- From: BUILDERMay2012
- By Amy Albert
Permits are being pulled and ground is being broken. It’s a story that’s playing out all over the country.
In St. Louis, the city’s largest home builder has a contract to build almost 200 homes in a master planned community. In Imperial County, Calif., part of California’s Mexican border region, zoning has cleared the path for a project consisting of more than 7,000 homes in over 70 neighborhoods. In Miami’s upscale Brickell neighborhood two new multifamily projects are slated to begin, one with almost 200 units, and the other with nearly 400. Outside Sacramento, Calif., developers in Sanger, Calif., are taking over derelict lots, propelled by a city incentive that reduces fees for doing so, provided that building materials are bought from local suppliers. Permits are at a five-year high in Washington County, Utah. In Houston, Realtors are reporting the lowest inventory in four years, with sales up almost 17 percent.
This is fact, not folly. Scattered pockets of the country are registering a pulse, and not just tech-heavy places such as San Jose, Calif., and Austin, Texas, cities that some would argue never felt the pain the way others did. So what’s behind these signs of life? Analysts, including Patrick Newport, U.S. economist at IHS Global Insight, cite first-time buyers as a driving force. Young people, it seems, are champing at the bit to move out of their parents’ place and strike out on their own.
The numbers are not products of wistful crystal ball gazing, either. They’re index-based, with several indices reporting improvement. The Conference Board’s Consumer Confidence Index is up. So is Gallup’s Economic Confidence Index. According to the Census Bureau, new housing permits, which began a climb this past fall, are at their highest level in more than three years. The American Institute of Architects Architecture Billings Index (ABI) is up for the fifth straight month. After all the head-fakes and false starts, even builders are feeling cautiously optimistic. The NAHB/Wells Fargo Housing Market Index (HMI) reports that builder confidence is at its highest level in five years.
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Similarly, in another report in the Atlanta Journal-Constitution, Arielle Kass quotes Home Depot chairman and CEO Frank Blake, “The housing market is definitely better. It’s better, but it’s not yet that much better.”
Business from professional contractors is coming back gradually, Home Depot’s CEO said, at a slower pace than do-it-yourself customers overall, but with more strength from the biggest professional customers. It’s a sign of a “gradual thaw” in the housing market, Home Depot chairman and CEO Frank Blake said in a company conference call Tuesday, even as he said housing is still under pressure. Customers continue to do their own projects to save money, and credit remains hard to come by, he said.
Sales to professional contractors were up 11 percent, chief financial officer Carol Tomé said.
Aerotropolis 
Crime in Mexico has spurred homebuilding in areas within 200 miles of the Mexico/US border. Being in Texas, I first watched Mexicans buy in Laredo and am now watching them buy in San Antonio, because the Mexican crime has crossed the Texas/Mexico border. Although many are quite wealthy, the larger market appears to be in the $350,000 to $500,000 homes, often in gated communities. Previously many Mexicans bought low and mid-priced condominiums, in San Antonio, for weekend retreats, Easter shopping, short vacations and medical checkups. In Texas, I see the pent up demand of locals who are tired of waiting for the economy to get better; they are deciding to take the risk of homeownership. With apartment rates rising, people want homes.
San Antonio is quickly developing a shortage of developed lots, as its population grows.
The attitude of buyers is changing, but not all builders have paid attention to those changes.
Having spent 20 years as General Counsel for homebuilders and developers, and another 13 years as outside counsel and consulting with builders in several states, I am optimistic. We need to move government out of the way to speed up the recovery.
Note that statistics tell only a part of the story. There has to be an understanding of how the statistics were gathered, what information was omitted and the hidden messages. Mark Twain said that there were three kinds of lies: “ Lies, damn lies and statistics.”
I agree that we’re seeing activity in central Texas. I am advocating to bring builders and agents together increasing sales. Licensed agents especially in the valley should take advantage of a free service at http://www.buildersupdate.com. Access to all new homes inside and outside their MLS.