AUSTIN, Texas — Before the subprime time bomb, there was a "witch’s brew" at work that hyperinflated home prices in many markets, and that same concoction could kick in during the next real estate boom, according to one housing stats expert.

Mike Inselmann, co-founder and president of Metrostudy, a data company that provides housing and other statistics, said the "unindicted co-conspirators in this whole bubble phenomenon … the genesis of the housing bubble was the witch’s brew of a strong local economy in metro areas that had very restrictive growth limitations."

The building industry in some cases was "running up against the inability to develop new subdivisions fast enough to meet that demand," said Inselmann, who spoke during a session Thursday at the National Association of Real Estate Editors annual conference in Austin.

While Inselmann said he is not opposed to all restrictions that limit new development, he advocated for better dialogue between industry participants and jurisdictions to prevent a "mismatch" of economic growth and housing supply.

The housing bubble "didn’t start with subprime — they were the guys who added gasoline to the fire. They created a mismatch which started the inflation in housing that was turbocharged by subprime financing," he said.

The housing market was hitting a wall in affordability, and subprime lending offered a means to continue the price escalation, he noted.

"When the next housing cycle hits, the danger is we’re going to go through exactly the same phenomenon we went through this time," Inselmann added.

His presentation included numerous slides displaying the rollercoaster ups and downs in housing prices for numerous metro areas. There were markets like Las Vegas and Miami that displayed a pronounced, shark fin-shaped rise and decline in price growth, followed by a mirror-image spike in price declines.

He contrasted those with slides that showed relatively level prices in some other markets, such as Dallas and Houston. Both of these markets, as it happens, lead the nation in new single-family home starts.

Major metros in Texas, among others, avoided big bubbles because new housing was added quickly as demand grew during the boom, which kept a leash on home prices, he said.

Overbuilding, though, can be a drag on home prices.

Las Vegas experienced a frenzy of building activity during the boom, though that market’s home prices had been driven up in part by a limited supply of private land available for development, and escalating prices paid for federal land auctioned off by the government.

Las Vegas leads the nation for its months’ supply of new-home inventory, according to the statistics that Inselmann presented, and Las Vegas also leads Metrostudy’s rankings of markets with the highest supply of new, finished homes that remain vacant.

Nationally, single-family housing starts are expected to rise 24 percent this year compared to 2009, he also said, after a 54 percent peak-to-trough slide, Inselmann said.

Based on three consecutive quarters of U.S. gross domestic product growth, Inselmann said the economy appears to have pulled out of its recession, despite continuing job losses.

The nation has lost about 8.5 million jobs during the downtown, he noted, adding that "job growth is a lagging indicator" for economic recovery, and the timing of the job losses is in tune with prior recessions.

Will Holder, president of Trendmaker Homes, a builder in Houston, Texas, who also participated on the panel with Inselmann, said that the homebuilding market does appear to be rebounding from tough times.

"We’re seeing some recovery in volume. More important, we’re seeing some recovery in (profit) margin," he said.

Chris Werth, president for the Central Texas division of PulteGroup Inc., another panel participant, said, "The bottom line for 2010 for us as an industry — we believe it’s going to be very comparable to 2009," though "we obviously need to see improvement in employment rates across the country."

The builder has seen some "demand pockets" for new homes, including some traction with a development in Gilbert, Ariz., Werth said.

Another recent success story, he said, was an infill development in Pasadena, Calif., with an average sales price of $750,000. The company "sold out the first phase in the first week of opening," he said.

He also noted that Texas has been "one of the bright spots" for the company, while Florida "has absolutely been one of our most challenging markets."

After a merger with builder Centex Corp., PulteGroup now controls about 150,000 lots, 32 percent of which have been developed, Werth noted.


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