Survey sees more growth opportunity in Lee, Collier By Daily News staff August 7, 2005 The Naples-Fort Myers market, which consists of Lee and Collier counties, is one of the most active markets in Florida, with Lee County offering tremendous opportunity for expansion, said Bradley F. Hunter, who directs Metrostudy's market research operations in the Naples-Fort Myers market. In this market, Metrostudy surveys single-family homes and townhomes in subdivisions. Scattered lots in areas such as Cape Coral, Lehigh and Golden Gate are not included in the data. The top 10 Naples-Fort Myers communities, ranked by annual new home starts, are Gateway, 469; VeronaWalk, 457; Colonial Country Club, 428; Cypress Landing, 266; Lely Resort, 249; Herons Glen, 233; Grandezza, 204; Forum, 196; Brooks, 187; and VillageWalk of Bonita , 185. The inventory of vacant developed lots in Lee County subdivisions increased during the second quarter to 5,409 units, sufficient to last 10.7 months at the current rate of construction, said Hunter. "Two years ago, the market had more than a 24.0-month supply of lots. It is worth observing that the absolute number of vacant developed lots has remained steady, at approximately 5,000-6,000, while the pace of lot absorption has increased. The months of supply is a useful measurement in understanding the current price pressures in the market and in predicting changes in various submarkets." There are 32,463 future lots ready to replace today's existing lots in Lee County subdivisions, said Hunter. A large number of those lots are in new communities along State Road 80. The most active projects in terms of housing starts during the past year are townhome subdivisions including Cypress Landing, which started 266 townhomes, The Forum/Colonnade, which started 192, and Three Oaks/Timberwalk, which started 128. Despite the sense that Collier County is running out of land, the pace of new home construction rose to a very strong level during the second quarter, said Hunter, who noted that Collier's building pace has not declined appreciably since 2002. Several new projects in south Collier account for much of the increase, but there has been a surprisingly high level of activity countywide. During the three-month period ending in June, Metrostudy recorded 857 home starts, slightly above the number of homes started during the second quarter of 2004. The annual pace of new home starts reached another record level, with 2,763 homes started in subdivisions between mid-2004 and mid-2005. Second-quarter closings were at the highest level in several years. There were 984 homes closed, an increase of 132.0 percent over the same quarter last year. The annual pace (mid-2004 to mid-2005) was 2,785 units. The level of housing inventory in Collier County is extremely low, with only 117 finished vacant homes and 1,368 homes under construction. This low supply correlates to the upward movement of housing prices in the county. Fully one-third of all homes about to start construction are priced above $750,000. This figure is based on the price distribution of vacant developed lots. Only 13.0 percent of homes started last year were in that price range. Nearly one-third of all homes started last year were priced below $300,000, but only 13.0 percent of homes about to start construction are below that threshold. Despite the depletion of lots in Collier, Metrostudy is tracking 15,106 lots in planned future subdivisions or in future sections of existing communities. The pace of new home construction in Lee County continues to increase dramatically year after year, said Hunter. The return of job growth in 2003 and 2004 fueled the resurgence of housing demand, which is now running at a pace that is nearly 30.0 percent higher than last year. In subdivisions, the number of Lee County single-family housing starts totaled 6,046 units between mid-2004 and mid-2005. The second quarter of 2005 was the most active quarter in the county's history, said Hunter, with 1,699 single-family starts in subdivisions. The number of closings also rose dramatically during the second quarter, increasing 38.0 percent over the second quarter of 2004, to 1,278 units. Housing inventory is low in Lee County, after reaching a high level during the first quarter of 2004. A large number of investor purchases drove the supply of finished vacant homes to 3.1 months of supply (1.5 to 2.0 months is normal). At the end of June, there were only 694 homes finished but not yet occupied. That figure falls into a normal range of 1.7 months of supply. The $250,000 to $400,000 price range still dominates the Lee County new home market, with 46.0 percent of unit starts selling in that range, said Hunter. Only 11.0 percent of the homes started in the past year were priced at or above $500,000; however, 30.0 percent of the homes about to start construction are selling at that price point (based on the pricing of homes planned for known vacant developed lots). Metrostudy is a provider of primary and secondary market information to the housing industry and related industries nationwide.