By Maxine Shapiro, KERA 90.1 Commentator
Dallas, TX – Today one of the largest homebuilders in the U.S. announced record second quarter earnings. Last week housing starts for May bowled everyone over with its highest monthly jump in seven years. Then continued good times are predicted by a Harvard Housing Study. Now let's look at the whole picture. I'm Maxine Shapiro with KERA Marketplace Middays.
KB Homes entered the Metroplex about five years ago, building homes for first-time and trade-up buyers. David Christian, division president for Dallas/Fort Worth, expects his 8% market share to increase this year to 1,700 homes. Since January, skeptics have impatiently waiting for the housing industry to fall on its you-know-what. And what was expected to be a "tumble" in home prices might just be a "hiccup" for the industry - so says the Joint Center for Housing Studies of Harvard University.
See, experts were expecting the soon to be retiring baby-boomers to settle into the homes they've been living in. But they're not. They're buying pricier homes and second and third vacation homes. As 30-year mortgage interest rates remain below 7% and stock market returns are in the single digits (as opposed to the high double digits of the '90s), everyone is agreeing that home-buying is still the best investment. The Harvard Housing Study also points out that the immigration boom has accounted for this continued need for housing. Currently it's a typical supply-demand situation. Demand is up and the supply remains tight due to land constraints; therefore, home prices are not falling and will probably continue to grow. The report goes on to say that if these trends persist, "Builders will need to add 1.7 million new homes and apartments a year to keep up with the demand."
Now, there are areas in California like San Diego where the housing gap has widened and homes are no longer affordable. But in the Metroplex, cost of living is still low, and we will probably keep building 'til we get to Oklahoma.
For KERA Marketplace Middays, I'm Maxine Shapiro.
Marketplace Midday Reports air Monday - Friday at 1:04 PM on KERA 90.1.