San Antonio Business Journal - July 26, 2006
by Tricia Lynn Silva

Just when some may have been thinking that things couldn’t get any better in the local residential real estate market, a new report shows that housing starts are continuing at a healthy clip.

According to the second-quarter 2006 report by Metrostudy, a total of 5,367 single-family home-construction starts were recorded between the months of April and June. This figure marks a 29.4 percent increase from the number of housing starts recorded during the second quarter of 2005.

For the 12 months ending June 30, 2006, the Metrostudy report shows that 18,598 homes commenced construction. This is a 26.2 percent increase from new home starts from the previous 12-month period.

Metrostudy is a leading provider of housing information.

Local homebuyers also purchased a total of 4,482 new single-family homes during the second quarter of this year — a 24.5 percent jump from the number of new homes purchased during the same three months of 2005, according the report.

Over the last 12 months, sales were completed on 15,743 new units — an 18.9 increase from the number of home-purchase closings recorded during the previous 12-month period, the Metrostudy report shows.

“For the San Antonio housing industry, the second quarter of 2006 was the strongest on record in nearly every category … ,” says Randall Allsup, manager of the local division of Metrostudy.

The news in San Antonio is much brighter than the forecasts being posted in other areas of the country — namely the housing markets in California, Arizona, Nevada, Florida, Northern Virginia and Atlanta.

“Those markets are being affected by a combination of affordability problems caused by rapid price increases, recent increases in mortgage interest rates, investors dumping speculative inventory, and buyer fear caused by much talk of a housing bubble,” Metrostudy President Mike Inselmann says.

Nationally, housing construction is expected to slow by 5 percent to 6 percent over the remainder of this year, and going into 2007 — despite strong fundamentals such as job growth and the economy. Negative headlines in the media also could be having a big impact on demand, Metrostudy notes.

“Given the performance of the economy, metropolitan areas whose supply-demand balance has not been distorted by local development restrictions or disruptive investor activity should behave normally,” Inselmann says. “Metropolitan areas experiencing job growth will experience in-migration and household growth and will likely see demand for housing remain steady in the coming year.”