It seems the Dallas-Fort Worth area housing market is luring many national homebuilders to the area. At least that’s what Phil Crone, executive officer at the Dallas Builders Association, claimed Monday.
"Obviously home builders are going to flock to where the population growth and, more specifically, job growth is," Crone said. "And the job growth is certainly as strong here in Dallas as it is anywhere in the country."
In fact, eight of the 15 cities with the fastest growth in the U.S. are in Texas, according to data from the U.S. Census Bureau. At the top of the list was the Central Texas town of San Marcos, which saw its population grow by 4.9%, surpassing the 50,000-population mark.
No other state has more than one city that made it to the top-15 list. Texas also is the fastest-growing state in the nation in both jobs and population.
According to Crone, experts expected the Dallas market to come in at 20,000 permits annually in 2013 — up from 17,000 one-year before. This estimate would be a modest 10% gain. However, now the estimates are reaching as high as 23,000 to 24,000 permits.
"Based on what we’re hearing from our builders, we could see as high as a 20% increase in the housing starts as opposed to last year," Crone noted.
Texas never saw the large housing or economic crisis that other states did. We were the last one into the recession and the first one out, joked Crone.
Population growth coupled with an increased job growth ate through the existing housing supply in Texas, so now there has to be new product. We are getting dangerously low on lot supply, said Crone.
Currently the Dallas market holds a 17-month supply of available lots. A healthy market will usually have a 24-month supply. "Homebuilders have to kick into gear," said Crone.
In June, national homebuilder Ryland Group (RYL) acquired Dallas-based LionsGate Homes, who currently operates in 15 active communities in the Dallas-Ft. Worth market.
Drew Mackintosh, vice president of investor relations at Ryland Group, said, "Dallas is a big housing market, both because the demographics support it and we’ve seen good job growth there."
It’s a market that Ryland Group left about two years ago in the downturn, because the builder had limited capital to deploy to all of the cities where it builds.
"Quite frankly, we were underperforming in Dallas at that time," said Mackintosh. The homebuilder decided to reallocate to other more successful markets.
"But now that’s its picked up, we’ve found this opportunity to reenter the market via LionsGate Homes, which has a great track record in that market, great relationships ... and gives us an opportunity to really reestablish our presence in Dallas."
It seems the draw to Dallas and other vastly growing Texas markets is stronger than ever before. For this phenomenon, homebuilders credit strong economic and population growth.