This Old Porch, This Old Price Point: An Unlyrical End to San Antonio’s Entry-Level Housing

Posted in Austin Market, Dallas - Ft. Worth Market, Houston Condo Market, National Housing Market, San Antonio Market | Posted on 07-10-2014 | Written by Jack Inselmann

jack iAs my good friend Robert Earl Keen has sung many times, “The road goes on forever and the party never ends…”!  Who doesn’t like that thought or feeling?  It outlines the idea that everything that is good or necessary is always right there in front of you.  It’s true that San Antonio builders have definitely enjoyed a party these last twelve months as the local market grows out of the recession. Today, however, the idea that “the road goes on forever” seems less and less realistic for the affordable, entry-level new homes in San Antonio.  A regular staple of housing supply for decades, this portion of the market has been equally important to the builders who build these homes as the families who create memories within them.  The vital portion of San Antonio’s new home market, those homes priced under $150,000, has quickly evaporated in the last couple of years.  In the last three years this price point’s share of new home starts has dropped from 30% of the market to just 6%.  Shoot, only ten years ago this price segment garnered a 63% share of all new home production – at that time an annual starts rate of 7,300; now builders can barely construct 600 homes annually.  This has to do with supply and not demand as there continues to be significant levels of demand for the more affordable product.

People will say, “San Antonio still has way more affordable product than most of the other major MSAs around the country so what’s the big deal?”  As Lyle Lovett would respond, “You say you’re not from Texas, man, as if I couldn’t tell. That’s right, you’re not from Texas.”  The big deal is that the affordable market has been arguably the most important part of housing in San Antonio for decades by creating opportunities for all people, the families, those in the community with moderate incomes.  Here locally, this remains so important because our median income lags most major markets, and in Texas falls approximately 15% below Austin, Dallas and Houston.  As a result, other areas can more easily move into higher priced arenas of housing and qualify much easier for a mortgage. In San Antonio, many qualified buyers cannot afford a higher priced product and will have to go to the resale market or, worse yet, continue to rent and not reach their homeownership dreams [one of America’s most important ambitions, by the way, but that’s another blog].  When Robert Earl and Lyle sing “This Old Porch,” the young fellow rents the porch while the weathered Texas man owns it.  It’s who we are.

Why is this happening?  Well, of course, a healthy market like ours is subject to the pricing factors of supply and demand.  Low lot availability in an expanding market leads to price increases which is impacted more today by rising development costs.  While it is easy to point to builders and developers for the increase in land and lot pricing, the unindicted co-conspirators in this equation are the municipalities and regulatory bodies that govern the housing industry with increasing fees, unnecessary delays in permit approvals, anti-development mentalities, and general anti-growth attitudes.  Maybe more importantly, the sincere lack of interest on the part of cities and counties to allow more density, and therefore more affordability and accessibility, hurts families on the lower to moderate income spectrum.  Not quite fair is it?  Without a change in mentality in these areas, Willie Nelson might be right: “Turn out the lights, the party’s over.”

Though the focus of this narrative is the new home product under $150,000, it must be noted that the $150,000 to $200,000 housing product has been put on the endangered species list and has only a few years left under current environments.  This growing trend, this pricing squeeze, is happening in the other Texas markets and we all can tolerate only so much cost increase before it slows down the overall growth pace.  There is much more to say but this will suffice for now.  As a good friend told me one time, “Jack, I could listen to you talk all day, and for a moment there I thought I was going to.”

As an encore, I think this is a watershed moment for San Antonio, many would say a sad moment.  The fundamental pricing of bringing a lot to market has jumped up recently and it is more likely to stay the same or rise even higher than it is to drop back down.  If this is true, it would mark the end of San Antonio’s traditional price point, the price point of my first home, the home my boys grew up in.  On that note, I let Jimmy Buffett take us home: “It’s been a lovely cruise.” Too bad it has to end.  If that’s the case, I think I’ll join Mr. Thorogood on the deck for “One bourbon, one scotch, and one beer…”

Texas Housing Survey: The Coming Affordability Squeeze

Posted in Austin Market, Dallas - Ft. Worth Market, Houston Condo Market, National Housing Market, San Antonio Market | Posted on 07-01-2014 | Written by Metrostudy News

Metrostudy_Texas_starts_by_market final

July 1, 2014: Houston Texas – Metrostudy’s 1Q14 survey of the Texas Housing market shows even as housing continues to boom, new and lower income buyers are getting priced out of the market.

