Posted on June 11, 2007 by David Laidlaw
During the mid-February school holidays, I spent a week and a half in Clearwater Beach , Florida . The town is located due west of Tampa Bay and sits on a spit of sand between the bay and the Gulf of Mexico . The whole region is also on the bleeding edge of residential real estate trends.
A local realtor provided my in-laws with a graph that depicted sales trends over the previous 15 months in Belleair Beach/Sand Key, Clearwater Beach and Island Estates. In October, 2005, there were 388 units for sale and 37 units sold. By April, 2006, 898 units were listed for sale and 33 units sold. Supply continued to expand and transactions dwindled so that in December, 2006 only 9 units sold and 926 units were listed. During this period, supply increased roughly three-fold and transactions decreased by one-third. If no units were listed and the anemic pace of transactions continued, it would take the realtors 103 months or about 8.5 years to sell out the existing housing inventory in these three communities.
We stayed in a small condo complex consisting of 12 units. The first few days, we were the only occupants. By the end of our stay, two other units were occupied by renters even though I expected the units to be full during their high season.
Rather than wait for demand to catch-up with supply, developers were steaming ahead with very large beachfront projects. It appears that the residential capacity of Clearwater Beach will double over the next year or two as the units under construction are completed.
All of the elements are in place for Florida ’s – and the Gulf Coast ’s- long-term growth. Aging and affluent Americans and Canadians are attracted to the climate. Florida ’s tax policies are also a strong draw to the wealthy since the state does not levy income taxes and has a favorable estate tax. However, the current housing imbalance is palpable and the consequences are unavoidable. Real estate prices will decline and construction activity will slow. The main questions surround the degree and longevity of the correction.