Once again, Frisco makes national Real Estate news, not for being the very best community to live, or the fastest-growing community in the U.S., but for being oversupplied with brand new homes as the real estate market shifts from a seller’s paradise to a buyer’s market, and as new home sales dip nationwide by almost 9 percent:
The shift may be most pronounced in what were once the most sizzling markets. Consider Frisco, Texas, a city 30 miles north of Dallas, where narrowly spaced villas of stone and brick have replaced cow pastures. Its population nearly doubled over the past decade, to 177,000. Its 8 percent jump last year made it the fastest-growing city in America.
Prashant Gopal is an excellent journalist and a friend of our’s from NAREE. He writes in Bloomberg of how falling sales and diving housing stocks are also affecting real estate agents in Frisco, who seem to be taking the biggest hits from each other as they shrink commissions in the “builder battleground”:
On a recent weekday, Konara, the real estate broker, drives his Dodge minivan along Highway 380, a builder battleground, where national giants such as Lennar, Toll Brothers, and PulteGroup go head to head with Texas companies. He stops at sales offices, where balloons festoon posts in a vain effort to spur sales. He points to empty houses that he says were completed six months ago.
His own sales are half what they were in 2016. In many cases, he’s rebating to customers all but $1,000 of his commission on each home sale. He walks into an Indian restaurant for lunch and looks up at the television screen. A competitor, the “Maximum Cash Back Realtor,” says he’ll take only $750. “You know what that means,” Konara says. “I’ll have to do the same.”
Prashant drew attention to the fact that Frisco is also home to the glittering Legacy West, transplant nirvana with Toyota headquarters (which may have subsidized some homes for employees) as well as Dallas Cowboys headquarters, where any day you can see real estate agents dining alongside football players and the Jones family. I believe the agents he is talking to, like Konara, but I also had to check with the man who’s company sells more of Frisco than anyone: J.P. Piccinini:
“I have read the reports, but the quality homes are still selling in even the higher priced neighborhoods,” says J.P. “Where you are seeing the huge sales incentives are on the cookie cutter homes. These homes are experiencing bigger price drops compared to other inventory. Some builders, not all, have been doing a bad job of building the same product over and over. Look at them, the homes are not interesting. Some of them look like every other home in the same subdivision.”
Many parts of Frisco, says J.P., sport gorgeous developments. As for slumping sales, he blames it on rising interest rates, election year jitters, and says Frisco home prices just got too high.
MainVue Homes, I said: they are not cookie cutter. They are a refreshing new look in the tract home builder world: transitional contemporary styles that prove one doesn’t have to build the same old Spanish stucco hacienda or Blanco stone and brick mix Texas Hill Country home.
Yet even Mainvue is apparently having a tough time selling, agents tell me.
“It’s the pricing,” says J.P. “Some of those Mainvue homes at Phillips Creek Ranch have now dipped into the $700’s; three years ago, those homes were just over $400,000.”
Of course, material costs have gone up, too, as have building labor costs. And the fall weather didn’t help, either: it rained almost the entire month of October.
New-home sales last month fell in the Northeast, Midwest, South and West. Home sales in the South were likely hurt by a barrage of hurricanes, while wildfires in the West may have damaged sales in the West.
Despite all the trash talk about the market, J.P. says his firm will have a record breaking December:
“We’re not slowing at JPAR,” says J.P. “In fact, we are expanding. I’ve got agents turning in three to four contracts a week. I think we’re actually going to have a record-breaking December.”
In December, J.P. predicts, builders will slash home prices to get them off their books, and buyers will be picking up some great deals.
To be continued…