Texas right now is home to the strongest housing markets in the entire country. Texas was on a different cycle long before the boom and the bust came along. Driven by past swings in oil prices, the state was already on a rapid-growth trajectory before the rest of the country went on its early-2000s building binge. Said colloquially, when Phoenix and Las Vegas caught pneumonia, Houston sneezed and kept on going, right to the top of the national market list.

The impact of the fracking revolution cannot be understated. With oil prices well above the $75 per barrel threshold of profitability, the energy sector has been supercharged, and this has fed the growth of housing demand. Houston has been the main beneficiary of this, but the entire state has felt the heady effects. The impact of the energy boom has been felt in all businesses in Texas.

“As strong as the Texas markets are, there is one thing missing: a strong first-time home buyer segment,” said Metrostudy’s Chief Economist Brad Hunter.

In all four housing markets in Texas, developers and builders are shifting away from affordable or “entry-level” product towards higher priced “move-up” housing. There are a number of factors that have contributed to this shift, but they all come back to margins. “The costs of nearly every input including land, materials, and labor have seen sharp increases during the housing recovery. In order to mitigate these increased costs, builders have chosen to construct more homes at higher price points (and fewer at lower price points) in an effort to maintain their profit margins. In addition, the scarcity of housing product in many Texas markets has increased prices that builders are able to charge home buyers for the same product. As a result, the quantity (and proportion) of homes built priced less than $150,000 has dropped dramatically during the last three years.

In Austin, during the four quarters ending 1Q12, 13.3% of all new housing starts were priced less than $150,000.  By 1Q13 that percentage had decreased to 11.1% of annual starts, and as of 1Q14 only 4.3% of annual starts in Austin were priced under $150,000. During that same period, starts on homes priced greater than $300,000 grew from 22.2% to 36.4%.

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“As more builders focus their product to the buyer from $300,000 to $500,000, others are employing creative solutions to bring product to market that is more in-line with the historical pricing trends in Austin. Some of these tactics include introducing the detached condo product, entering new submarkets, or even expanding the range of gentrification. Austin continues to expand the heart of its new home market while these creative solutions add diversity to the market’s housing mix,” said Madison Inselmann, Regional Director of Metrostudy’s Austin market.

In Dallas/Ft. Worth, 13.7% of annual starts were priced below $150,000 as of 1Q12. That proportion has decreased to 6.5% as of 1Q14. During the same period, starts of homes priced greater than $300,000 grew from 28.7% to 41.9%

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“New homes priced under $150,000 are rapidly disappearing from the market because of shrinking lot inventory, rising land and construction costs. There are just over 5,000 developed lots available for home in this price range and they are not being replaced. Only 2% of the new lot deliveries in Dallas-Fort Worth last year were for homes priced under $200,000. Buyers searching for a new home in this price range are being pushed to the existing home market in most submarkets. They may soon be forced to stay in the rental market,” said David Brown, Regional Director of Metrostudy’s Dallas Ft. Worth Market.

In Houston, 19.1% of annual starts were priced below $150,000 as of 1Q12. That proportion dropped to 16.3% in 1Q13 and has since declined to only 9.8% as of 1Q14.  Meanwhile, the proportion of home starts priced greater than $300,000 grew from 27.7% to 39.4%.

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“Housing production is still struggling to catch up to burgeoning new-home demand, so more expansion is on the way. The pace of job relocations into Houston will be slower this year than the breakneck pace of 2013, but the influx of companies and workers will continue to support demand growth,” said Brad Hunter, Metrostudy’s Chief Economist.

In San Antonio, 18.6% of annual starts were priced less than $150,000 in 1Q12. Since then, this share has declined by 11.3% to only 7.3% of all annual starts as of our most recent survey. Builders in this market have increased the proportion of homes started in the “move-up” market over $300,000 from 18.7% in 1Q12 to 29.2% as of 1Q14.

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“San Antonio has historically been one of the most affordable new home markets in the country. Recently it has become increasingly difficult to build a home priced below $150,000 in San Antonio,” said Jack Inselmann, Regional Director of Metrostudy’s San Antonio Market.

