by BILL PETERSON
Agreeing with the perceptions of local real estate agents to the effect that the local housing economy is much rosier than the national picture, the Hays CISD projects an increase of new housing starts in 2008.
Carter Scherff, Hays CISD’s Chief Financial Officer, said house starts should climb to 1,331 within the district in 2008 after falling to 1,185 in 2007. The projected increase in home starts indicates that builders anticipate the continuing absorption of existing new home inventory.
If the school district’s numbers are correct, then the local housing downturn took place in 2007, following a record housing boost in 2006.
Basing his numbers on contacts with local builders, Hays CISD’s demographic information and data from Residential Strategies, Inc., Scherff said starts declined 25 percent to 1,185 in 2007 from 1,574 in 2006, while new home closings declined 14 percent to 1,296 units in 2007 from 1,501 in 2006.
If 1,331 new homes should be started in 2008, it would be the second highest number, if barely, in the school district’s history. Hays CISD said 1,330 new homes were started in 2005, which suggests that 2008 would return the local new home market to something of a normal pace.
“A lot of our builders appear to be isolated from the national market, and I don’t anticipate them slowing down,” Scherff said.
Area real estate agents say the local new housing market is further insulated from national trends because it has been driven by demand, rather than speculation.
The school district has not projected a number for new home closings in 2008. However, its data indicate that finished vacant inventory remains tight at 1.7 months.
Judging from 1,296 new home closings against 1,185 new home starts in 2007, going on ten percent of the new home sales last year consisted of pre-existing inventory. Last year was the first in the last four when new home closings outpaced new home starts.
From 2004 through 2007, according to Hays CISD’s data, builders within the school district’s boundaries produced 5,303 new home starts and 5,092 new home closings, indicating that 211 vacant new homes were on the ground at the close of 2007.
As of Jan. 28, Hays CISD said 383 homes were listed for sale within the school district. The school district also added up 1,135 re-sales for the first 11 months of 2007.
For 2008, Hays CISD projects 135 starts in Hometown Kyle, 132 starts in Shadow Creek, 130 starts in Whispering Hollow, 118 starts in Kensington Trails, and 91 starts in Waterleaf.
Builders within Hays CISD set quarterly records for new home starts in the first three quarters of 2006, peaking at 457 in the third quarter. Starts then declined dramatically to 297 in the fourth quarter of 2006, followed by 285 starts in the first quarter of 2007 and 265 in the second quarter of 2007 before rebounding to 341 in the third quarter and dropping back to 294 in the fourth quarter.
For six straight quarters, from second quarter 2005 through third quarter 2006, the school district set records in home starts for corresponding quarters (first quarter against first quarter, second quarter against second quarter, etc.) before slowing down in fourth quarter 2006.
New home closings within Hays CISD reached corresponding quarterly records in all four quarters of 2006, peaking at 435 in the third quarter. The first quarter of 2007 set another first quarter record with 367, giving the school district five straight quarters of house closing records for corresponding quarters. Starting with the second quarter of 2007, new home closings slowed down to levels that still mostly outreached corresponding quarters from 2004 and 2005.
While new housing starts reached a four-year low at 1,185 in 2007, new home closings were the second highest on record at 1,296 in 2007, even though that represented a 14-percent drop from the record of 1,501 in 2006. Third quarter 2007 closings (342) were still the second highest third quarter, and fourth quarter 2007 closings (301) were the second highest fourth quarter in the school district’s history.
While business generally disdains any kind of slow down, Hays CISD officials are relieved to be delivered from the torrid pace of 2006. Regardless, Hays CISD Superintendent Kirk London said he anticipates little more than a mild local slump in the first half of 2008.
Said Scherff, “We’re slowing down and I think it’s good because it gives us an opportunity to handle growth better.”
BILL PETERSON is editor of www.HaysHighway.com where this article was originally published. It is reprinted here through special arrangement.