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Lesley Deutch

Pause on multifamily moves step closer in Pasco

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The Pasco County Planning Commission is recommending approval of a six-month moratorium on new applications for multifamily development in a portion of the county.

Planning commissioners also think the land development code should be changed to limit the ability to receive a conditional use approval for multifamily uses on commercial land.

The planning board made both recommendations during its April 1 meeting. The Pasco County Commission is the final authority on both issues.

The area shaded in pink represents the area where a 180-day moratorium is being proposed on applications relating to new entitlements for multifamily developments. (Courtesy of Pasco County)

Planning commissioners said a pause on new applications for multifamily uses is needed to give staff time to collect data to determine whether there’s an oversaturation of multifamily within the temporary moratorium area.

Commissioner Mike Moore has repeatedly warned that too much multifamily is being allowed within District 2, which he represents.

A majority of board members voted in February to direct staff to prepare an ordinance to enact a six-month moratorium on new rezoning, conditional use or land use applications that would increase the potential for multifamily, in a specified area.

That specified area, which is contained in Moore’s District 2, is generally defined as between State Road 52, on the end; U.S. 41, on the west; State Road 54 on the south; and, Bruce B. Downs Boulevard, on the east, with the boundary zig-zagging between District 1, represented by Commission Chairman Ron Oakley, and District 2.

Not everybody is sold on the idea of enacting a temporary moratorium.

Eric Garduno, representing the Bay Area Apartment Association, said that while the proposed moratorium is temporary, its objective is “to discourage the growth of apartment communities in our county.”

That’s contrary to the county’s comprehensive land use plan, and would be a mistake, Garduno said.

“Apartment communities are a key ingredient to the future success of the county.

“Their development should be encouraged, not discouraged,” he said.

“The latest information I have regarding vacancy rates for apartment communities in Pasco County, is 6.1%, which is really, really low.

“There are just under 15,000 apartment units across the whole county. By comparison, Hillsborough County has 133,000. That is 11 people for every apartment in Hillsborough, and 36 people for every apartment in Pasco County.

“Nationally, 45% of rental households are in apartment communities, of five or more units.

“Only 25% of renters in Pasco County are in apartment communities.”

Garduno pointed to a market study provided to the county board in February.

That analysis, completed by Lesley Deutch, managing principal with John Burns Real Estate Consulting, projects a need for an additional 5,380 Class A apartments in Pasco County over the next five years.

Garduno told planning commissioners: “This demand is fueled by young professionals and empty-nesters, both of whom want amenities and services in and around their communities. He also noted: “Apartments are a key economic driver for the county. They, themselves are employers. This includes onsite teams, as well as a whole host of contractors who maintain and fix appliances and amenities throughout apartment communities,” Garduno added.

“More importantly, I think, for your consideration: They provide the rooftops for commercial investment. You need rooftops, to support retail. You need rooftops to attract major employers.

“Apartment communities get you those rooftops in a small footprint that furthers the comp plan — the comp plan objectives around reducing sprawl, reducing environmental impacts and maximizing the efficient use of infrastructure,” the apartment industry expert said.

Joel Tew, a private zoning and land use attorney, told planning commissioners instead of imposing a moratorium, the county should be encouraging more multifamily development.

“Here, at the peak of unprecedented housing demand, market demand, in this country — unprecedented housing inventory shortage in this country, unprecedented number of young professionals, and empty-nesters and retirees who are wanting apartments and the high-end lifestyle that the current product provides, it is simply a bad message to send to business,” Tew said.

“We should be providing incentives to get product there, to get affordable housing, to get apartment options for those that want to live in Pasco County,” Tew added.

“This whole concept is simply ill-designed to apply to one commission district, for purely political reasons that have nothing to with the comprehensive plan, that have nothing to do with market data, that have nothing to do with market demand,” Tew said.

Planning commissioners said they see the value of the pause, to collect more data.

Planning Commission Chairman Charles Grey put it this way: “They’re saying that this multifamily development is happening so rapidly, in order to make sure we have our arms around it and that we have the right regulations and support, we’re going to need for that, they need some time to review it and make sure they have the proper protocols in place.”

However, Grey and other planning commissioners said the data collection also should include information about vacancy rates — something the county board had not requested.

