Dallas-Fort Worth new home prices heading higher
By STEVE BROWN
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.
“The consumer is not going to know what hit them in certain parts of town,” said Bruno Pasquinelli, CEO of CB Jeni Homes. “We’ve been raising our prices as often as we can.
“Lot prices are going up dramatically,” he said. “And labor and material prices are rising on top of that.”
The supply of vacant lots for new homes in North Texas has fallen by about 40 percent since the end of 2008.
And with homebuilding ramping up in the area, there aren’t enough construction sites in prime locations in the northern suburbs.
“The big issue we are seeing in the market is the tightening supply of lots,” said Ted Wilson, a housing analyst with Dallas-based Residential Strategies.
Wilson said many of the home lots that were developed at lower prices before the recession will soon be gone. And the next generation of new home neighborhoods has a much higher land cost.
“The vacant developed lot supply continues to be whittled down,” he said. “Many builders will deplete much of their inventory of legacy lots in 2013 and will be forced to move into these higher-priced lots.”
Lot developer Mehrdad Moayedi says that suburban home lot prices have already gone up by 20 to 40 percent and more price increases are coming.
“The old inventory is going, and when you get past that, it will double the cost of a lot,” said Moayedi, CEO of Carrollton-based Centurion American Development Group. “It’s going to be a rude awakening for homebuyers.
“A house we are selling in Kaufman County for $130,000 and $140,000 is going to be $180,000 next year.”
New home prices had actually retreated during the worst of the recession.
Nationwide new home prices fell in 2008 and 2009 before resuming their increases.
By the end of last year, nationwide median new home prices were almost back to where they were before the housing market crash.
Part of that is due to rising costs for everything from skilled labor to lumber, housing economists say.
“Lumber and plywood have been on a tear recently — softwood lumber averaging a 10 percent gain over the same time last year in the last four months,” said Dave Crowe, chief economist for the National Association of Home Builders.
“Softwood plywood is up 25 percent by the same measure and OSB [a commonly used wood building material] is up 49 percent.”
Residential construction employment — which suffered huge declines in the recession — is now lagging in the rebound, Crowe said.
“Nationally, employment in homebuilding has hardly picked up at all,” he said. “For instance, we’ve had a 2 percent growth in residential employment in the past two years, but a 58 percent increase in starts.”
Crowe said with the industry responding to increased demand, “finding employees is getting more difficult.”
Builders tell stories of competing contractors stealing work crews off their job sites and — in a few cases — partially built houses waiting for skilled labor crews to finish the work.
“A lot of the people got out of the business during the downturn,” said Jeff Dworkin, owner of JLD Custom Homes. “Only about 50 percent of the people building five years ago are still here.
“We are all scrambling to find labor.”
Dworkin said roofing material prices went up after last summer’s fierce hailstorms. And concrete prices are rising with the huge volumes of road construction under way in North Texas.
“The same house on the same lot we offered last year is now 10 to 15 percent more due to cost increases,” he said. “In some cases it’s as much as 25 percent.”
And inventories of unsold new houses are now at the lowest point in North Texas in almost two decades.
Only about 2,000 finished, vacant new homes were available in the D-FW area at the end of 2012.
“With inventory so low and sales climbing, we are seeing builders raise prices in many locations,” said David Brown with housing analyst Metro Study Inc.
Local buyers who heard about all the distressed home sales and falling prices during the recession may be shocked to find a much different market this spring.
“We still get consumers coming in that think they can steal housing,” Pasquinelli said. “That ship has sailed.”
Follow Steve Brown on Twitter at @SteveBrownDMN.