We know from the cranes: apartments are going up in Dallas like crazy.

More than 7,200 apartments are being built in North Texas right now to satisfy the need for more rental housing. Most construction projects, like homes, are almost non-existent, the Home Builders Association has lost almost a third of its members, but construction workers are hammering away on multi-family projects.

Steve Brown reports that “Dallas-Fort Worth apartment starts are up more than 80 percent this year, while single-family home construction continues to fall. And the area leads the country in apartment building.”

We need the nation in home sales, now Texas leads in apartment construction. Texas really is like it’s own country! Experts tell Steve we will stay put as the number one building center for a while: tenants are knocking the leasing office doors down and apartment occupancies are at all-time highs. Will we overbuild? Probably, but apartment building in Dallas-Fort Worth is still less than half of what it was before the recession and credit crunch.

Net leasing has outpaced apartment completions in North Texas for more than two years. Mike Puls of Foley & Puls says demand is better than we have seen since the 1980s, since there are fewer young people today who can afford a home and more people moving to Texas. He called it a structural change in the mindset of the consumer: older households don’t want to own anymore because they don’t see the value in the investment. Younger people can’t get jobs and move in with  mom and dad.

I know of a very smart couple who shed their home not too long ago.

“I am paying $3000 a month for rent and they have to cover all the repairs,” he told me. “I love it. In my home I was paying twice that per month and where was it going?”

But these tenants are a sophisticated crowd: developers know they have to provide a higher-quality product to attract and maintain renters. The market is too competitive to be be cutting corners, says Brian Tusa, managing director with builder Alliance Residential, who is building in Dallas like there’s no tomorrow.

One of the most expensive Alliance projects to date is a 303-unit apartment building under construction on Market Center Boulevard in Dallas’ Design District — my husband asked me about it when we were going downtown the other day.

Alliance has other projects across the area: Lewisville, North Fort Worth, and the Medical District near Parkland Hospital, which is exploding, as I reported about a year ago.  JLB Partner’s is building on Maple Avenue, and just opened a 281-unit apartment project on University Drive east of Southern Methodist University: already 50 percent leased.

JLB is also hammering away at a 372-unit apartment complex east of downtown on Ross Avenue, and has started 300 units on North Central Expressway in Cityplace.

Everyone, said Sherwood,  wants to come to Texas to do something. But with tougher lending standards, he doubts that all the proposed projects will actually get built.  Of 15,000 to 16,000 units on the planning sheet, Sherwood says maybe 8,000 to 10,000 could actually be completed.

One thing for sure: rents are and will continue to go up. Average D-FW rents have risen about 9 percent since the end of 2009, and are forecast to increase 4.4 percent. The average Dallas apartment rent is $800 a month, but these snazzier units go for much more — $1500 to $3000 a month. Most experts agree that as rents go up from higher and higher demand, buying a home will look better and better.

But we have problems with that.

One, financing is much harder to get and shows no sign of easing.

Two, 20% down is the new down payment norm. That means a young couple buying a $300,000 home need to have $60,000 saved up for a downpayment.

Three, the unemployment rate exceeds 17 percent for the younger Gen Y’ers, compared to 7 or 7.5% wth Baby Boomers.

Four, Gen Y is more mobile and may prefer leasing over buying after seeing parents and older sibs with underwater mortgages. We are becoming a renter nation, and the smart commercial multi-family builders are all over it.

I hate Dodd-Frank. It’s a good idea gone rogue. And if you value the ability of qualified people to buy real estate without having to place 20% to 50% as a down payment, you should hate it, too. Dodd-Frank is like nuking an entire apartment complex to get rid of bedbugs in one small 300 square foot unit.

Yes, underwriting rules and loans to “marginal” lenders were out of control and led to the housing bust that brought down our economy. Lenders played “hot potato”, making and packaging subprime loans and selling them off to investors until, when the truth came out,  the last investor got screwed because he was left holding the hot potato — a bunch of bad loans. Of course, the fact that the ratings agencies messed up on their projections didn’t help, where is their slap? The fact that lenders were pushing ARMs and interest-only products didn’t help. And now those banks are tighter than Scrooge about lending.

But Dodd-Frank is leaving the details up to a bunch of federal regulators. First of all, we did not elect these federal regulators so I find this almost bordering on unconstitutional. Secondly, what they are going to do will make it harder for people to get mortgages and further depress the housing market. You must know that the credit crunch is about 40% of the problem with the housing market. Bank lending is down by 9% even though bank’s financial profits have risen by 136%. Lending has fallen in 10 of the past 12 quarters despite the bailout. (I’m glad the national press is starting to cover this: we bailed out Wall Street in exchange for loans on Main Street, that ain’t happening.) Dodd-Frank is putting lenders on the hook, requiring them to retain a share in the risk in mortgages they sell to investors. In THEORY, that sounds great — just like taxing millionaires.

But now that a rule to implement this provision has been written, critics say the requirement will make it so hard to get a mortgage that it will further depress the housing market and undercut a struggling economy. “I’ve been in this business 32 years and I have never seen guidelines as tight as they are now,” said Scott Eggen, senior vice president for capital markets with PrimeLending, a mortgage lending subsidiary of Dallas-based Plains Capital Corp.

The proposed rules ignore Congress’  exemptions for “qualifying residential mortgages” — hey, what’s qualifying? The regulators have decided it’s 20 percent down, caps on a borrower’s  debt to income ratio, restrictions on loan terms and other limits that would restrict the number of loans that would qualify for these exemptions. It’s like saying, in effect, only he who gets there first will get the exemptions, then we shut the door.

Will we have people camping on the sidewalk for mortgages as they once did to put contracts on homes during the boom?

