone, we can focus on our real buyers."
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