Combine this with the fact that incomes are not rising at the pace of rising housing costs, and the end result is buyers are being priced out of the market, effectively limiting the pace of housing growth. “This is not to say that San Antonio is not a healthy housing market, by any means, as indicators point to a market that should enjoy 8,000 to 9,000 home starts again in 2014,” said Randall Allsup, Senior Consultant of Metrostudy’s Texas market.

In all the Texas markets, the first-time homebuyers have been given less attention by many public builders, but we do anticipate a return of entry-level demand (and product that serves those buyers) in the next year, gaining even more momentum in 2015 and beyond. DR Horton and LGI are the tip of the spear for the entry-level right now, but we are expecting others to follow suit over the next few years. Continued momentum in labor markets will support more household formations (20-somethings moving back out of their parents’ basements), and more reasonable mortgage requirements by the banks will help as well.

For information contact:
Danielle Fiore @ 813-443-6504
dfiore@metrostudy.com

About Metrostudy

Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide.  Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day.  www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

2014 Real Estate – David Jarvis, Metro Study – Houston Real Estate Radio

Posted in Houston Condo Market, Houston Market, In The News | Posted on 12-27-2013 | Written by David Jarvis

david jShannon Register, Broker/Owner of Register Real Estate Advisors and Host of “Houston Real Estate Radio,” talks to David Jarvis, Regional Director of Metro Study, about trends going into 2014.

2014 Real Estate

What $200,000 Can Buy in Houston – Resale Edition [PICS]

Posted in Houston Condo Market, Houston Market | Posted on 02-07-2013 | Written by Madison Inselmann

A couple of weeks ago we produced a collection of floor plans for new homes available in the Houston area priced at or below $200,000. In that piece, the $200,000 price tag was based on the principal and interest payment (P&I) for a 3.5% mortgage being approximately the same as what Houston apartment renters are paying each month. In turning our gaze from the apartment market to the resale home market, $200,000 seems like a good jumping off point for some existing home commentary.

Before we get started I wanted to point out that the homes you’ll see below probably will not be available for purchase by the time you read this article. Well priced homes in desirable locations [read: school districts] are selling within weeks (days, in some cases). Consumers have absorbed enough homes to drive Houston’s existing home supply down to ONLY 3.8 months, notably below the six months considered equilibrium in Houston. This shortage of listings is partially due to a shift in consumer practices in the shadow of the latest recession. Previously, people looking for homes would list their current residence on the market to ensure they’d have enough time to sell their home should they find something they wished to purchase. Buyers today, on the other hand, are looking without listing, preventing homes from “casually” sitting on the market. Read the rest of this entry »

Houston Continues to Lead the National in Housing Starts in 2012

Posted in Houston Condo Market, Houston Market | Posted on 01-30-2013 | Written by Metrostudy News

(Houston, TX– January 30, 2013) For Houston, the recovery is surging roughly nine months ahead of the national average. Job growth remains strong, creating a robust housing demand over the last twelve months. This is according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.

In November, the Greater Houston job market regained the top spot in the nation in terms of annual job growth, adding 85,300 jobs over the previous twelve months. “The current pace is slightly ahead of what the Greater Houston Partnership projected, thanks to a late year surge in construction hiring,” said David Jarvis, director of Metrostudy’s Houston division.  As a result of the strong job growth in 2012 Houston’s unemployment rate has dropped from 7.3% to 5.8% through November 2012.

On an annual basis, Houston builders started 23,480 new homes in 2012, a 27% increase from 2011 and the highest year end tally since before the recession. In 4Q12, area builders closed 5,720 new homes, bringing the year-end total for 2012 to 21,713. 2012’s closing tally represents a 17% increase in closings activity when compared to 2011. “Given the time required to complete a home, closings tend to trail starts in a growing market. Therefore, new home closings should trend above 23,000, on an annual basis, in 2013,” said Jarvis.

The relative supply of finished vacant homes in the market currently rests at 1.9 months, a seven year low. In fact, the market currently has twice as many homes under construction as it does home sitting finished and vacant. “The sizable difference between these two categories of inventory confirms the ability of builders to tighten their inventory over the last eight quarters and highlights the vigorous new home demand present in Houston,” said Jarvis.

