Hopes for a housing recovery were dashed in 2010 when tax credits spurred a spike in sales that proved temporary, and last year, when rising unemployment, bickering over the U.S. deficit and falling stock prices spooked consumer confidence.
Buffett 'Dead Wrong'
"I was dead wrong," Warren Buffett said in his Feb. 25 letter to Berkshire Hathaway Inc. shareholders about his expectations for a housing recovery last year. He says he's optimistic again, expecting reinvigorated household formation to spur demand for more residences.
"Housing will come back -- you can be sure of that," he wrote. "Every day we are creating more households than housing units. People may postpone hitching up during uncertain times, but eventually hormones take over. And while 'doubling up' may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure."
After looking for several years for a larger home, Jessica Moehlman, an auto sales manager, said she and her partner expect to complete the purchase by June of a $439,000 three-bedroom house in Grant Township, Minnesota, about 20 miles east of Minneapolis, so his three children can get into a good school district.
No More Waiting
The improving economy and current price levels have "created an urgency for us to purchase a new home now versus waiting a few years," said Moehlman, 27. "We feel we are still able to utilize our money more effectively by buying a bigger house for less money."
PulteGroup, the largest U.S. builder by revenue, and D.R. Horton, the biggest by volume, each have one community in Eastvale, the California city where software developer Kowalyshyn sees improvement. Meritage sold about 30 homes in the town last year and this year opened a new community called River Road, with prices starting at $402,990, said CFO Seay.
KB Home has four communities in Eastvale, with prices starting at $272,990, according to its website. The homes are selling at a profit, Reffner said.
"We think Eastvale is a great market," he said.
Kowalyshyn said he considered alternatives to keeping up payments on his home, including selling at a loss or walking away from his property to let the bank take it back. To buy a house closer to his Los Angeles office -- a 100-mile round-trip commute from Eastvale that costs four gallons of gas a day and about $50 a month in tolls -- he'd pay more money for less space.