Cleburne builders cranked out about 140 to 160 new houses a year before the 2008 economic crash, but last year, the city logged just 19 new stick-built and modular/manufactured homes. That was down from 21 in 2011 and 22 in 2010, according to Jerry Cash, Cleburne’s economic development director.
Nationwide, however, an estimated 780,000 housing units were started in 2012. That was up 28 percent from 2011, according to commerce department figures. A glance at headlines around Texas shows that the state is part of the national uptick: in Houston, 2012 building starts were up 27 percent over 2011; a 15-acre Plano development is re-starting construction after being halted by the recession; and a 105-unit subdivision is going up northeast of Austin in Hutto.
The inventory of houses for sale has been shrinking for six months, according to a recent USA Today report, with the inventory of previously occupied houses at an 11-year low. Ultra-low mortgage rates and steady job gains have fueled more demand for houses and apartments. More people are moving out into their own homes after doubling up with friends and relatives in the recession.
Encouraged by rising demand and low inventories, builders in 2012 broke ground on the most new houses and apartments in four years. Those signs of life are now shooting up on sites in and around Cleburne.
Workers are tying steel and pouring concrete streets in a Cleburne project that was mothballed when the recession hit.
In its first phase, the project promises to put 20 townhouse units on approximately three acres near Chili’s at the intersection of Wedgwood Drive and Hyde Park Boulevard.
The first phase will occupy about three acres of the approximately six-acre site, builder Mark Rhodes said.
“They’ll be four and six units,” with fenced yards, one-car garages and rent for approximately $1,050 to $1,200 monthly, he said. “It’s going to be gated.”
Countywide, multi-family residential construction slowed to a crawl and halted altogether in some years during or since the recession.
In 2011, Johnson County cities issued no multi-family building permits. The number rose to 376 for 2012, according to the Real Estate Center at Texas A&M University.
“I think a lot of what we’ve going to get is people who are retired or close to it,” Rhodes said. “Or people who lost a home or people who don’t want to buy.”
In Keene, a builder is starting two new brick, single-family houses designed specifically for rent.
Dan Zacharias is building them for an investor and plans to rent the three-bedroom/two-car garage houses for $900 to $1,100.
“There’s a lot of houses out there but they’re run down, in a bad neighborhood,” Zacharias said. “They have trouble keeping them rented.
“We built two homes in Cleburne last summer,” that were about 1,500 square feet, and three-bedroom/two bath, Zacharias said. “We had them rented before we even got ’em finished.”
And in Burleson, officials on Wednesday approved a preliminary plat for Heritage Village, a 23-acre plus housing development.
It’s about time, said Mark Dotzour, Real Estate Center at Texas A&M chief economist.
“We need to be building more new houses in America. This blog has well documented how buyer psychology has changed dramatically in 2012, and the positive momentum continues,” Dotzour wrote on a recent post. “People want to buy homes, and inventories are extremely low. Check out the center’s website to see that the inventory of homes for sale in Texas is now at an incredibly low 4.3 months.
“With growing demand and scarce inventory of homes to choose from, price increases are inevitable. In this environment, it makes sense to start building homes again. I can hardly believe I’m saying this, because I remember in 2008 saying the last thing we need to do is build more homes. But that was five years ago.”
The Wall Street Journal reports that prices are down 26.9 percent from the April 2006 peak nationally. However, the price trend is up.
“U.S. home prices jumped by the most in six and a half years in December, spurred by a low supply of available homes and rising demand,” The Associated Press reports. “Home prices rose 8.3 percent in December compared with a year earlier, according to a report from CoreLogic, a real estate data provider. That is the biggest annual gain since May 2006. Prices rose in every state except Delaware, Illinois, New Jersey and Pennsylvania last year.
Steady price increases are helping fuel the housing recovery, encouraging some owners to sell homes and enticing would-be buyers to purchase homes before prices rise further, the AP said.
Most economists expect prices to keep rising this year. Sales of previously occupied homes reached their highest level in five years in 2012 and will likely keep growing.
Overall, housing construction will be 20 percent of this year’s economic growth, a Moody’s Analytics economist said. Some economists forecast that housing could add a point or more to economic growth this year. Higher prices can also make homeowners feel wealthier and can encourage spending.
Ultra-low mortgage rates and steady job gains have fueled more demand for houses and apartments. More people are moving out into their own homes after doubling up with friends and relatives in the recession.
“All signals point to a continued improvement in the fundamentals underpinning the U.S. housing market recovery,” said Anand Nallathambi, CEO of CoreLogic.
The housing recovery is also boosting job creation. Construction companies have added 98,000 jobs in the past four months, the best hiring spree since the bubble burst in 2006. Economists forecast even more could be added this year.
Housing has been a leading driver of past recoveries. But the bursting of the housing bubble pushed a flood of foreclosed homes on the market at low prices. That made it hard for builders to compete.
And a collapse in home prices left millions of homeowners owing more on their mortgages than their houses were worth. That made it difficult to sell.
Now, six years after the bubble burst, those barriers are fading.
“Look for more home builders to launch IPOs in the coming months. As they do, capital will begin to flow more freely into the construction of new homes,” Dotzour wrote in his recent blog post. “This will create construction jobs. The multiplier effect of a new home being built is massive. The cold north headwind against economic growth changed to a warm southerly whisper of a tailwind in 2012. Watch how a gentle breeze can increase to a gusty wind when Wall Street money returns to the housing market.”