For information contact:
david jarvis @ 713.622.9909 x 132
email djarvis@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing industry and related industries nationwide. In addition to providing its own primary housing data for approximately 70% of the United States housing market, the company is recognized for its consulting expertise regarding real estate development, marketing and economic issues, and is a key source of research studies evaluating the marketability of residential and commercial real estate projects. Services are offered through an extensive network of offices located in major metropolitan areas throughout the U.S. For more information, visit www.metrostudy.com

What $200,000 Can Buy You Around Houston – [PICS]

Posted in Houston Condo Market, Houston Market, In The News | Posted on 01-18-2013 | Written by Madison Inselmann

Time to Buy.  Sellers Market.  Sky High Rents. Much has been made recently (this blog, the Chron) about the tightening housing supply in the Houston area, as well as a growing number of markets nationwide.  In the past Metrostudy Report has touched on how the “Rent vs Buy” ratio already favors buying a home if you’re renting a single-family home or Class-A apartment.  That’s truer now than when that post first went live back in May of 2012.  In fact, Class-B apartments have even moved within striking distance of becoming a “buy” scenario for the consumer.  Class-A and Class-B apartment designations are different for each market so I’ve included market averages as of the end of 2012 according to Apartment Data Services, our trusted friends in apartment market commentary.

Houston Apartment Market Characteristics

In Houston, housing has always been relatively affordable due to the availability of land.  If you translate the above monthly rent payments into the principal and interest (P&I) payments on a home mortgage, you’ll find that those monthly payments will buy you a good amount of home in the Greater Houston market.  For the purpose of this post I collected pictures of a variety of floor plans priced at $200,000.  This price point seemed ideal for those consumers choosing between renting an apartment or buying a home.  If you calculate the monthly P&I payment on a $200,000 loan with a 3.5% interest rate, you arrive at $898.09.  This total falls right between the market averages of the above listed rents,  and below those Class-A and Class-B averages of the apartment developments inside Loop 610.  The following homes are from a variety of builders in the Houston area with a diverse product offering near this price point.  ENJOY THE VIEW.

$200,000 Home Around HoustonThe Frisco: Available around Houston, 2510 sqft, 4 bedrooms, 2.5 bathrooms

$200,000 Home in NW Houston

The Cheyenne: Available in NW Houston, 2091 sqft, 3 bedrooms, 2 bathrooms

$200,000 Home SE Houston

The Oakdale: Available in SE Hosuton, 2361 sqft, 4 bedrooms, 3.5 bathrooms TaylorMorrison

$200,000 Beazer Home in SW Houston

The Capri: Available in SW Houston, 2385 sqft, 3 bedrooms, 2 bathrooms Beazer Homes

$200,000 DR Horton Home NW Houston

Bridgeland Model: Available in NW Houston, 2328 sqft, 4 bedrooms, 2.5 bathrooms DR Horton

$200,000 Brighton Home in NE Houston

The Milan: Available in NE Houston, 1904 sqft, 2 bedrooms, 3.5 bathrooms Brighton Homes

$200,000 David Weekley Home in NE Houston

The Granbury: Available in NE Houston, 2460 sqft, 4 bedrooms, 2.5 bathrooms

$200,000 Legend Home in NE Houston

The Garner II: Available in NE Houston, 3094 sqft, 5 bedrooms, 3.5 bathrooms Legend Homes

A Special Thanks to the Participating Builders (in order of appearance): Ryland Homes, Ashton Woods Homes, TaylorMorrison, Beazer Homes, DR Horton, Brighton Homes, David Weekley Homes, Legend Homes

Houston housing market continues its rise

Posted in Houston Condo Market, Houston Market, In The News | Posted on 01-16-2013 | Written by David Jarvis

premium_article_headline

The Houston Chronicle ran a front page article this morning illustrating the short supply of homes for sale in Houston.  It’s a good time to a seller.

“Houses are going fast and at higher prices than ever before, experts say. Some properties are selling before they even hit the market.

“The supply of homes has fallen remarkably low, which has led to bidding wars on the best properties.”

