Orlando home builders shift focus to upper-end houses

Buyers interested in purchasing affordable new homes have far fewer selections than they did just a few years ago, a new study shows.

The number of new Orlando-area homes priced at $150,000 or less shrank to just 282 during the fourth quarter. Three years earlier, buyers had triple the offerings in that range, according to research firm MetroStudy. While construction has eased off lower-priced homes, it has ramped up on the high end. New homes priced at more than $500,000 ballooned to 637 during the fourth quarter from 112 three yearsearlier.

And housing starts in the Metro Orlando area's most popular price range $250,000 to $299,000 have quadrupled during the last three years.

"I think what you're seeing is a shift," said Sean Strickler, vice president of sales for Pulte Homes in Orlando. Builders are no longer able to pick up the deals on property that had languished following the 2007 housing bust and was then sold off at a discount by lenders, he added.

What is not increasing much are Central Florida wages. The region's median income increased 1.2 percent to $56,193 in December from a year earlier, according to the federal government. Even though price increases for new homes were unavailable, existing home price for the core Orlando market increased 6 percent during the last year.

The price growth has forced builders to move away from first-time buyers and chase a pool of move-up buyers. Housing starts for last year were pretty flat from 2013, according to the MetroStudy report. The firm researches new-housing permits, starts and occupancy.

Builders facing a trio of higher land costs, reinstated impact fees, and rising labor prices have been able to tap out-of-market buyers. Buyers from higher-priced markets in the North have been able to sell their homes for a profit that they are willing to use as a down payment, Strickler said, as well as international buyers.

One factor softening the blow of fast-rising prices is that interest rates continue to be at historically low levels, which keeps monthly payments more affordable, said Anthony Crocco, regional director for MetroStudy. In December, interest rates on a 30-year mortgage were 3.86 percent.

Fast-rising land prices have also started to slow a building spree in Winter Park, where custom builders have razed dozens and dozens of old houses in recent years in order to build new ones. Winter Park infill lots are quickly becoming so pricey that builders are seeking individual lots to other neighborhoods.

"In Winter Park ZIP codes, the market is softening because of price growth but you will see a push out to College Park, Colonialtown, and Lake Eola Heights," Crocco said.

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Orlando home builders shift focus to upper-end houses