Many construction projects are being suspended in the south of Florida because of the circumstances unfavourable for developers, such as high interest rates and construction materials costs, as well as exorbitant insurance premiums. Experts report that developers who have no capital of their own are doing zonings and site plan approvals but are not beginning the construction until at least some of these costs reduce.
Meanwhile, insurance and construction expenses keep growing. This year, commercial carriers raised their rates by 50% after last year’s 15-30% increase. Interest rates of loans to construction firms hover around 7.5-8% compared to 4.5% in the past.
While some developers are forced to suspend their projects because of higher costs, others intend to benefit from the influx of in-migrants to Florida over the past two years. For instance, Century Homebuilders Group is going to start the construction of two eight-storey buildings with a total of 408 apartments in Doral, Miami-Dade County. This is the second phase of the project. The first phase with 329 residences in two six-storey buildings is due for completion in September 2023.
Phase II will cost approximately $15,000 per unit more than Phase I because of the higher construction and lending costs, and it will require 35% more equity from the developer.
This situation may cause the value of housing in Florida to increase further.