“I know from my perspective of being in that business, no developer goes in to develop an apartment project without knowing what the vacancy rates are. If the vacancy rates are 15(%) or 20%, he’s not going to build a new complex,” Grey said.

Planning Commissioner Chris Poole thinks the 180-day moratorium is needed, to ensure the county has the facts.

“We need to get it right. The data has got to be right. It’s incumbent on us to make sure we get it right for future generations,” Poole said.

Limiting multifamily on commercial land
While the moratorium is temporary and applies to only a portion of the county, a proposed change regarding conditional uses on commercial land would be a permanent change to the land development code and would apply countywide.

Planning commissioners resisted that proposal at a previous meeting, citing concerns about potential unintended consequences.

Planners brought a revised proposal to the planning board’s April 1 meeting.

That proposal would allow conditional uses to be considered for multifamily uses on general commercial land, if: the proposed multifamily meets the criteria for affordable housing; the multifamily would be part of a mixed-used development, including nonresidential uses; or the proposed multifamily development is located in the county’s West Market area.

Published April 07, 2021

Pasco board looks to put pause on multifamily

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The Pasco County Commission is considering a temporary pause on multifamily development in the central part of the county.

The board has directed staff to prepare an ordinance that would prohibit new applications for multifamily to be considered in an area bounded by State Road 54/State Road 56 on the south; State Road 52 on the north; U.S. 41 (Land O’ Lakes Boulevard) on the west; and Bruce B. Downs Boulevard and on the east.

The moratorium would take effect beginning on the date of the first public hearing — which has not been determined yet.

This 262-unit apartment development is being built off State Road 54, at Oak Grove Boulevard. The Pasco County Commission is pursuing a temporary moratorium on new multifamily development in the central part of Pasco County, to give commissioners a chance to get a better handle on how much of this type of development is already entitled in existing zonings. (B.C. Manion)

The idea is to give county staff time to research the number of existing entitlements for multifamily development and to report back to the board. Once the board has that information, it can decide how to proceed.

Board members voted 3-2 to support pursuing the temporary moratorium.

Commissioners Mike Moore, Christina Fitzpatrick and Jack Mariano voted yes; Commissioner Kathryn Starkey and Commission Chairman Ron Oakley voted no.

The vote came after extensive discussion, including analysis of Pasco County’s Class A market demand provided by Lesley Deutch, managing principal with John Burns Real Estate Consulting.

Deutch, who appeared on behalf of land use attorneys Joel Tew and Barbara Wilhite, told commissioners that demand for Class A apartments in Pasco County is expected to grow by about 5,380 over the next five years. She characterized that projection as a “conservative” estimate.

Nectarios Pittos, the county’s planning director, provided a presentation that reviewed the county’s policies regarding multifamily development.

“The compact nature of development requires less infrastructure; it’s less land, and so you are making use of existing infrastructure as much as possible,” Pittos said.

Commissioner Starkey cautioned against becoming too restrictive regarding the development of multifamily housing.

“We need to have some workforce housing,” Starkey said. “I am really getting concerned that we don’t pay enough attention to this part of our society, and they need to be integrated into all of our communities.”

Commissioner Moore said his district is becoming too saturated with multifamily development.

He has repeatedly warned against the long-range potential of having large apartment complexes that become less competitive over time wind up with high vacancy rates and ultimately fall into disrepair.

Commissioner Fitzpatrick has similar concerns.

“What’s going to happen 30 years from now?” Fitzpatrick asked, expressing worries about the prospect for crime.

But, Starkey said multifamily is needed to address today’s demand.

She said young professionals aren’t buying; they want to rent.

Starkey also noted: “There is a rise in trend of apartment dwellers being higher-income brackets.”

Noting that Pasco is an attractive area, Deutch said, “there’s a lot of growth in Pasco. Unless you want it to stop, you  have to have housing.”

Like Starkey, Deutch said that renting has become a much more popular choice than it was in the past.

Chairman Oakley said Deutch’s report was informative.

“I don’t see we’re overrun with apartments,” Oakley said.

But, Moore persisted: “We continue to change zoning on parcels, when we already have the inventory to meet the demand.

“The parcels are there, ready to be developed tomorrow. These guys already have the entitlements,” Moore said.

“Did you look at all of the parcels that have the entitlements for the future, when you did your study?” Moore asked Deutch.

Deutch responded: “No, I did not. That wasn’t part of the study.”