Read the full article from The Houston Chronicle: http://bit.ly/ZXCaly

Commentary on the Fiscal Times’ “6 Surprising Ways Housing Recovered in 2012″

Posted in Houston Condo Market, Houston Market, In The News, National Housing Market | Posted on 01-15-2013 | Written by Madison Inselmann

In her article concerning the 2012 Housing Market, Blaire Briody lays out what should be some encouraging signs for housing professionals.  While it is true that there’s no such thing as a “national housing market”, improving national averages help boost consumer sentiment toward home buying which gets distributed through national media outlets.  The six key factors highlighted in the piece have enough breadth to boost the psyche of both consumers and real estate professionals alike.

Fiscal Times: “6 Surprising Ways Housing Recovered in 2012″

For Houston, these factors are stronger than the national average, and their success in 2012 was not necessarily a surprise.  Houston, and Texas overall, did not participate in the wild boom and bust period of the latest housing cycle and therefore did not have as far to recover as the harder hit markets around the country.  Below I address some of the factors mentioned in Ms. Briody’s piece in the context of the Houston Market.

3) Rise of Non-Distressed Home Sales: For Houston, non-distressed home sales through the Houston Association of Realtor’s MLS grew by 20.6% in 2012, despite a relative shortage of listings (now only a 3.8 month supply).  At the same time, distressed sales remained relatively flat, year over year, with only a 121 more sales recorded in 2012 than 2011.  Since Houston’s recession began in 2009, the percentage of non-distressed sales has grown from 77% to 82%.  Ideally, non-distressed sales should represent 85-90% of the market each year.

4) Serious Delinquencies Fall (Postings Overall on the Decline): According to the Foreclosure Information & Listing Services, the total number of annual postings dropped 22% over the last 12 months and rest 34% below the peak experienced at the beginning of 2011.  Annual postings were more dynamically influenced by the recession than the actual number of foreclosures.  While only recording 30,000 postings a year through 2007, the market jumped up as high as 51,000 annual postings in the beginning of 2011 during the tail end of the federal home buyer tax credit.  Since that point, the market has seen a steady decline back toward 30,000 postings. as they saw their numbers jump from 30,000 annually to over 50,000.

5) Home Price Growth is Happening Across Diverse Geographies: Home price appreciation is subject to supply and demand principles.  In 2006, builders began scaling back their building programs in response to the national recession.  From 2006 until early 2012, builders in the market closed more homes than they started, chewing through any excess inventory created during the housing run-up.  Today builders hold a supply of homes right in line with equilibrium for the market.  At the same time, the supply of resale homes available in the market has not returned as sharply as the area’s demand.  While the number of resale homes sales grew 16.7% in 2012, the supply of listings dropped 29%.  Currently there is only a 3.8 month supply of homes on the market, notably below the six month market considered equilibrium for the market.  As a result, according to the Federal Housing Finance Agency, Houston’s home price appreciation turned positive in the first quarter of 2012 and has grown each quarter since.

6) Foreclosures Decrease By 10 percent: Houston’s annual foreclosure rate has held remarkably steady over the last six years considering the size and scope of the housing recession, averaging 11,700 foreclosures annually.  In 2012, 9,993 homes were foreclosed upon, a 10% decline from the previous year.

References: Metrostudy, Federal Housing Finance Agency, Houston Association of Realtors, Foreclosure Information & Listing Services

02/06/13: Metrostudy Houston 4Q12 Executive Client Briefing

Posted in Events, Houston Condo Market, Houston Market | Posted on 01-15-2013 | Written by David Jarvis

With the Presidential Election over and the Fiscal Cliff negotiations  kicked down the road, the national economy and most local ones are adding jobs and beginning to take steps toward a recovery.  The surge in local demand for housing was so sharp and so sudden that inventory levels across the spectrum were pulled to or below equilibrium.

NEW LOGO 2013

Join us at our 4Q-2012 Executive Briefing where we will discuss Houston’s current pace of economic growth, area housing and lot inventories and our projections for the coming year.

Where: Lakeside Country Club

100 Wilcrest Drive

Houston, TX 77042

Date: Wednesday, February 6, 2013

Time: Registration:  8:00 a.m.

Presentation:  8:45-10:00 a.m.

Phone: 281-582-0825

Note: This meeting is limited to Subscriber Clients and their employees only.


