A year ago, the general economy came to a near standstill in the United States. The housing industry was hardly immune to the shock.
“There was a pullback last March and April,” said Eddie Cantu, a Hidalgo County commissioner who is also a land developer. “People were waiting it out for a few months to see what would happen.”
The slowdown, at least in housing, did not last in 2020. In May going into June, sales and construction began to pick up. It was steady growth at first. It then accelerated as builders and realtors began to figure out what was happening in a fluid market.
Interest rates were dropping. Families were spending more time at home, spurring more to consider their options.
“People started realizing that they could use a little more space, or maybe a new home,” said Ivan Guajardo, the owner of Dynasty Custom Homes in Hidalgo County. “With interest rates so low, it made it easier to reinvest in a new property.”
The flip side to building a new home was staying put, adding space and making home improvements. There was a declining inventory of existing homes and a growing interest in new homes. The two factors added together have created a surging market.
“This backlog of clients, along with new clients who were just beginning the process created a surge of buyers all ready to start at the same time,” said Jason Cano, the owner of Nest Custom Homes of Harlingen. “Most made preparations and plans to start construction pre-pandemic, leaving them anxious to break ground.”
Putting all of these factors together, Cantu marveled at what he has seen in recent months.
“It’s the hottest market I’ve ever seen,” he said.
Keeping Up With The Demand
Cano drives between active building sites in southwest Harlingen. Signs bearing his company’s names pop up throughout that part of the city.
“New developments and lot availability have spurred interest and starts,” Cano said. “Several new subdivisions have been completed or are in progress. With better options, buyers and builders alike are moving forward with projects and feeling optimistic and confident.”
The Harlingen-based builder is busy. His company started building four new homes in mid-February. There’s another 12 construction starts scheduled in the coming months. Cano is also looking ahead to developing 20 acres into 65 residential lots in Harlingen later this year.
“The opportunity to design a space and enjoy a home that’s never been inhabited is extremely appealing during these times,” Cano said. “During the pandemic, people are opting for new construction and the known history of a home.”
Dealing With Challenges
One adverse development during the course of 2020 as builders adjusted was the rapid increase in lumber prices. Cano said the cost of lumber began rising in the fourth quarter of 2020, reaching record highs and making things more complicated for buyers and builders.
Loans and budgets were readjusted for buyers who had put building plans on hold and then moved forward as lumber prices rose. There have also been some material shortages as of late to go with a competition for available labor with workers being hired to build several large commercial projects in the area, Cano said. There have also been some slight delays due to pandemic procedures and guidelines, he said.
“Everything is taking a little longer,” Cano said in reference to permitting, processing, surveying and closing contracts. “There are many tools and apps in place, such as virtual closings, online notaries and Zoom calls, that are making things safer and more convenient for everyone.”
Through all of these challenges, Cano and Guajardo point to stable and growing employment sectors in the medical industry, law enforcement and education that have created a stable market of home buyers. Cano specifically cited nurses and federal law enforcement officers who have been buyers of his homes in recent times.
“We’ve had several calls on new homes,” said Carmen Reyes, the owner of Casa De Reyes homebuilders of Mercedes. “Some of our customers are recent retirees and are using their 401Ks and other resources to build new or upgrade homes.”
With interest rates at historic lows and the supply of pre-existing homes for sale being low in volume, Guajardo sees no letup in home construction anytime soon.
“You’re able right now with the interest rates to afford something bigger and better and with a good monthly (mortgage) payment,” he said. “People are seeing those opportunities. I’ve never built as many homes as I did the second half of 2020.”