Greater Houston Builders Association Economic Forecast Luncheon

At the Greater Houston Builders Association (GHBA) in January, Mike Inselmann was the keynote speaker.  He had some excellent insights on the Houston housing market, focused specifically on new home sales.

Mike Inselmann spoke about the effects that the sub-prime mortgage industry has had on the new home market, both across the country and in Houston.  Some of the highlights from his speech include:

• Although Houston will experience some “bruising,” we will experience a less extensive drop and a quicker recovery than many parts of the country, as the mortgage industry corrects itself.

• Historically, 1.7 new jobs in a region generates 1 new home sale.

• 17% of the total mortgages in the Houston, TX were sub-prime; 90% of these had a home value less than $175,000.

• Fewer qualified buyers usually bring about an upturn for both apartment developers and investors with single family homes for lease.

• Currently, the Houston-area MLS listings are balanced with buyer demand, with approximately six months of inventory of homes for sale.

• He is forecasting a 24% decline in new home starts for 2008. 

• Mike is forecasting that the Houston, TX housing market slow down should bottom out in the second quarter of 2008 (April 1, 2008 – June 30, 2008).

• The average annual appreciation rates are expected to drop from 4.5% to between 3% and 4%.

• 2008 will be the best time to buy a new home, in Houston, in the next 5 to 10 years.

• Houston demographics suggest that there will be a demand for 40,000 – 50,000 new homes during 2008.  There will be approximately 35,000 – 40,000 home starts during this period, leading to a seller’s market.

• Houston’s “more rational development approval process” has enabled developers to deliver supply to keep up with demand, minimizing the unwarranted price increases other markets have had to endure.

• Mortgage industry correction will require stricter qualifying requirements, leading to fewer home buyers, in the market.