The chief economist for?the National Association of Home Builders began his remarks to a group of Fredericksburg-area builders Wednesday by congratulating them for simply being there.
Their attendance at the Fredericksburg Expo & Conference Center meant that the builders had weathered what keynote speaker David Crowe called ?the worst housing recession anyone in this room has been through.?
Crowe offered them some hope for the future.
?You?ve made it through this far,? he said. ?You will be rewarded. We?ve passed the worst of it.?
Crowe doesn?t expect the market for new home construction to rebound quickly or get back to its levels from mid-2000. But he does see a number of positives for the future: including less competition from builders that have gone out of business, modest employment gains, declines in distressed mortgages, improved consumer and business confidence, and continued new household formations that will need a place to live.
Indeed most indicators show that the market is already improving, Crowe said. Builder confidence is up, though still far from where it was during the boom. Sales, building permits and new home starts have been rising from historically low levels. Mortgage rates are low and will probably stay there for a couple of years. He thinks momentum will pick up in 2012 and accelerate in 2013.
There are still some headwinds, Crowe said. Credit remains tight, and jobless rates are still relatively high. Skyrocketing oil prices or other global economic factors could derail the early recovery. Many are choosing to rent instead of buy, which has led to gains in multi-family construction. People who are unable to move have decided instead to renovate their homes. Many of those renters have said they want to become buyers as the economy improves, however, and some builders have done well focusing on renovations rather than new construction.
Crowe emphasized that each market needs to be evaluated separately. He said the continued foreclosure problem is mostly confined to a few states ? especially Florida, California, Arizona and Nevada. Overdevelopment there means that the national numbers for new homes will remain lower than normal for a while. But in other states there are clearer signs of improvement.
Crowe said Virginia is faring better than most of the nation, and he predicts the Fredericksburg market will roughly track statewide gains or perhaps fare slightly better. He named the region?s proximity to Washington, lower costs and military bases as among the attributes. He said employment gains are the real key to the market improving, and growth in new home construction would itself lead to lower jobless rates.
The Fredericksburg area is beginning to see more interest from builders as inventory levels of existing homes for sale have declined to about a five-month supply. National homebuilders?D.R. Horton Inc., Richmond American Homes, Ryan Homes, M/I Homes, K. Hovnanian Homes and Newland Real Estate Group have all made or committed to significant local investments of late, as have more local builders including Atlantic Builders and Augustine Homes.
The Fredericksburg Area Builders Association organized Wednesday morning?s event.
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