With several billion-dollar developments underway in North Texas, Hillwood Communities President Fred Balda knows a bit about the region’s housing market — and he’s starting to see would-be homeowners hitting a price ceiling.
The Dallas-based residential development firm has delivered the initial phase of the $350 million, 250-acre Bluewood master-planned community in Celina and is gearing up to start the $1.5 billion Pecan Square master-planned community, which is planned for 3,200 homes by this May.
“We are in a very robust market,” Balda told the Dallas Business Journal. “In the last five years, we have bought a lot of land in North Texas, and our job right now is to deliver as many lots as we can as this market continues to be robust.”
The key to success in building a new home in North Texas comes down to the price of a home, Balda said, which Hillwood Communities tries to hit in the $275,000 to $400,000s range.
“The price of housing in Dallas-Fort Worth is starting to hit a ceiling, and these two projects will hit underneath that ceiling,” he added.
We chat with Balda about the housing market and how he expects it to change in the next few years:
What has changed North Texas’ housing market this real estate cycle? The last seven years we have been batting an average of 100,000 new jobs a year, which is more than 700,000 new jobs. That should equate to 350,000 new homes, and we’ve only built about half of that — so we are playing catch up.
Where are you seeing good activity on new homes? This is our third community in Celina. It’s a hot area if you hit the right price point with all the relocation activity from Toyota, Liberty Mutual and JP Morgan Chase. We can’t build enough, to be honest, as long as you make sure to hit the right price point.
What is that price point? At Bluewood we are pricing homes $275,000 to $400,000, which is a very nice price point for a new home in a new neighborhood with a brand-new elementary school that was delivered last fall. It’s a very well-appointed, Hillwood-type community.
Do you think you’ll see a similar demand for homes in your next big community? We will break ground at Pecan Square in Northlake in May. We are serving two sides of the Metroplex, with the Dallas side being incredibly robust with new jobs, but the western side of the region is extremely active with Charles Schwab coming to Circle T Ranch, which should open up in the next year-and-a-half to two years. We are seeing growth and demand on both sides of the market, but you have to hit a price point at half-a-million or under — that’s the sweet spot in this marketplace.
What do you see as being the future for North Texas’ housing industry? I see the next several years as being very strong. We have been seeing 33,000 new home starts a year and I expect we’ll continue at that pace. The governor keeping the volume down to where it is today is finding enough labor to build homes. But that volume is still pretty darn good. We are the No. 1 market in the United States, and we can only build so many homes without the needed supply of labor. With interest rates kicking up, adding a little bit to the monthly payment of a home has everyone trying to keep the price point a little bit lower than how it has been in the past. This could change the size of the houses and size of the lots. Demand is clearly there, but the challenge for developers and builders is to hit a price point the market can continue to absorb at the current pace, and I think we’re all doing a pretty good job at it.