Register Real Estate Advisors is proud to be part of the Greater Houston Home Builder’s Association (GHBA.) They invited guest speaker, Dr. Mark Dotzour, to speak to a GHBA group and he had some interesting things to say about the current housing market. Dr. Dotzour is part of Texas A&M University’s Real Estate Research Center. His forecast indicated homebuilders will probably increase productivity this year, slightly. In the Houston area we are seeing some new home starts and some new communities taking shape. Houston’s job growth has remained steady and increasing in some areas, despite the recession. We also have low interest rates and are not seeing reductions in value like many other areas of the country. Housing remains affordable in the Houston area. At RREA, we are seeing a lot of foreign investors that want to purchase housing in the U.S. as an investment.
Dr. Dotzour made it clear that modifying delinquent mortgages in the U.S. has not been successful in fueling the recovery from the recession. His economic forecast, while not dreary, wasn’t dreamy. He stated that it’s hard for their economic models to indicate properly when there’s so much uncertainty within our government and our housing market. He outlined many things that are limiting new home construction, one of which is the Dodd-Frank laws. You see, mortgage lenders continue to be in an uproar about penalties and misunderstanding of the Dodd-Frank laws. This prevents lenders from making loans that otherwise would not be questioned. Under the Dodd-Frank law, if a lender makes a loan around $100K (FHA) and it goes south, then FHA can fine that bank up to $30K. That’s a penalty that is making lenders think twice before loaning money to qualified home buyers. At RREA, we have an in house lender and it seems like lenders are requiring more and more information before they will make a loan.
As always, Dr. Dotzour was well received by Houston real estate professionals and builders. He said the government would do us a favor by clearing the housing market by incentivizing the purchase of foreclosed homes such as they did in the 1980’s. If you were in the Houston area in the 1980’s, you don’t even want to think about that market! He indicated that even if interest rates were 1%, as leery as buyers are these days, they still might not purchase homes!
As we move forward to another election year, I do hope there will be a bigger economic recovery nationwide. There are still a lot of housing issues that need to be addressed in Washington, D.C. I am proud to live in Texas, where the economy is solid considering the circumstances nationwide.
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