The Future of the Home Building Market: Q&A with David Weekley
HOUSTON – (Realty News Report) – Housing starts in the Bayou City are exceptionally strong. According to national research firm Metrostudy, Houston was the second highest volume new-home market in the country; only Dallas/Fort Worth reported a greater number of home starts over th last 12 months. Still, many would be homebuyers are priced out of the market nowadays. What’s the solution? Has the home building market recovered following Hurricane Harvey? What’s ahead for Houston? Realty News Report spoke with David Weekley, Chairman of the Board of David Weekley Homes to find out some of the answers. Weekley, who started his company in Houston at the age of 23, is a major force in home building across the nation. With 2018 revenues of nearly $2 billion, David Weekley Homes is the largest privately-held home builder in America. The company has built more than 90,000 homes in 22 cities.
Realty News Report: Home prices continue to rise and many people, including the chief economist of the National Association of Realtors, say the nation’s housing market is in dire need of more housing starts. Why won’t builders construct more houses?
David Weekley: It’s not just more housing starts, it’s about more affordable housing starts. In Houston that’s homes priced below $350,000. We’re continually working to innovate and get down to a more affordable price range, but labor costs are going up. There are plenty of more expensive homes out there, but we’re trying to find out way to design and build $300,000 homes. The secret is smaller lots and smaller homes, but the average square footage of homes is going in the other direction. We need to build on smaller lots. During Hurricane Harvey, we didn’t know of any homes that we’ve built over last 40 years that flooded. We’ve been building above the flood plain forever. Most of the flooding occurred in homes built a long time ago to different standards. We have the rules in place now to prevent flooding but it’s challenging. The city hasn’t kept up with improvements to channel the bayous and help handle the water. You have to take care of drainage needs first. We are also excited about the Harris County bond program that just passed. With it, the community is going to accomplish what it needs to help the situation.
Realty News Report: What about Houston? It’s the No. 2 market in the nation for housing starts. Metrostudy reports Houston had 29,370 starts in the 12 months ending in September 2018. How long will this robust building continue in Houston?
David Weekley: I don’t see any reason why it should slow down. In the mid ‘80s, Houston was largely an oil and gas-based economy. When the price of oil went down, home prices went down, and the city went through a recession. But when oil and gas turned down recently, Houston powered on through it. Houston has clearly broadened its employment base from oil and gas, with the growing Texas Medical Center, and logistics and distribution. I don’t see any reason Houston should slow down.
Realty News Report: You’ve had a strong build-on-your-lot division for years. With Hurricane Harvey destroying so many homes, it makes sense that infill construction on lots where flooded homes have been demolished is very strong for home builders now. What’s happening in this segment?
David Weekley: Our Build On Your Lot business picked up dramatically after Hurricane Harvey. We started a lot more homes — four times what the Build On Your Lot business was before the hurricane. But we also wanted to help out the people who were affected by Hurricane Harvey. The David Weekley Family Foundation committed $1 million to BuildAidHouston.org, a new nonprofit initiative of HomeAid Houston, which provides Houston homeowners with much-needed home repairs following the devastation from Hurricane Harvey. In collaboration with Greater Houston Builders Association, BuildAid offers materials and contractors at cost, to significantly reduce the price of rebuilding for homeowners. BuildAid also received a $5.5 million grant from the Hurricane Harvey Relief Fund, which was established by Houston Mayor Turner and Harris County Judge Emmett. These funds play a critical role in BuildAid’s effort to rebuild homes across Houston.
Realty News Report: Governmental entities are working to implement stricter requirements on building in Houston after the flooding in 2017. Is the city taking the right approach?
David Weekley: That goes back to what I was saying before: the city needs to look at a number of different areas where they can improve the handling of flood waters. Recent new regulations are adding new requirements that drive up the cost of housing. We need additional solutions like fixing the bayous.
Realty News Report: You started your company when you were 23 years old. Now it’s the largest privately held builder in the nation. What’s your secret of success?
David Weekley: From the beginning, we paid attention to design. I started to ask questions. Why were there only a few windows? Why were the ceilings only eight feet high? So, we created our brand promise, around design, choice and service. We always paid attention to home design; today we have 100 architects and designers on staff. Design is a key component of what we do. Other builders said, “take it my way” but we would build what the customer wanted.