Starkey noted that it can take decades for a property with an entitlement to actually be developed.

Attorney Tew raised this issue with the board: “I’m concerned that the commission will get into picking winners and losers in the marketplace. That is not what the government is supposed to do.”

He also told board members: “I think this is very treacherous ground and really uncharted territory for this commission.”

The prospect of a moratorium, according to Tew, “will be an immediate buzz kill to your potential employers.”

But, Moore cited a number of other places — such as Illinois, Massachusetts, Tennessee, Ohio, Texas and other jurisdictions in Florida — where moratoriums on multifamily are either in place, or are being considered.

Mariano, like Moore, thinks the county needs a better understanding of its current level of entitlements.

“I’m really scared that we don’t know what our supply could be, if everything was going to be built out,” Mariano said.

In another action relating to multifamily development, commissioners directed staff to prepare changes to the county’s land development code to remove the possibility of developing multifamily, as a conditional use, in a commercial zoning district.

The goal is to preserve commercial land for commercial uses, according to Fitzpatrick, who made a motion to pursue the change.

Moore seconded the motion, which was approved on a 4-1 vote, with Starkey dissenting.

Published February 24, 2021

Strong housing outlook predicted through 2021

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Experts speaking during the 2021 Tampa Bay Builders Association virtual Economic Forecast predicted a bright picture of this year’s housing market — both locally and nationally.

“We have a very bullish outlook for 2021,” said Lesley Deutch, managing principal at John Burns Real Estate Consulting.

“Usually, we’re a little bit more on the pessimistic side,” said Deutch, whose company is a combined research and consulting company. But, she added: “The outlook is very, very strong.”

Tampa recovered immediately in the housing market and in relocations, Deutch said.

“Tampa, I have to say, since the beginning of COVID, has been sort of the outlier, in a very positive way. It really outshone almost all of the other markets in the country.”

“Single-family permits are rising,” she said, noting they’re up by 8%.

“Builders are selling out of their current communities and that’s really going to slow the sales pace,” she added.

The real estate expert also noted the Tampa market has a low inventory in both new homes and in resale homes.

For instance, there’s just a 1.2 months of supply in the resale market, she said.

“That’s virtually nothing. That’s driven by demand from people moving to Tampa, moving around Tampa. But, it’s also driven by investor demand,” she said.

Big national companies are coming in and buying all of the resale inventory in Tampa, fixing it up and putting it back on the market as rentals, she said.

“You can guess what that leaves us with — some pretty rapid price appreciation,” she said.

“The resale market is really starting to appreciate because there’s just no supply on the market. In fact, it’s coming pretty close to the new home, which is around $294,000 right now,” Deutch said.

That would seem to create a major crunch in affordability, she said.

But, Tampa remains relatively affordable because the Federal Housing Administration recently raised its loan limits to $356,000 in Tampa, plus mortgage interest rates are low, she said.

Deutch also noted: “There is demand on all levels, not only in Tampa, but across the Southeast.”

Deutch also offered a sunny outlook in the national housing market, and she attributes part of that to an increasing optimism that the vaccines for COVID-19 will allow the country to return to normal by the end of the year.

Her 2021 housing forecast for the United States projects an 8% appreciation in resale home price appreciation — far above the consensus forecast of about 3%.

“We actually believe that resale price appreciation could trend even higher, due mostly to investor activity, as well as homebuyer activity,” she said.

Her company also projects a 9% appreciation in new home prices.

“That’s really driven by that tremendous lack of supply, and the need to drive down sales activity, so construction can catch up,” Deutch said.

On the rental side, the projection is for effective rents to decline 5% on the national level, but she noted this doesn’t apply in the Tampa market.

The national decline in apartment rents, she said, “is primarily driven by the urban markets that are really seeing some serious rent declines at this point.”

On the other hand, single-family rentals are projected to have a 3% increase in rents, and there may even be some upside potential there, she said.

Nationally, the forecast is for 7% new home sales growth, and 9% single-permit family permits and starts, she said. The consensus projection is higher, but she said that’s based more on a supply issue than on demand.

While Deutch focused on the housing market, Brent Schutte, chief investment strategist with Northwestern Mutual Wealth Management Company, talked primarily about the economic outlook for 2021.

Schutte is a frequent expert commentator on national news outlets including CNBC, The Wall Street Journal and Bloomberg.

