The man in charge of finding investors for Dream Finders Homes believes the housing market is headed for a slowdown because of the steady increase of home prices, but he doesn’t think it will be a sharp decline.
Chris Butler, the managing partner of DF Capital Management LLC, a subsidiary of Dream Finders, shared his opinions at an Economic Roundtable of Jacksonville meeting Nov. 27 at the Omni Jacksonville Hotel.
Instead of selecting the most expensive homes, Butler said many prospective homebuyers today are choosing smaller and less expensive properties.
He said Dream Finders is targeting those clients by building entry-level homes while trying to keep up with the demand.
“Supply has never been lower,” Butler said, referring to Zillow.com statistics in his presentation that show the country has 1.2 million homes available for purchase compared with more than 2.3 million in 2011.
He said inventory of new construction homes in the Jacksonville region is at 1.9 months and all available homes is at 3.6 months.
A six-month supply of homes is considered normal.
Butler said Florida should continue to see tremendous population growth because of people leaving other states that have increasing taxes due to new federal tax laws limiting state tax deductions.
Because of that and low supply, Butler said homebuilders need to pick up the pace.
Despite the current labor shortage and rising costs for some homebuilding materials, Butler said national and regional homebuilding companies still are making a decent profit.
“They’re still getting the 20 percent margins they were a couple of years ago,” he said.
Butler said rising interest rates should not have a meaningful impact on the market since they are increasing slowly.
“If rates are going up, it’s because the economy is getting better,” he said, adding that purchasing a home still is less expensive than renting.
Daniel Gilham, president of the Economic Roundtable of Jacksonville, asked Butler what innovative solutions would help developers build homes cheaper and faster.
“It’s going to take that cutting-edge company to do it first and force others to follow,” Butler said, adding that it may take a person like Elon Musk to streamline the process.