The spec house at 6115 Desco Dr. will look similar to this. Photo courtesy Shoot2Sell.

The spec house at 6115 Desco Dr. will look similar to this, also built by LRO Residential Development.

Spec homes are a sign of strong builder and bank confidence in a market, as they are created without any specific buyer in mind, just the belief that one will be interested once it is completed. The higher the price tag, the higher the stakes.

In our inventory-parched market, homebuilder Les Owens, President of LRO Residential Development, has that confidence in the Dallas market, even at multi-million-dollar levels. He’s starting two spec houses this month, one in Preston Hollow for $3.15 million, and another in Devonshire for $2.2 million.

Both houses are available for customization, but Owens is breaking ground now and says he will complete them in late summer/early fall this year.

As we reported earlier this month, luxury home sales in Dallas-Fort Worth skyrocketed in 2014—those with prices of $1 million and up grew 15 percent year-over-year, the second highest sales volume in Texas (bested only by Houston).

Luxury home sales in DFW represented 1.2 percent of the market, and top-performing luxury brands are seeing more multi million-dollar sales in areas that have strong resale value and high existing demand.

“Established neighborhoods and homes of significance in coveted areas such as Highland Park, Preston Hollow, Greenway Parks, and The Volk Estates are desperately pursued, and the quality of the design continues to be a driving factor,” said Caroline Summers, a Briggs Freeman Sotheby’s agent. Jump to read about the houses and see photos!

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Swananoah Front

Homes priced at $1 million or more are moving like hotcakes in Texas, according to the 2014 Texas Luxury Home Sales Report from the Texas Association of Realtors. The figures, assembled using data from the Real Estate Center at Texas A&M University, show that every Texas metro area posted double-digit growth in luxury price ranges.

Dallas posted a 22 percent increase in luxury home sales for the period between January and October 2013, the report shows, with Austin posting a whopping 55 percent increase (no wonder Trulia is calling our capital city way overvalued). Houston came in second with a 46 percent increase in luxury home sales, and San Antonio posted an 18 percent increase.

“Data from the Texas Luxury Home Sales Report shows that million-dollar homes are playing an increasingly important role in the Texas housing market,” said Dan Hatfield, chairman of the Texas Association of Realtors. “The housing slump is behind us and as Texas’ economy and population continue to accelerate, we’re going to see increasing development and demand in larger, higher-priced homes with luxury amenities.”

So, what’s driving the increase? It’s mostly thanks to the influx of high-paying tech jobs in Austin, and in Houston it’s likely due to oil and gas wealth moving into the area. For Dallas, a brisk job market driven by a healthy financial sector, as well as oil and gas wealth, could be fueling the luxury real estate market. The increase in sales definitely shows appreciation, though, and it makes you wonder just how many of these $1 million-plus properties are second homes or even investments.

“It’s common for luxury homes to have a significantly longer sell time and higher housing inventory than the average home simply because the pool of interested homebuyers is so much smaller,” said Jim Gaines Ph. D., and economist with the Real Estate Center. “However, this data still indicates strong demand, particularly in Austin, where homes of $1 million or higher are close to 10 percent of all active listings and are selling in less than six months, and in Houston, where housing inventory is only 7.4 months.”

Here’s the Dallas-Fort Worth market breakdown from the report:

In the Dallas-Fort Worth area, 809 luxury homes were sold between January and October 2013. Luxury home sales made up 1.1 percent of the total housing market and experienced a 22 percent increase in sales compared to the same period in 2012. This is slightly higher than the 19 percent year-over-year increase of the Dallas-Fort Worth housing market as a whole. As of October 2013, there were 922 active luxury home listings, 4.1 percent of all active listings on the market. The housing inventory for a luxury home was 11.4 months, 8.4 additional months than that of the Dallas-Fort Worth housing market at large.