He told those listening in that “the market is painting a picture that 2021 is going to be much brighter than 2020, economically.

“I think the reason the market has been able to shake off some of this bad news is because it doesn’t believe it’s permanent. It does see a political system that will endure. It sees an economy that has largely adapted to COVID,” he said.

“Most importantly, it does see vaccines that are coming in 2021 and that will get all of those people who are impacted right now, hopefully, back to work in 2021,” he added.

The fiscal stimulus will play an important role, too, he said.

Painting a broad picture, Schutte said, “we do see in 2021 a U.S. and global economy that will be operating on all cylinders of growth, for really the first time since somewhere late 2017, early 2018.”

He projected fast economic growth, somewhere between 5% and 6%, in 2021, early 2022.

“And, the growth is going to be broad, which is important from a market perspective,” he added.

“On a national basis, at least based on the data that I have, housing still remains very affordable,” Schutte said.

He also touched on politics.

“While the Democrats do have control of all three chambers, I think it’s important that it is still pretty much a divided government,” he said.

With the margin of control slim, he said “I’m not thinking there’s going to be a huge progressive tax increase” later this year.

He also advised: “You should never overweigh politics in your investing outlook. It is one variable to look at, but only one.

“Presidents and administrations are pluses or minuses to economic growth in the U.S., not absolute positives or negatives.

“What happens during a president’s term is much more determined by when they take over in the business cycle.

“Do they take over early in the business cycle? Do they take over mid-business cycle, or do they take over late business cycle? As you might expect, the ones who take over early in the business cycle typically preside over the highest market returns,” Schutte said.

Housing forecast Tampa*
2021 forecast

  • Employment in Tampa: up 1.9%, for a gain of 25,700 jobs
  • Median income: $57,000, relatively flat
  • Affordability: 9.1, on a scale of 1-10, with 10 being most unaffordable
  • Construction: Total permits down 1.5%, driven by the multifamily side of the market; single-family permits up 6.5%.
  • New home volume: Up 5% to 7%
  • Median new home appreciation: Up 9%
  • Resale market: Up 7%
  • Apartment rent: Down 4.3%; single-family rent: Up 3.4%

Housing trends, these are here to stay:

  • Build-for-rent: 700-square-foot 1-bedroom units and 1,000-square-foot 2-bedroom units
  • Work from home: Homes with extra room for work space
  • Multi-gen living: From room for a mother-in-law to adult children, the demand for shared living spaces is expected going forward.
  • Outdoor living: COVID has raised awareness regarding the competitive advantage of outdoor living spaces, at your home and within communities.

* Tampa projections include Pasco, Hernando, Hillsborough and Pinellas counties.

Source: Lesley Deutch, managing principal John Burns Real Estate Consulting

Published January 27, 2021

Local outlook brighter than in many other housing markets

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The housing market has its challenges, but Florida continues to enjoy a better situation than markets in many other parts of the country.

At least that was the message delivered by two experts at the Tampa Bay Builders Association 2019 Economic Forecast briefing on Jan. 23 at Tampa’s River Center at Julian B. Lane Park, in downtown Tampa.

Robert Dietz, chief economist of the National Association of Homebuilders, and Lesley Deutch, with John Burns Real Estate Consulting, shared their expertise on the outlook for the housing market, and discussed various factors that influence its performance.

Dietz focused on the national picture.

“Despite the fact that Florida is really kind of benefiting from strong population growth, the national market is slowing down,” Dietz said. “A lot of that has to do with higher interest rates, where we are in the economic cycle.”

The current growth cycle, which is 116 months old will exceed the record growth cycle of 120 months, which was achieved during the 1990s, Dietz said.

But, Dietz observed: “The thing that’s important to keep in mind, however, is Ben Bernanke, the former chair of the Federal Reserve, said ‘Economic growth cycles don’t die of old age. They’re murdered, and they’re murdered by the Federal Reserve.’

“Our forecast is for two (interest) rate hikes right now. Wall Street is saying zero for 2019,” Dietz said.

“The big macro risk is the labor market,” Dietz said. “The good news is that the unemployment rate is below 4 percent. We do think it’s going to rise later in 2020, when we hit that growth recession.”

Labor shortages result in wage growth, which generally is good for housing demand, he said.

However, he noted: “Keep in mind there’s two kinds of income growth in an economy. There’s income growth that’s generated by productivity growth. That’s fine.

