Aug. 08--Rising prices, stagnant wages and creeping interest rates are pushing Central Florida's new-home buyers into Lake and Osceola counties, where real estate struggled the most during the downturn.
After home prices collapsed starting in 2007, partly built subdivisions seemed almost frozen in time and attracted few customers. The market for new homes all but died in some parts of Lake and Osceola.
But as new-home prices throughout the region shot up 20 percent during the past 18 months, more buyers were priced out of developments in Orange County, where land prices are higher. They are trading shorter commutes for lower mortgage payments and more space farther away from Orlando.
Closings on new homes were down slightly in Orange from the second quarter of last year through the same period this year, according to MetroStudy, which tracks new-home construction. But in Lake and Osceola counties, closings were up sharply during the same period. Seminole County, meanwhile, is nearly built out.
Film director Michael Jordan and his wife had been house-hunting in the Orlando area for about two years and found their search gradually extending from the Dr. Phillips community to Windermere and Winter Garden and then farther out as prices climbed.
"I didn't want to look in Clermont. It seemed so far away," said Jordan, who was moving with his wife from Pennsylvania for work. "One morning, a few months back, I was lucky and had some free time. I thought: 'Let me just drive out there and see what it's like.'"
Jordan said he was pleasantly surprised with Clermont's quick access, albeit on toll roads, to Orlando, airports and tourist areas. The couple also liked the new shops and restaurants amid Lake County's rolling hills. Last month, they purchased a house with about 3,500 square feet in the Legends Golf and Country Club for $340,000. The price was higher than typical for Lake County, but Jordan said they got much more for their dollar than they would have closer to Orlando.
Several factors have made outlying areas more attractive to new-home buyers.
The first is cost. In the fall of 2012, new-home prices averaged $290,000 in Orange County, but they increased to $350,000 by June of this year, MetroStudy reported.
In Lake and Osceola counties, by contrast, average new-home prices climbed from $200,000 to about $240,000 during the same period.
"Projects in further-out locations may have some opportunities with the kind of pricing buyers need," said Anthony Crocco, regional director of MetroStudy.
Slowly climbing interest rates also factor into buyers' decisions. Rates on a 30-year, fixed-rate mortgages were 4.17 percent in June They have bounced around for months but remain well above the low point of 3.2 percent in February 2013.
Meanwhile, wages have risen more slowly than home prices. During the 18 months when new-home prices shot up about 20 percent, average household income in Metro Orlando rose only a few percentage points to reach $55,841, according to the U.S. Department of Housing and Urban Development.
Joe Ziler, president of the Kevco home-construction company, said he has been buying lots for construction in Lake County developments that have seen little or no activity in years. He recently bought 19 in the Sleepy Hollow community in Leesburg. Typical buyers for homes less than $200,000 are couples with blue-collar jobs, he said.
Orange County still has the greatest amount of home construction, with 1,099 closings in the second quarter -- down 3 percent from a year earlier. Orange continues to have development near Winter Garden, the Horizons West project in southwest Orange County and Lake Nona in south Orlando. Much of east Orange remains undeveloped.
Farther out, where land is less expensive, Lake County had 439 closings in the second quarter, an increase of 55 percent from the second quarter of 2013. And Osceola County had 619 closings, up by about the same amount.
Orlando-area real-estate broker Michael "Bo" Julian, co-owner of Julian Properties Inc., said he has seen the migration of buyers to more remote addresses as prices have risen.
"In established areas, if you're going into the new-home market, you're going to have to go further out or else you're going to have to go for an older house," he said.
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