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Undersupply drives rentals
That’s true in Tampa, where Tony Polito, regional director of Metrostudy Tampa/ Sarasota in Florida, said, “The gap between new and used is tremendous in Tampa, as there’s very little ‘entry-level’ product in the market.” According to the U.S. Census Bureau, “Tampa had the fth highest population gain, adding more than 58,000 residents through migration in 2016. Tampa is undersupplied with homes for sale, and that is driving people to rent.”
For their part, public builders have focused on the move-up market. Yet with the millennial generation now outpacing every other buying demographic today, they’re beginning to target the entry-level buyer — and seeing tremendous success in a variety of markets.
CASE STUDY: Houston a bright spot for affordable homes
One of those hot markets is in Houston, where in the rst quarter, it was the second-highest volume new home market in the country, according to Lawrence Dean, Metrostudy’s Houston regional director. The strongest volume of new home starts —25,789 — hovers in the $200-$299,000 price range.
DR Horton has been a popular builder among homebuyers, and closed 930 of its Express entry- level homes there last year alone. “They introduced the Express brand in Houston three to four years ago,” Dean explained.
“It’s become a big enterprise in Houston.”
He also has watched builders and developers step up the pace on more affordable, new homes over the past ten months, by focusing on smaller, more-ef cient home products. “They’ve realized most of that growth is centered around millennials who are entering
a new life stage, and Baby Boomers who want to downsize to something more cost effective.”
Huge population growth means
more new homes
With Houston’s reliance on the oil and
gas industry, you’d think population and demand for homes would re ect today’s oil prices. Yet it’s a mecca for population growth. Dean explained that in 2015, which was a “tough year all around,” Houston added 159,000 to its population — all of which has “de nitely helped our new home market in terms of volume.”
And while Houston has always been more affordable than most markets, “the oor has de nitely risen,” Dean said. Affordable, single family new homes now range
from $200,000 to $400,000, with builders focusing on the $300,000 range.
Those who can afford the least amount of house have been pushed to resale. “From a macro housing affordability stance, it’s not
a situation where families are priced out of home ownership, but new home ownership.”
Lot of land, few regulations
Houston is a at, expansive region where there’s a lot of developable land, and very few developable regulations, “so we can build a lot of housing,” Dean added. That
leaves the playing eld nearly wide open for local and national builders alike.Privately owned local builder Chesmar Homes,
for example, “was the rst to bring back duplex townhomes into master-planned suburban communities. They’ve developed very attractive and well received duplex/ townhome product in some pretty highly desirable communities for $200,000 and even below,” he observed.
And, of course, there’s the DR Horton Express product, where “it’s a builder and brand that’s leading the march on affordable housing,” Dean noted. Dean shared proprietary Metrostudy data that illustrates DR Horton’s capture of this opportunity. Since the rst quarter of 2015 the volume of new home closings overall has decreased by 6.3% in Houstong, while Express closings have increased by 65.3%.
“Houston has always been an affordable market — and it’s now playing to our strengths, more so than other markets,” Dean stated.
Case study content courtesy of MetroStudy
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