The disaster unfolding in Houston is first a human tragedy, but the economic impact of Harvey’s floodwaters is likely to be severe. It could prove particularly harsh on home building.
Houston is the number-two home building market in the country, passed on the BUILDER Local Leader List by Dallas just this year. Among the builders active there are D.R. Horton, Lennar, Perry, Hovnanian, Long Lake, Taylor Morrison, KB, Pulte, Beazer and Meritage along with numerous private and custom builders.
Asked if he knew of any actively selling communities that had sustained damage in the winds and waters of Harvey, Lawrence Dean, regional director for Houston for our sister company Metrostudy, wrote, “It is too early to know just yet.” But he is not optimistic.
“Various communities in Fort Bend County southwest of downtown Houston, Montgomery County north of Houston, Galveston County southeast of downtown Houston, and suburban areas of Harris County, which contains most of the City of Houston, have all received large scale flooding damage,” Dean wrote in an email exchange with BUILDER. “This is currently anticipated to include flooding in many of the top selling master planned communities in the market, but this has not yet been able to be confirmed as the flooding is still on-going and dynamic in nature.”
Dean also wrote that he knows of many home building company employees who have been flushed from their homes by floodwaters, including himself.
Dean’s colleague at Metrostudy, John Spies, senior advisor, East Region, added in an email, “Another way to look at the Harvey impact is guesstimating the loss of time in the field and applying that time to the annual starts or closing rate. I think a good guess is we will lose 4-6 weeks of activity. This would equate into a loss of 2,046-3,066 starts that will not hit the ground this year, that would have otherwise been started. Our average new home price in Houston is $356,292, so a loss of 3,066 starts equates into an economic hit of roughly $1.09B.”
That’s a B. For billion.
Here is Spies’ data for activity north (top) and south (bottom) of Houston.
