When trying to understand why the residential housing market is facing a hard time in certain markets, looking at the numbers may give us a big clue. Cities like Las Vegas, Austin, Orlando, Atlanta, and Phoenix all have few natural boundaries so expansion is possible. Cities like Los Angeles and New York have very few places to build so even in a downturn pricing will hold steadier.
So if there are no natural boundaries, builders have few restrictions and optimism will abound. When the markets turned sour in some of these cities in 2005 builders did not react, instead continued to flood the market with new inventory and the glut develops. The chase for market share dwarfs common sense and huge industry losses will occur.
I would love to be the builder who slowed down in 2006, set aside their assets to buy land at the bottom while the other builders are dumping, and then started building in 2008. Of course, that builders name will be the household name replacing many that we know now.
Top 10 Highest Residential Building Rates in USA in 2006
(residential building permits, building permits per 100,000 people)
- Charlotte-Gastonia-Concord, NC-SC 20,281 12.93
- Las Vegas-Paradise, NV 21,590 12.16
- Austin-Round Rock, TX 17,753 11.87
- Orlando-Kissimmee, FL 23,498 11.71
- Atlanta-Sandy Springs-Marietta, GA 53,944 10.70
- Houston-Sugar Land-Baytown, TX 55,105 10.23
- Nashville-Davidson–Murfreesboro, TN 13,771 9.49
- Jacksonville, FL 11,497 9.03
- Phoenix-Mesa-Scottsdale, AZ 35,790 8.90
- Riverside-San Bernardino-Ontario, CA 33,508 8.30
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