'There are lots of layers to it': What's the state of Lake County's home building market?

Editor's note: This story was revised to include information from Trident Construction.

What is the home building market like these days?

“Right now, the only thing consistent is inconsistency,” Lisa Templin-Rayborn, executive officer of the Homebuilders Association of Lake-Sumter, told the Daily Commercial.

It also depends upon who you talk to, she noted.

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There’s a big difference between the demand for custom-built homes and what she calls “production” building.

Some subdivision builders have hit the pause button, and subcontractors are casting out lines to builders in hopes of landing work.

There is no simple solution. “It’s like an onion; there are lots of layers to it,” she said.

What are the issues?

Among the issues:

+ Demand for houses is greater than the supply, especially for affordable homes.

+ High mortgage rates, which are tied to the Federal Reserve raising interest rates to combat inflation.

+ Costly impact fees and rising tax rates.

+ Shortages of building supplies, and rising prices.

+ Not enough workers.

What a difference a year makes

Realtors in Lake reported seeing a lot of “craziness” in 2021 with a pent-up demand from people fleeing COVID-restricted states like New York. Many eager buyers paid cash, often paying more than the asking price. Of course, the new residents had to sell their existing homes first.

Things have definitely slowed down, including year-over-year.

Statewide, the number of home sales that closed by the end of the first quarter this year was 59,554, according to Floridarealtors.org. Last year, that number was 76,339, which makes for a 22 percent decline.

For the quarter, the number of buyers paying cash last year was 25,602, compared with 18,304 this year, a 28.5 percent decrease.

This year’s median sales price was $399,900, up 3.9 percent over last year’s $385,000.

“The average median priced home in Orlando is $360,000, up from 2022,” Templin-Rayborn said.

Statewide, the dollar volume for the first quarter of 2023 was $33.2 billion compared with last year’s $42.1 billion – a 21.1 percent decrease.

There is a downside, even in the good news, according to a Forbes magazine report on May 11.

“Tight inventory issues continue to keep prices high, perpetuating affordability challenges for many, especially first-time homebuyers," the housing market article stated.

The need for attainable housing

“There is a great need for workforce, affordable, or attainable housing,” Templin-Rayborn said, using different terms to describe the same demographic. “I’m not talking about Section 8 [subsidized low-rent] housing.”

It is what developers have described as “hero housing” for teachers, nurses and first responders.

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The Forbes article predicted there will be no big change on that issue throughout the year nationwide.

Impact fees

One thing that adds to the cost of a home is impact fees. Implemented by local governments to pay for services brought on by the rising number of newcomers, the fees have long been a sticking point for homebuilders.

The Lake County School Board recently approved a consultant’s study calling for a $12,021 fee on a single-family home larger than 800 square feet. The panel is recommending the Board of County Commissioners also approve it for four years.

But, in fact, newcomers are not the only ones who will be paying the fee, Templin-Rayborn argued. It also affects first-time buyers, retirees looking to downsize, and others who have lived in Lake County for years.

The value of homes has also gone up, resulting in higher tax bills.

Elected officials need to do everything they can to cut costs, Templin-Rayborn said.

A homebuilder's perspective

Nick Smith of Trident Construction agrees that conditions are “a bit of a mixed bag,” as he puts it.

“The phone keeps ringing, so that’s good,” he said.

One of the keys to his success is that he remains versatile. Lately, he has been doing a lot of remodeling. A lot of would-be sellers are finding it more affordable than trying to buy a different house.

He also builds docks and custom homes.

Working in construction since 2005, including working for some big builders, Smith remembers the 2008 recession because he had just gotten a degree in finance and couldn’t find a job.

He’s more optimistic about the industry now.

People are still moving to Florida because they find it to be a desirable place to live, Smith said.

The bigger picture

Besides consistent inconsistencies, there are also some concerns among many about an economic downturn. Congress and the White House are possibly on the brink of letting the nation go into default over the debt ceiling. Next year is an election year, and there is a lot of trouble brewing overseas, including with China and Russia.  

Major local growth

Still, there is room for optimism, experts say. About 1,000 new residents pour into the state every day, and they need a place to live.

A lot of Lake County property already has been approved for development, including vast stretches south of Leesburg along U.S. 27 that eventually will double Leesburg's population, which currently sits at 27,910.

The Villages does not appear to be slowing down. In fact, it is rapidly building houses in the southern end of Leesburg’s territory at County Road 470 and Florida’s Turnpike.

Recently, the mega retirement community purchased 900 acres in Mascotte. Currently, that property does not connect to any of the development’s other properties, which would make it an outlier, but that could change, as the developer continues to build in Sumter County and march toward the Lake-Sumter line.

Local home building materials supplier Blackton Inc. is certainly optimistic. The company is expanding its operations in Leesburg by building a 17,000-square-foot structure on seven acres it purchased in an industrial park. (See related story.)

“I wish I had a crystal ball,” Templin-Rayborn said.

That’s not a new phenomenon. President Harry Truman was tired of economists saying, “but on the other hand….” He said, “I would like to meet an economist with one hand!”

This article originally appeared on Daily Commercial: Pent-up demand has waned; what's next for Lake County home building?