This is more by way of a bulletin from the field, as this week's travels are a challenge to daily posts.
That said, this is interesting.
Anecdotal evidence suggests that the awaited "return of the first-time buyer" to the housing market is coming to pass. Here's a few flashes we've picked up, in Las Vegas and San Francisco.
- First-time buyer demand has picked up significantly in the Las Vegas market, according to a number of executives we heard from there. A fits-and-starts mode, where strength in one segment gains for a burst, while another segment slows down, has in very recent weeks shed light on momentum in the lower price tiers, among first-timers. Meanwhile, builders have detected a slowing in demand for their higher-end offerings in the market.
- D.R. Horton's torrid roll-out of its Express brand of entry-level homes has now expanded to 44 markets in 14 states. We're hearing that Horton divisions nationwide are undergoing a re-tool as on-the-ground operations reduce and streamline plans around only very slight regionalizations of the basic Express model line, and work hard at driving the per home gross margins toward D.R. Horton's expected high-teens level of performance.
- Remember now, Horton is on pace to delivering on a promise to stakeholders that it would grow its volume in 2015 by 27%, or 8,000 homes, to a total northward of 36,000 homes. The rough-math of about one-in-five deliveries being against the Express line would mean 7,200 of the entry-level brand. That's at current run-rates, not even reflecting its planned growth as part of the Horton mix. That figure is bigger than 90% of the other home builders in the country. In commentary on its third quarter, D.R. Horton vp for investor relations Jessica Hansen noted this:
Our Express homes brand, which is targeted at the true entry-level buyer, focused primarily on affordability, is currently being offered in 44 markets and 14 states with the significant majority of our Express sales and closings to-date coming from Texas, Florida, and the Carolina. This quarter Express accounted for 19% of our homes sold, 16% of homes closed and 10% of home sales revenue. The average closing price in an Express Home in the third quarter was $188,000.
Hansen further commented that the "depth of market" that Horton is seeing in traffic and its model homes is strong for the entry-level, and that just-under-700 FICO scores are adding up to plenty of qualified buyers.
Could it be that--now that the credit box as begun to open and banks are making mortgages more widely available--that the first-time buyer market will activate in a big way?
It's hard to say, but more likely, this "watching-paint-dry" recovery will continue to show volatility, feints and dodges, and choppiness across time, particularly as jobs and wage baselines reset around widespread structural economic changes in industries.
Here's a note from RealtyTrac Daren Blomquist on trends in age and homeownership. Looks like those Millennials are trying to say something here.