“And then there’s wage growth that comes about as businesses are competing over an increasingly scarce labor pool. That’s inflation. That’s what the Fed is worried about. That’s why they’re trying to raise rates before that happens,” he said.

Dietz is projecting that the fixed-rate 30-year mortgage will be around 5.1 percent or 5.2 percent.

“That’s the good news. It’s not going to rise much higher than what we’ve already seen,” he said. Still, he added: “Given the current levels of pricing, a 5-percent mortgage interest rate is enough to stall the housing market. If you would have asked me five years ago where that point was, I would have, without hesitation, said 6 percent.”

While interest rates have an impact on demand, there are other considerations, too, including the ability to get a loan, Dietz said.

The increase in student loans and auto loans is crowding out the ability of younger households to get home loans, Dietz said.

There are 1.5 trillion student loans, which is up 136 percent since the Great Recession, he said.

In general, student loans can lead to degrees, which can mean a lifetime of higher income and the ability to buy a bigger house, he said.

“The problem is the 40 percent of four-year college students who go to college and drop out. No degree and $20,000 in student loans. That’s pure dead-weight loss,” Dietz said.

Auto loans are an issue, too.

“Car sales have done very well for the past four or five years. The problem is, seven-year car loans, no money down,” he said.

He also noted the increasing number of 25-year-olds to 34-year-olds who are living at home with their parents. Twenty years ago, that number stood at one in 10; now, it’s one in five.

Overall, however, the demographics are good.

“The demand for single-family housing is going to grow and grow and grow” because the peak age of millennials is about 28, and half of new homes are purchased by those between 35 and 55,” Dietz said.

Affordability is an issue
“The worst markets are the West Coast. In San Francisco and Los Angeles, fewer than 1 in 10 home sales are affordable for a typical family. For that reason, you are seeing population leaving California and going places like Idaho. Boise is now listed as unaffordable because of population demand,” he said.

The Tampa/St. Petersburg market is relatively affordable, Dietz said. It has been enjoying population growth, and in 2017, its population grew by 1.8 percent, compared to the national growth rate of 0.6 percent.

He’s projecting single-family construction in the Tampa region “to be better than the nation as a whole, but slower than what we’ve seen in the last few years.”

He also expects the size of single-family homes to continue to decline, and points to the 24 percent growth in townhome construction as an indicator of that trend.

Dietz also predicts that multifamily construction will be slightly negative because of tighter financing, and that remodeling will soften, too.

Deutch took a closer look at Florida, and the Tampa market area.

“Florida, as a whole, is much stronger than the rest of the country,” Deutch said.

“Tampa is a very, very solid — fundamentally solid — housing market,” she said.

“From a national perspective, Tampa is very, very affordable. From a local perspective, it’s getting a little bit more unaffordable. All of Tampa and all of the Florida markets are benefitting from (their) relative affordability,” she said.

However, she noted: “We’re not immune to what’s happening in the rest of the country.”

The biggest impediment to increased residential construction is affordability, she said.

“Home prices are way above the peak — 24 percent higher than the peak of new home prices and resale prices are getting up there, too.”

“It’s not just only builders increasing their home prices. The construction prices, labor costs, land costs, have all gone up. And, all of this is really constraining a faster pace of growth for Tampa’s market. This is what’s causing the slower home sales.”

Despite the challenges, companies can manage through them, she said.

The key is understanding the consumer, Deutch said.

Her company did a consumer survey of 25,000 new home shoppers across the country, dividing them into nine consumer categories: Young singles, single parents, mature singles, young couples, empty-nesters, active adults, young families, families plus and mature families.

“So, if you’re a home builder and you sold a home to an empty-nester, they’re going to be very happy to meet the warranty manager at 10 a.m., in the morning. They don’t really have a whole lot of things to do.

“But if you sold that home to a single parent, do you think they’re going to be sitting at home waiting for the warranty guy to come in at 10 o’clock in the morning?

“All of these people are going to act completely differently,” she said.

“You really have to understand who your buyer is. There is going to be more competition,” Deutch said. “They’re out there. There is demand, but how are you going to get them?”

Housing trends
John Burns Real Estate Consulting does monthly surveys with 350 builders across the country, asking the same questions each month, to get a pulse on the market.

