Economist Elliot Eisenberg spoke at The Greater Houston Builders Association’s mid-year economic forecast luncheon June 9, addressing the skyrocketing demand for housing statewide, including the Greater Houston area.
A mixture of increased savings from stimulus checks and less spending during the pandemic has allowed residents to make down payments on homes, Eisenberg said. People moving from other states at rising rates is also stressing the housing market that already had few existing homes to sell.
The country holds about $2.5 trillion in excess savings during the pandemic, Eisenberg said. People are using these pent-up savings to buy homes.
“Especially in a place like Houston or Texas in general where housing is traditionally quite inexpensive relatively,” Eisenberg said. “This money goes a long way towards a down payment. So the savings is driving consumption.”
The inventory of homes before the boom was already low. Builders produced fewer homes in response to the housing crash in 2008, Eisenberg said.
“We’re short homes; that’s the problem,” Eisenberg said. “Inventory peaked out at over 4 million [homes] for one month in 2007. Right now, it's a million. Inventory's down by 70, 80 percent from there. Why? Because you didn't build enough homes.”
Now, homebuilders know they can sell every house they put on the market, but they cannot make enough homes, Eisenberg said. Additionally, materials such as bricks and appliances are also hard to come by as demand has shot up in nearly every sector of the economy, he said.
“Demand is insatiable. It’s bigger than it’s ever been. But there's nothing in the inventory existing to sell,” Eisenberg said “There's infinite demand, and you cannot possibly meet it.”
The number of homes that are sold but have yet to be started is at an all-time high, he said.
“So what do you build? All you build are expensive homes,” Eisenberg said. “There’s nothing cheap being built.”
Eisenberg said the region's housing problem is not likely to go away soon as people move in, Texas’ population grows and more people enter the homebuying stage in life.
“We've never had a cohort of people so large that wants to buy a house as the cohort we're about to see,” Eisenberg said. “But if you look further than that, on the very far left, the problem goes away because no one's having any children."