The Orlando, FL, metro area topped real estate consulting firm RCLCO's ranking of the leading 25 for-sale housing markets based on single-family permitting from 2011 to 2015, highlighting demand for new houses and the potential for continued construction activity.
RCLCO found that metros with the most single-family momentum were in states experiencing significant inward domestic migration, including Arizona, Colorado, Florida, Nevada and Texas.
Florida metros occupied four of the top-12 spots on RCLCO's list: Orlando, Jacksonville, Tampa and Miami. For that, RCLCO credit's the state's net in-migration numbers, both domestic (357 people per day) and foreign (334 people per day), counterbalancing the meager natural population increase of 12% (98 people per day).
The strong demand and building activity driving the 25 markets on RCLCO's list are due in large part to millennials, who are settling down, and baby boomers, who are beginning to downsize. In addition, homebuyers are buoyed by a 5.2% increase in income between 2014 and 2015. Growing incomes and high demand, combined with existing low inventory levels, should keep homebuilding activity in these areas relatively high.
Meanwhile, housing prices are beginning to drop, albeit slightly, Zillow reported earlier this month. That, along with the recent year-over-year income gains, means that for the first time since 2011, income growth is outpacing increases in home values. Rent growth has also slowed, meaning that homebuyers might now have a better chance to save up for a down payment.
Despite tight inventory in many markets, some are adding inventory again. This confirms a Trulia report finding that, despite national inventory falling 6.7% year over year, 21 of the country's 100 largest housing markets added inventory in the last year. Like RCLCO's list, Florida and California had a strong showing with cities like Miami, Fresno, CA, Sarasota, FL, and San Francisco all adding housing stock.
In a nod toward reality, however, the National Association of Realtors indicated that many metros had to significantly increase building activity to meet demand. For example, the association said that the New York City area alone needed to up new-home permits by 218,541 to meet the need for new, single-family construction.