The days of big spikes in new-home prices may be numbered.
The short supply of new homes combined with a resurging homebuyer demand pushed prices significantly higher in recent years, especially in areas such as Collier County.
But Michael Timmerman, a longtime consultant to the real estate industry in Southwest Florida, cautioned the new inventory of homes coming onto the market plus buyers' price sensitivity will likely keep homebuilders from pushing price increases much higher.
“We're definitely seeing a leveling off of prices,” says Timmerman, president and CEO of MJT Realty Economic Advisors in Naples, in a presentation to the Real Estate Investment Society recently.
Timmerman says he started cautioning homebuilder clients in fall 2013. “We have to be cognizant not to raise prices too quickly,” he says. “I expect to see prices soften and level off as new product is built.”
In fact, some builders who raised home prices too rapidly have been forced to scale back expectations by offering incentives to homebuyers.
Still, unlike the previous boom, Timmerman says the market is in equilibrium as housing starts equal household formations. “We're not overbuilding in the marketplace,” he says.