We look forward to sharing the positive Houston Trends with you on February 6th!
If you have any questions regarding this event, please contact:

David Jarvis: djarvis@metrostudy.com

Candy Winter: candyw@metrostudy.com

Houston Housing Market 2013 – The Way I See It

Posted in Economy, Houston Condo Market, Houston Market, In The News, National Housing Market | Posted on 01-11-2013 | Written by Mike Inselmann

Houston Housing Outlook 2013

Greater Houston Builders Association Presentation

By: Mike Inselmann, Founder and Former President of Metrostudy

The outlook for housing, and indeed most types of real estate, is very bright indeed as the New Year begins to evolve.  After a long, anxious, and scary, recession market conditions are exceedingly favorable for all types of housing sectors in Houston.

The National Economy is showing signs of a steady, but unexceptional recovery pace assisted, ironically, by a burgeoning increase in new home construction (and all the jobs and materials needed in support of home building).  The mortgage industry misbehavior in the middle of the last decade triggered a housing downturn that pulled almost every sector of the US economy into the morass of all too familiar since 2008.  Now housing is poised to play a significant role in the recovery of the next few years.  The end of the recession, expansion of job growth, the welcome end to the election season and all the negative rhetoric has improved the spirits of consumers.  Spending on consumer goods, autos, and now housing is having a positive effect on the economy.

Houston is at the top of almost every list relating to housing and real estate.  The downturn in Texas and Houston was not as severe as most of the ‘crisis’ markets around the country, and the upturn began sooner and is likely to be more sustainable due to the inordinate share of job growth being created in Texas and Houston.

The Houston economy moved from the recovery phase in November 2011, when the local job market regained all the jobs lost in the recession, and began building an ever larger employment base that has now reached roughly 2.8 million workers (double the job base at the end of 1982).  Houston will show an additional 95,000 jobs since that point in November 2011 once the final 2012 figures are tabulated.   Jobs are the principal driver of demand of demand for all goods and services;  jobs create households and household growth is the demand for additional housing, both for purchase and for rental.

The robust job recovery, thanks mostly to the expansion of the energy sector in the past few years, has created enough households to absorb all of the excess housing in Houston for single family homes, rental homes, during the second half of 2012.  Home prices are rising, apartment rents are the highest in history, and builders of both new single family homes and rental apartments are ramping up construction to try to match this new demand.  Consumers of housing in the next six months will come to realize that the window of opportunity to lock in a ‘deal’ on a new place to live has closed.

Prices will most certainly continue to rise because of the mismatch between supply and demand alone, but cost increases will also play a major role in housing price increases.   A dearth of buildable lots has home builders scrambling to find places to build homes and lot costs are increasing too.  Apartment builders are paying dearly for well located sites near or within Loop 610 as well.  Furthermore the surge in construction in the past year caught the supply chain flat footed as the supply of concrete, building materials and labor are challenging the industry to raise prices to cover the increased costs.  It is quite possible that the demand for housing will remain stronger than the builders’ ability to deliver units for much of the coming year.

Single Family Resale homes listed in MLS at the end of December amounted to a 3.7 month supply the lowest in 12 years.  Sales of pre-owned Single Family homes listed in MLS have risen 24% since June of 2011 even as the number of listings has declined.  During that same period demand for new Single Family homes has risen 39 %.  So, sales are increasing, supply is shrinking and prices for both for sale housing and rental apartments are on the rise.

In the past 15 years demand for new single family homes has averaged 30,000 per year, compared to an average of 22,000 over the past 30 years.  Metrostudy calculates the sustainable demand for new single family homes to be approximately 32,000 new homes per year based on job growth and population forecasts for the Houston Region.   In 2012 builders started 23,500 so there is room to grow before reaching that projected demand.   But some hurdles remain that make it difficult to reach that level very soon.  First is the previously mentioned short supply of lots, materials and labor to build homes.  But, mortgage underwriting standards remain restrictive, and many transactions for new and existing homes that do sell are subject to an ongoing disagreement over appraised values.  Furthermore, demonstrated demand from first time buyers has been severely restricted by credit issues and underwriting restrictions.  It is unclear whether the local market can reach the 32,000 annual units of demand without some contribution from first time and low to moderate income buyers.  But it will come, and in the meantime home builders will likely start construction on between 26,500 and 27,500 new homes in 2013, an additional 13-17% increase in the coming year.  That is, if production can keep up with demand.