Here are some questions and results:

“Where are home prices going? Month-to-month.”
In 2017: 31 percent said home prices are increasing; 65 percent said they are flat; 4 percent said they are declining.
In 2018: 5 percent said they are increasing; 72 percent said they are flat; 23 percent said they’re declining.

Where do you see single-family home sales over the next six months?
In 2017: 66 percent said they’re going to be good; 33 percent said they’re going to be fair; none said they were poor
In 2018: 24 percent said they’re good; 71 percent said fair; 5 percent said poor.

Published February 06, 2019

Tampa Bay housing market has solid outlook for 2018, experts say

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Tampa Bay’s housing market is looking strong for 2018, but changes are expected, as the market evolves, according to experts featured at the 2018 Economic Forecast meeting presented by the Tampa Bay Builders Association.

Buck Horne, vice president for equity research, housing and real estate for Raymond James, presented an analysis featuring three key findings during the Feb. 6 meeting at Tampa.

Buck Horne, vice president — equity research, housing and real estate, for Raymond James & Associates, provided a look at key trends in the housing market. (B.C. Manion)

The first involves a deluge of new apartments expected soon.

“We see what we’re calling a wall of new supply in multifamily rental apartments, which is going to be delivering into the front half of 2018, and it could spill into the back half of ‘18, as well,” said Horne, who specializes in the housing and real estate sectors.

“In the latter half of last year, we were doing our data digging and what we found were just surprising levels — how widespread pervasive construction delays started to mount.

“Labor shortages, permitting issues, entitlement delays — all of it really started to mount. And, we saw an incredible backing up of supply in multifamily that was supposed to deliver last year, which is now scheduled to deliver this year,” he said.

The scheduled new supply in 2018 could be as much as 50 percent higher than either 2017 or 2016, according to figures on one of Horne’s charts.

“We think it’s going to start to affect multifamily rental markets, mainly in the big urban core coastal cities — that’s where it’s going to be most acutely felt. But, it’s in a lot of places. It’s not just New York and San Francisco and L.A., although those are the worst.

“But, you’re going to see it in Charlotte. You’ll see it in Nashville. You’ll see it in Tampa, in the second and third quarters, as well,” he said.

Lots of new homes are going up in the Bexley subdivision, off State Road 54, in Land O’ Lakes. Housing experts expect the Tampa Bay housing market to have a solid outlook in 2018.

There has also been a shift within the composition of household formation, which has started to tilt to the single-family side, said Horne, who has been a regular guest on CNBC, offering insight into the housing sector, and has also been widely quoted in major media outlets, such as Bloomberg and The Wall Street Journal.

“Last year was the first in 10 that we saw multifamily renter households actually decline, rather than growing. We saw accelerations in new single-family household formation,” Horne said.

Dearth of homes for sale
As the spring selling season begins, there’s a historically tight inventory, Horne said.

Listed inventory for sale, as measured as a percentage of total housing stock, is at its lowest recorded level in more than 30 years, according to Raymond James data.

Horne also observed: “We’ve got reliable data going back to the late 1980s, and we haven’t seen anything like this. Anything that’s even affordable and that’s in reasonably good condition gets snapped up very quickly.”

When it comes to housing starts, Horne said, “we’re looking for basically good, but not great, growth. We’re forecasting another year at a low double-digit growth in single-family housing starts and new home sales.

“But, you’ll see we are projecting that multifamily starts will begin to come down. We think that’s a function of the supply issues that are coming this year, as well as possibly some demand that starts to tail off,” he said. He also expects rent levels to begin to stall.

Horne also expects to see growth in single-family housing, both owner-occupied and rental.

There are a lot of factors at play, he said, but he noted: “We are seeing evidence that the push into single-family and away from multifamily is beginning to gain some momentum,” Horne said.

Older millennials are beginning to make the move from apartments into single-family dwellings, he added.

One of the fastest-growing housing types in America is the single-family renter household, Horne said.

“We’ve also got for the first time, in a long time, real household income growth: 2016 household income got up to about a little over $59,000.

“That is driving some better demand, but it’s also driving higher and higher household prices,” he said.

Concerns about affordability
“The cost to build a new single-family house just is relentlessly going higher,” Horne said.

“The under-$200,000 single-family house is becoming an extinct species. It’s harder and harder to build, unless you go way out to the periphery, to actually make that math work.

