housing market

Builders Capital was happy to host Dr. Elliot Eisenberg, also known as the Bowtie Economist, this month for a virtual presentation. Dr. Eisenberg is an internationally acclaimed economist and a charismatic public speaker. He is well known for enlivening the topic of economics by making it relevant, educational, and engaging. Elliot examined the current state of our economy and explained what we could expect in the housing market for the upcoming year.

“For the next 10 years, housing is the place to be.”

Dr. Eisenberg is optimistic about the housing market for years to come. The numbers show that the demand for new construction will remain pervasive for several years to come. 

There is no alternative to housing. Homebuyers cannot choose an alternative option, or forego it all together; they need someplace to live. Furthermore, prospective homebuyers had the unique opportunity to save money for a down payment while social distancing at home and now want to take advantage of low mortgage interest rates.

There has never been a better time to be in new construction. Despite supply chain issues and labor shortages, builders are continuing to persevere, building homes that are so desperately needed.

Best Areas for New Construction:

New construction is thriving across the nation, but certain regions are booming even more than others. Nevada, Arizona, Utah, Idaho, Florida & Texas remain in the top states for new construction year after year. In addition, the Southeast and Pacific Northwest are flourishing with development, along with cities surrounding the I-70 corridor.

Key Economic Factors in the Housing Market:

  • Homes have been underbuilt for the last 13 years, creating a vast shortage in inventory.
  • Builders cannot take full advantage of the current booming market due to a land and labor shortage. However, because they can’t take full advantage, they’ll keep building homes at this rate for years.
  • 35% of new construction homes are sold before they’ve even been started.
  • Existing home sales rebounded quickly and are as strong as they were pre-pandemic 2020.
  • Starter homes are not being built anymore; there are no new homes under $200,000 being constructed.
  • The median new home price is $400,000, and the average is $460,000.

“This is not a deteriorating economy; it’s an economy going back to normal.”

Overall, the economy is recovering quite well from the short-term Covid-19 induced recession. In nearly all areas, data is trending with where things were in the fall of 2019. Looking ahead, Dr. Eisenberg predicts that we will see more economic growth as inflation settles, supply chain issues recede, and the labor force returns to work.

2022 Projections:

  • 2022 will continue to be another strong year for the housing market.
  • The Fed will likely not raise rates until July, and even then, rates will still be low historically speaking.
  • Four million new jobs will be created in the United States.
  • Inflation will start to ease up as supply catches up to demand.

Dr. Eisenberg has reassured us that the economy has proved to be resilient over the last 18 months despite the upheaval. It was a pleasure to host The Bowtie Economist again. We appreciate his wealth of knowledge and passion for economics and look forward to learning more from him in the future.

About Builders Capital

Builders Capital is one of the nation’s largest private construction lenders., offering innovative financing solutions to a broad spectrum of developers and homebuilders, from bridge, fix-and-flip, and ground-up construction, to development and attached housing. The company maintains its headquarters in Puyallup, Washington, with sales offices in Boise, Colorado Springs, San Diego, Phoenix, and Orlando.

Builders Capital’s management team brings to the business over 100 years of expertise in residential construction lending, home building, real estate development, and loan servicing. Brokers can access the portal at any time at my.builders-capital.com, and direct borrowers can get a rate in less than five minutes by using an innovative and automated GETMYRATE tool at MyRate.Builders-Capital.com