Tuesday, January 29, 2013
Teardown market building back up
After a timeout for the recession and a housing crash, the rumble of bulldozers is starting up again in close-in Dallas neighborhoods.
Custom homebuilders are buying up old properties and knocking down small homes to make way for a new generation of houses in East Dallas, the Park Cities and North Dallas.
“It’s starting to come back, and it’s better than it was,” said builder Josh LeComte, who has recently bought a few lots for new homes in East Dallas. “Compared to the worst real estate crash in history, this is way better than that.”
LeComte Homes has a couple of new houses in the works in the Lower Greenville area and is looking for more deals.
“I’m getting some spec building loans,” he said. “If you can deliver value, then you can sell a house.
“It’s not like it was when people were paying whatever they could to get in a house.”
Since the top of the new home market in 2006, housing starts in North Texas have dropped by about 70 percent.
And while the business is improving from the worst of times in 2008 and 2009, the comeback is definitely measured.
For the 12-month period that ended this spring, builders started just over a dozen houses in Dallas’ M streets neighborhood. In the same period of 2006, there were 162 starts, according to statistics from Dallas housing analyst Residential Strategies Inc.
In University Park, there were about 48 home starts during the year ending with first quarter 2012. In 2006, there were almost 140 starts for the same period.
“We’ve heard some rumbling that the teardown market is picking back up,” said Residential Strategies’ Ted Wilson. “But it’s still pretty weak.
“There were a lot of custom builders who were crippled during the downturn.”
Residential Strategies estimates that about half of the North Texas builders shut down or went broke during the housing market downturn.
“A lot of the guys that were marginal players are gone from the market,” he said.
But buyer demand is definitely back in many Dallas-area neighborhoods.
With less than a 4-month supply of pre-owned homes on the market, builders in close-in neighborhoods are hoping to get sales by offering new product.
Rudy Rivas, one of the partners who owns M. Christopher Custom Homes, is purchasing old homes in East Dallas’ Lower Greenville and Lakewood Heights neighborhoods to build new houses.
Most of his planned homes will be selling for just under $700,000 — a step down from what many new houses in the area went for before the crash.
“There’s a huge new home shortage” in some Dallas-area neighborhoods, said Rivas, who also builds in suburban communities including Colleyville, Southlake and Allen. “If you are in the right area with fresh product, there is lots of demand.”
M. Christopher Custom Homes is expecting its starts will top 80 homes this year — about double what the company did in 2011.
The builder has bought about 10 lots in East Dallas and has a few houses already under construction.
“I started my company seven years ago, right before the crash,” Rivas said. “The crash occurred before we had a lot of stuff on the ground.
“I got there right before the sidewalk sale.”
Bargains are few
He’s building East Dallas houses that average about 4,500 square feet and trying to stay away from suburban designs.
“We’re trying to maintain the architecture of the area,” Rivas said.
However, with three-car garages and swimming pools, M. Christopher’s new houses are a far cry from the tiny 1920s and 1930s cottages they are replacing.
“We are giving people higher ceilings and more glass,” Rivas said.
Real estate agents say they are seeing more builders scouting the market for bargain buys — but there aren’t too many.
“Lot prices are not as high as where they were, but they are getting there fast,” said John Whiteside with Coldwell Banker Realtors. “Almost all of the smaller homes are in somebody’s crosshairs.”
But that doesn’t mean that mega-mansions are making a comeback, Whiteside said.
“The days of people buying huge houses with space they don’t need and have to heat and cool are over,” he said.