Area housing market receives high marks
The housing market remains healthy, even under the specter of rising mortgage rates and an ongoing construction labor shortage, economists said Wednesday at the Greater Houston Builders Association’s annual economic forecast luncheon.
“We sold more homes last year than any time in history, with hurricanes and sixty-buck-a-barrel oil,” Ted Jones, chief economist for Stewart Title Guaranty, told a crowd of nearly 900.
The sold-out event also featured national economist Robert Dietz, who began his speech citing reasons federal tax reforms will benefit the housing market.
Absent from the presentations, however, was any discussion about the city of Houston’s proposal to overhaul building regulations as a response to Hurricane Harvey.
Proposed changes include higher elevation requirements and increased detention of stormwater.
The new rules could go to the City Council for a vote by mid-
February. Harris County has also approved new regulations, though they are less extensive.
Veteran homebuilder Will Holder said that just a small percentage of new homes flooded during Harvey as new communities are better built and builders are more conscientious.
“I think that has paid off and not a lot of credit has been given for that,” said Holder, who is retiring as president of Trendmaker Homes in March.
Yet he recognizes the value of making changes over time.
“We’ve got to make communities that are sensitive to older communities downstream that had no planning, no engineering. For that reason, it’s a great direction.”
Amy Rino, Houston division president for Taylor Morrison, said the industry needs to be responsive when changes are necessary.
“Houston homebuilding is always evolving,” she said. “It’s going to be important we work with our developers, the GHBA and one another as we move forward in the best interest of the consumers.”
Home buyers may face higher mortgage rates this year, but many will end up with more money in their pockets, said Dietz, the chief economist for the Nation Association of Home Builders.
Preferential rates on capital gains on real estate sales remain unchanged. That profit is a down payment for a new home, a boost for homebuilders’ sales, he said.
While the $10,000 cap in the property tax deduction will weaken demand in some high-cost, high tax states like New Jersey, New York and California, fewer Americans will pay the Alternative Minimum Tax, which should offset some of the impact, he said. And the $750,000 mortgage interest deduction cap will only affect a small percentage of mortgages.
The national builder association anticipates rates will rise to about 5 percent by the end of 2019.
Some of the biggest challenges builders will face this year are construction labor shortages, higher lumber prices and a lack of lending for builder loans, Dietz said.
Despite its challenges, Houston will continue on its path of growth.
“You absolutely can’t stop it,” said Holder, adding that this area will need 25,000 to 30,000 new homes a year for the next 20 years.
But for now, builders should be cautious about growing too fast. During the oil price slump, some 80,000 oil and gas workers lost their jobs.
“They’re not hiring those jobs back immediately,” Holder said.
Rino said January was a strong month for the company.
“Consumer confidence is definitely improving,” she said. “I’m very encouraged.”