To build the same house as five years ago, it’s 36 percent more today, he said.

Many new homes have been built in the Long Lake Ranch Community in Lutz and more are being built there, as new home construction continues to create new housing options in Pasco County.

Most of that was labor and lot costs, but rising material costs now are compounding cost issues, he added.

“The point is, it’s not going to get any better anytime soon,” Horne predicted.

“We know there’s a tremendous amount of pent-up demand for entry level, but increasingly fewer and fewer — particularly smaller builders — are able to meet the cost required to build at that price point.

“You’re finding the larger builders, who can get the efficiencies and the scales needed to build in high volumes and production efficiencies, that can acquire the land in large enough chunks and develop it, those are the guys that are soaking up that entry land demand.

“The smaller guys — it’s harder and harder to compete for that entry-level buyer,” Horne said.

Lesley Deutch, a principal for John Burns Real Estate Consulting, said the affordability issue is her greatest worry.

While Tampa is one of the most affordable markets in the state, it is getting more expensive to buy a house, she said.

In Tampa, there’s a two months’ supply of resale housing inventory, she said.

“So, that’s really driving people to the new home market, and we expect to drive up prices of resale homes,” she said.

Deutch offered a forecast for 2018 for Tampa’s housing market.

She expects employment to be up by 2 percent, adding 26,600 jobs. She expects income to increase by 5 percent.

She’s projecting total construction activity to rise by nearly 12 percent, up to 20,000 permits.

Most of that growth will be in the single-family sector, she said.

She expects the median price of new homes to increase by 4.3 percent.

“(It’s) not a booming, doubling of growth, but a very, very strong growth market. One of the strongest, actually, in Florida,” Deutch said.

John Burns Real Estate Consulting is based in California. The company spends a substantial amount of time looking at demographics across the country, and doing consumer research.

Its research reveals a high demand for communities that allow residents to walk to destinations, such as restaurants, grocery stores and coffee shops, Deutch said.

“I think that having housing that’s close to something walkable — people will pay a premium for it because that’s what they’re looking for,” she said.

She also sees a shift coming for Tampa’s housing market.

“It’s going to be a different world over the next 10 years,” she said, as households grow substantially in the 65-plus age category (+142,000), grow modestly in the 25 to 44 age group (+14,000), as they decline in the 45 to 64 age group (-14,000). The 45 to 64 age group is typically the move-up buyer.

“So, where is the opportunity here? It’s really a different strategy than we’ve been using in the past. It’s a different buyer. It’s a young buyer and an older buyer,” Deutch said.

Buck Horne, vice president for equity research, housing and real estate for Raymond James & Associates, and Lesley Deutch, principal for John Burns Real Estate Consulting shared their insights at the Tampa Bay Builders Association’s 2018 Economic Forecast breakfast.
Here are some of Buck Horne’s key points:

  • A supply surge in multifamily could disrupt rent pricing.
  • Apartment occupancy has been falling noticeably on a year-to-year basis.
  • Investors should shift their focus more significantly in favor of single-family homes.
  • Inflation-adjusted median household income in the United States hit a new record high of $59,039 in 2016, breaking a previous high mark set in 1999.
  • The cost to build a like-kind single family home has increased 36 percent over the past 5.5 years.
  • Luxury markets continue to grow. New home sales priced above $750,000 was the strongest growth category in 2017, increasing 32 percent, year on year.
  • Listed housing inventory for sale, both new and resale, as measured as a percentage of total housing stock, is at the lowest recorded levels in 30 years.

Here are some of Lesley Deutch’s key points:

  • Median housing resale price in Tampa market is expected to be up 7.6 percent in 2018.
  • Single-family permits in Tampa market are expected to be up 11 percent in 2018.
  • Tampa’s employment is expected to be up 2 percent, which is more than 26,600 jobs.
  • There’s a two-month supply of resale inventory, which is virtually none.
  • Tampa is ranked No. 2 in the United States for people moving into the area, based on U-Haul truck rental pricing.
  • A consumer preferences survey by John Burns Real Estate Consulting reveals that three community features important to buyers are safety, location and street appeal.
  • The John Burns survey also shows that important home features are design, price and function.
  • The vast majority (84 percent) of buyers desire a detached, single-family home, and 62 percent expect to pay $250,000 to $450,000 for it.

Published February 28, 2018