A report from the U.S. Census Bureau has recently confirmed what most folks in North Texas already know: residential construction is skyrocketing! The bureau’s findings were specifically for 2015 and tracked building permits. Last year in the Dallas-Fort Worth area, builders filed over 57,000 permits for housing units that included single-family, apartments, condos and townhomes.
That number moved the metro area into the number two position, right behind New York City-where in 2015, 86,424 building permits were issued. In the Big Apple, however, most of those permits were for apartment and condo properties while in Dallas-Fort Worth, more than half were for single-family homes. On that top-ten list, it should also be noted that Houston eased into the number three spot with 56,901 permits issued and Austin was in tenth place with 22,270 building permits issued.
Even though construction is brisk, the Dallas Business Journal reported that the Dallas-Fort Worth metro area was still in need of over 40,000 residential units at the close of last year. To residents who are witnessing a surge in new construction in North Texas, it may not seem possible that a shortage exists. According to Ted Wilson, whose firm, Residential Strategies, tracks and analyzes the Dallas-Fort Worth market, there is still a huge need for available housing. The article from the Dallas Business Journal noted that, ‘by the end of 2015, there were 14,180 single-family homes under construction, which represents a 7.2 month supply, but it wasn’t enough to counteract the existing shortage.
Record rains in the spring of 2015 plus a reduction in the number of construction labor are the most often cited explanations for this phenomenon. Home builders speculate that those factors caused a 15 to 20 percent drop in the number of completed housing units. Wilson stated that, “Unfortunately, there appears to be no near-term alleviation for this challenge.” An unlucky trickle-down issue is also impacting future buyers. With fewer in the construction work-force, building projects are becoming more expensive and those higher costs are being passed on to consumers.
Case in point: by the close of 2015, the median home price in North Texas for single-family homes had risen in one year’s time to $304,091, which reflects an increase of 6.5 percent. In spite of it all, the end of 2015, builders closed on 23,565 single-family homes, which reflected a 7.9 percent y-o-y increase!
With a goal of improving shrinking inventory, resourceful home builders are now on the lookout for affordable real estate for future building projects. The Dallas Business Journal story also mentioned the new master-planned community of Clements Ranch where new homes are set to be priced in the low $200s.
See more on that here.