Briggs Freeman’s Susan Baldwin told me that Former President Bill Clinton was on The Today Show this morning talking about this very issue. He said that banks are not loaning, they are sitting on trillions but not making loans to small businesses because they don’t have to and are paying no interest on deposits. He’s right on th money but small business, heck Bill — housing!

More developers are circumventing both builders and realtors and selling directly to the consumer to adapt to today’s credit crunch. And, it works!

Before the bust, I had heard that southwest Fort Worth was the fastest growing segment of what some call the Metroplex — this conglomeration of communities that comprise Dallas-Fort Worth. There was growth, jobs, tons of homes being built and sold out there. Everyone was fat and happy, making money.

(There are still jobs!)

Developer Gary Hazelwood must have gotten that memo, too. The man who created Chateau Du Lac at Lake Grapevine found 1000 acres west of Benbrook at Veal Ranch, with that gently rolling topography that says budding Texas Hill Country. He loved it. “If we do this right,” he said at the time, “we may have no competition.” By doing it right, Hazelwood meant high quality construction and ground amenities much like what he had created at Chateau Du Lac, 90 lots of two-plus acres each with homes starting at about $1.5 million. Think uber high standards, Vaquero-esque. (In fact, Gary told me his company, Westmont Development, built the fence around Vaquero.) The developments, the Bella’s : Bella Flora, a gated, luxurious community of one to two acre lots starting at $125,000, $750,000 ish homes of at least 4000 square feet. Then there’s Bella Ranch, a little less luxe, smaller square footage, lots starting at $49,900 with a 2300 square foot building minimum, but also gated, exclusive, the two separated by a gentle hill.

The highly rated Alda school district was a pleasant surprise.

“School districts are driving real estate purchases.” he told me. With the education draw, Hazelwood had himself a veritable Southlake on the western fringe of Fort Worth.

It was 2007. The lots in Bella Flora were selling just fine, until the financial world as we knew it fell apart. Like most developers, Hazelwood was in a bind. The way it once worked : developers bought land and prepped it for development — put in roads, sewers, all the entitlements. They sold the neatly delineated lots to builders, took their money and galloped elsewhere to do it all over again. But in 2008, the banks froze up credit. Home builders found it nearly impossible to obtain lines of credit to build spec homes. Homebuilding is now back to lows not seen since the 1960’s because in order to build a spec house, builders must put down a substantial chunk of cash on every single spec. Banks clearly want more skin in the game. As a result, home starts are subterranean.

And developers are holding the dirt.

“We switched mindset immediately,” says Hazelwood. He began selling straight to the consumer, let them buy the dirt and hire the builder, then hammer away… all standards within the Bella Ranch or Bella Flora guidelines.

In fact, more developers are using this technique — Bluegreen Communities as well as The Tribute at the Colony. For developers, like everyone else in real estate, there is no more easy sell. Consumer direct sales require more funds for marketing to consumers and more work —  no more easy-peasy builder’s lot draw.

It worked. Of 80 total lots in Bella Flora, 58 are sold. One third of younger sibling Bella Ranch is sold. That’s 46 lots in less than a year with 14 homes completed and at least 8 under construction. Even more amazing: the builders who bought lots and built spec homes in the Bellas SOLD THEM prior to completion.

Bella Flora and Bella Ranch are, in fact, one of North Texas’ biggest real estate success stories.

Most developers, said Hazelwood, are selling three lots per year max.

Still, I wondered, what was the draw to southwest Fort Worth? Where are these people coming from, I asked, and where do they work?

Alcon Labs in nearby Burleson. Note to Rick Perry: here’s another soundbite for your campaign. Alcon is adding thousands of jobs. This July, the town of Benbrook announced a partnership with Buxton Co. to develop a 1.5 million square foot open air regional shopping center in southwest Tarrant County called The Trails Town Center. The Trails will be at the southeast corner of Interstate 20 and Winscott Road.

Called a gateway to West Texas, the project should provide more than 6,250 jobs and generate $375 million in annual retail sales.

Are there any shopping centers besides this under construction in the U.S. today? Zero in 2010. New shopping center construction has ground to a halt.

A new tollway is going in on the west side of Fort Worth, there’s hospitals employing young professionals, and families are moving to the area because it’s only a ten minute commute to Fort Worth private schools. Benbrook is hot.

“People want space for their families,” says Hazelwood. “They’d rather move out a little farther to get land — two acres instead of a 50 by 150 lot — to raise their kids. They can be more self-reliant — do solar and wind power, and for a $9000 investment, drill a well: no more water bills.”(In Tarrant County, if you have one acre of land you can drill your own well. Parker County requires two acres.)

Hazelwood is seeing people moving closer to Fort Worth from Weatherford, Burleson and Granbury even as he sees Fort Worth families moving out of the city seeking pastoral peace and quiet. He’s even sold to aging Baby Boomers who want to be closer to great hospitals and their grandchildren in Fort Worth. Right now, residents pay taxes to Tarrant County only — no city taxes, though Hazelwood says there will come a day when this property will be annexed into the city.

But for now, Hazelwood has found and is building the next frontier. Southwest Fort Worth is the gateway to West Texas and the affordable good-life promise it holds. You couldn’t ask for better topography, he says: two lakes, horse stables, golf course and, not too far down the road, cattle grazing.

He’s blazing another frontier, too, at the same time, on the development front.

“We are listening to the buyer,” he says, “really listening because we want to sell these lots. The way we are doing it actually brings us in more for the long haul and connects us to our buyers.”

Hence, buy a lot from Hazelwood before September 30, he’ll cover the principle and interest for one full year.

Now that’s a deal just too good to refuse.