When the Real Estate market started to drop in 2007/ 2008, wholesalers for building materials on new construction, remodeling and apartments kept a good inventory of product needed to meet demand. The country as a whole started suffering due to job losses and other natural occurrences that affected buying trends.
Some parts of the country suffered more than others causing many persons having to foreclose adding to the already dwindling new home and re-sale, moving those homeowners to apartment units. With the market softening, suppliers for construction companies’ inventories became heavier than needed causing the producers of those products to have a backlog. Interest rates were around 5-½% on the average at that time. Because of the above mentioned it had a direct impact on all workers in the industry causing many layoffs. A glut was created in the housing market with higher than normal inventory that left many sellers holding on to their homes longer than expected. Many new home builders started setting on land they had planned on developing and monitoring their speck homes they would keep on inventory and several new home builders sold to larger builders or went out of business.
Over the last several years the Real Estate market has been going through an explosive growth in north Texas and other areas of the country. The two biggest problems we have had to meet demand in homes and apartments needed for market are the supplies and the labor for construction. This caused a demand exceeding supply scenario for about the last several years. In a normal Real Estate downturn it takes about two years to get building materials restocked and labor back in to the market. This last downturn was much worse than the ebbs and tides the real estate market normally see therefore taking it longer for the market to correct.
The real estate market needs 6 months of inventory to have a balanced market. Below 6 months inventory you have a sellers market and about that 6 months it becomes a buyers market. We have been as low as 2 months inventory in the DFW area and in some areas as few as a couple of weeks inventory. Since late 2015 and early 2016 more building supplies have entered the market for new homebuilders and remodelers. New homebuilders have been able to attract a larger workforce to start building more spec homes to meet demand in their communities. As more Corporate Company Headquarters moving to the area and the lack of ready available homes for new employees to move, many were told to rent for a year. This caused a large growth in building apartment homes around the area.
As of late summer of 2017, the apartment builders have gone from very busy to just busy with fewer building permits than earlier. The same is happening in Atlanta, Houston, Nashville and Las Vegas. Single-family home sales in the DFW area have seen some areas with a modest increase to a lower average sales price in about 25% of the area and some areas pricing is still increasing with nicely but not as much as seen in the past couple of years. The inventory is still low but it is adjusting some based on pricing in the area. We are starting to see more hesitancy with buyers terminating contracts than we have seen in the recent past. This entire means we should have a good steady market with pricing starting to stabilize over the next year creating a healthy market while we are seeing it being corrected.
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