Photo courtesy of Kye R. Lee/Staff Photographer, Dallas Morning News
I think we’ve been saying this in so many words for a few weeks: our market is doing better, much better, and now even Steve Brown my “Debbie Downer” NAREE colleague at the Dallas Morning News is paying attention: He’s even saying our homes (all of them?) may soon cost more:
“North Texas homebuyers are going to have to dig deeper to pay for a new house. And even if they can swing the bigger price tag, finding an available property won’t be easy. A growing shortage of undeveloped land and lots in many new home neighborhoods and rising construction costs will mean significantly higher prices in the Dallas-Fort Worth area this year and in 2014.”
Then I just got off the phone with Steve’s photo star, builder Jeff Dworkin, a CandysDirt approved builder (all hand selected because I know the quality of their work: Jeff, Michael Turner of Urban Classic Homes, Mickey and Michael over at Shariff-Munir, Mark Danuser at Tatum Brown, Tom Greico, Marc Kleinman, Dennis Mullinix, Matthew Thomas, these are the good guys) who confirmed the home in the photo, 7231 Coronado, will be completed later today but sold weeks ago prior to completion at $530k. Unreal price. But that’s the story everywhere. And he thinks the home would have sold for $20 to $30K more had he put it in MLS. (He has another one going up two blocks from Coronado, so holler at Jeff if you are interested.)
Jeff is in Vegas today at the National Home Builder’s show but has to come back before it ends because he’s closing on two more homes Friday morning. The home builder’s problems, if we can call them problems, are what Steve outlined and I’ve been telling ya —
-Home inventory (pre-owned) in Dallas is down to a four month supply of pre-existing. Six months is normal. It’s even less in Austin — 3.3 months!
-Builders stopped building specs after 2009, and banks stopped lending money for specs so, as we predicted, specs became a hot commodity.
-The supply of vacant lots is down by 40% in Dallas/Fort Worth.
-Building materials are costing more: wood, concrete, roofing materials (because almost everyone in North Dallas got a new roof courtesy of last springs’ hail storm), plumbing, concrete.
-Skilled labor is at a premium. As Jeff and my other builders told me months ago, the number of home builders in Dallas has been chopped by almost half of what it was before the recession. The work went away, so many subs turned to other careers. Today’s home builder needs loyal subs.
I had lunch with Michael Turner of Classic Urban Homes last week, and I was lucky to get the man to sit down for 30 minutes, that’s how busy he is: six customs under construction, three in the design stage.
“It’s like someone flipped on a light switch 6 months ago, ” he said. Whereas Jeff might be selling to younger families in East Dallas wanting a new home for around half a million, Michael’s Classic Urban gets 80% of their calls from people in Park Cities, Preston Hollow and Bluffview who want to downsize to about 3000 square feet, or what one of my dear friends calls a “lock and leave”. But they still want those homes loaded. Michael says three things are driving all this new construction: low interest rates, pent-up demand from the last four years, and the herd mentality.
That’s not to say he is not also selling to younger what we once called DINKS, double income, no kids.
“People in their mid thirties, young professional couples, both working” says Michael. “they are wanting new, a modern, contemporary home they plan to stay in longer. We are trying to keep up with the demand.”
A few consumer trends Michael sees: engineered wood flooring is hot, stainless steel still rules in the kitchen, greener countertops like Silestone and Cesaerstone are running neck to neck with granite, a “flex room” which can be a study/office/craft room combo, and the end of the living room as we know it.
“The formal living room is dead,” says Michael. “And people are also giving up media rooms.”
Contemporary design, however, is here to stay, he says.
Builder Leo Savino of Significant Buildings and Construction agrees that contemporary is not just hot, it’s here to stay. He, too, is finding building lots as scarce as a needle in a haystack. In fact, now he has several commissioned remodeling projects for some clients who choose to stay in their current home lot and make, well, Significant improvements to it.
“I have a client in the Park Cities who loves, loves, loves her street and never wants to leave,” says Leo. “So we are doing a major interior remodel, going contemporary and larger in a 1920’s house.”
If you are thinking of building, one thing you DON’T want is a builder who beats on his subs too much for pricing. Such a builder may find himself without subs in this heating up market.