Experts Talk Home Building, Economy at Dallas Builders Association State of The Industry Summit

In the wake of a pandemic, a costly 2021 winter storm, and a war in Ukraine, state and local officials say growth remains strong in Texas, but they’re concerned about the supply chain and potential construction setbacks. 

“If we can’t build homes, then the growth is going to stop,” said State Rep. Jeff Leach, R-Plano, who addressed the state of the housing industry at an event Wednesday organized by the Dallas Builders Association. 

Research economist Jim Gaines with the Texas Real Estate Research Center at Texas A&M University also spoke to the breakfast crowd at Venue Forty50 in Addison.

Gaines summed up his presentation with the following highlights: 

• The economy is still subject to the COVID pandemic impacts and now the war in Ukraine.
• People are coming; jobs are available.
• Housing will be strong; it’s a seller’s market. 
• Energy may start feeding the local economy, not like before. 
• The industrial market is very strong;the office market is slow to recover. 
• Retail will continue to recuperate and then expand. 
• Hotels, restaurants and other service businesses are recovering.

Assault On Freedom

While leaders at Wednesday’s event agreed that the situation in Ukraine is creating a widespread economic impact, it may not have a drastic effect on Texas. 

“I think the biggest [challenge] that is on everybody’s mind right now is the situation in Ukraine, just first and foremost, what the people over there are going through,” said Phil Crone, executive officer of the Dallas Builders Association. “We’ve got a war that hearkens back to World War II. Some of the terrible things that have happened over the last century or so, we’re seeing again in modern times. There’s been an economic impact here related to some of the sanctions we’re trying to impose on Russia.” 

Representative Leach, chairman of the state’s judiciary committee and a construction attorney, said the war in Ukraine is alarming. 

“What we’re seeing is an assault on freedom and freedom-loving people,” he said. “I’m so grateful that even though we have our challenges here in this country, we are so blessed to be Americans. I think we’re especially blessed to be Texans.” 

The Texas Legislature will not convene again until January, and there are plenty of agenda items Leach said he’s ready to tackle in 2023. 

“We are already working on a bipartisan basis here in Texas to rebuke what Russia is doing to the extent that we have any economic ties with Russia — which we really don’t, apart from energy,” Leach said. “We’re working with the comptroller and the governor’s office to make sure that we put our foot down and draw a line in the sand. It’s going to be very clear where the people of Texas stand on this.” 

The state’s population growth continues to be strong, Leach said, pointing out that about 1,000 people move to the Lone Star State each day. 

“If we were our own country, economically speaking, Texas would be the ninth-largest economy in the world. We would be larger than Canada, larger than Australia, and larger than Russia,” Leach said. “As long as Texas continues to lead and we stay open for business and free, I think we’re going to lead the way not only for this country but hopefully for the rest of the world.” 

Builder Tom London said he’s concerned about escalating property taxes. 

“My property taxes in Florida are half of what they are in Dallas County,” London said. 

Leach acknowledged that the tax issue is one he hears frequently from his constituents. 

“I would love to do away with property taxes altogether,” he said. “I would certainly love to reduce them substantially. It’s not our job to tax you out of your home. It’s our job to protect your rights. I do think you’re going to see some substantial movement on this in the next session.” 

State of The Economy

Gaines, the economist, acknowledged that there are some challenges for those in the home-building industry right now, and it’s become increasingly more difficult to predict the future. 

“We ain’t got a clue; we haven’t since COVID,” he said. “In the short run, you’re probably good. You can probably sell [a home] if you can build it. Your biggest problem is, can you build it, and can you build it in a reasonable period of time?”

A home that used to take four to six months to build can now take up to a year to complete, due to supply chain and inventory problems, Gaines added.

“The Russian invasion of Ukraine is creating secondary effects,” he said, pointing out the jump to $5 per gallon for gasoline. “It’s going to be 12 to 24 months before this supply chain thing gets back to some semblance of normal.” 

There are some indicators as to where the national economy stands. Stimulus packages have been paid out, employment and income gains are sluggish but constant, and there has been an increase in household spending, Gaines said. 

“At the national level, we haven’t gotten back to where we were in February 2020, the month before COVID hit,” he said. “Officially, Texas has recovered, in terms of jobs — and I do not see a mask in this room.” 

Additionally, employment is on the rise in Dallas-Fort Worth. 

“I don’t know if the Ukrainian war is going to make a big impact on Texas,” Gaines said. “In some respects, it could help us. J.R. Ewing notwithstanding, Dallas is not the energy capital of Texas.”

Tarrant, Collin, Dallas, and Denton counties are among the top 13 in the U.S. for population growth from 2010 to 2020, Gaines pointed out. During that decade, Dallas County’s population spiked by 267,732 people. 

“The median age around here is 34,” Gaines said. “All these Millennials that come through, they’re in that 29 to 38 age range. They’re your home buyers. You guys are going to have to keep building. It isn’t going to let up this decade.”