New Housing Starts Are Key To Market's Health

Sales of existing homes may be strong and price declines less steep, but those indicators don't necessarily point to the end of South Florida's housing slump, a leading analyst said.

Instead, listen for the sound of hammers on wood, housing consultant Lewis Goodkin told more than 100 people at a Fort Lauderdale real estate seminar sponsored by the Gunster law firm.

'The real sign that we have bottomed out is when we start seeing new-home building,' he said. 'This is the lowest level I've ever seen in many markets.'

Broward County is on pace for 311 housing starts this year, the lowest rate recorded in more than a decade, according to the Metrostudy research firm in West Palm Beach.

Home construction is more prevalent in Palm Beach County, in part because of the availability of land. The county is on pace for 758 housing starts this year, but that's off 27 percent from Metrostudy's forecast at the beginning of 2009.

During the housing boom of 2000 to 2005, annual housing starts in the two counties peaked at well above 10,000.

'Today's levels are so low, it's almost zero,' said Brad Hunter, Metrostudy's regional director.

Builders have been retrenching in recent years, selling off land and writing down the values of their portfolios. Some now are searching for bargains on lots, trying to position themselves for a rebound, but new homes still can't compete against foreclosures and other resales, Goodkin said.

Recent regional and national reports suggest the housing slump may be easing, but Goodkin isn't optimistic.

He said borrowers who owe more than their homes are worth have little incentive to stay"