With buyers snapping up homes the day they hit the market, or as soon as there is a “whisper” of their availability, builders are planning new subdivisions all over Greater Waco in the near future.
That includes the 1,500-home Park Meadows development on the western outskirts of Waco that construction giants D.R. Horton and Stylecraft are teaming up for over the next decade.
Building plans serve as the backdrop for home prices that continue to surge in McLennan County. The average taxable value of a home increased from $113,150 to $122,377 during the past year, according to certified tax rolls the McLennan County Appraisal District released this week.
Taxable values typically lag behind market values, and the Real Estate Center at Texas A&M University released a report (PDF) showing the average price of a home sold in Greater Waco in June pegged $218,524, well ahead of the $198,224 average in June of last year. The numbers for June 2017 topped any monthly averages dating back five years.
The 322 home sales in June established a new record for the month, said Amarillo-based economist Karr Ingham, who analyzes local trends.
“The home sales totals in the second quarter and first half of 2017 are the second-highest on record for those time periods, behind only the record numbers in 2016,” Ingham said in a report he released this week.
Actual sales may be even higher, because major companies including D.R. Horton and Stylecraft often market their own homes and do not place them on the local Multiple Listing Service, said Jim Gaines, the A&M Real Estate Center’s chief economist. Their deals may not appear on monthly sales statistics.
Whatever the exact figure, there is no debate the local housing market is hot and picking up steam. Builders have noticed and are taking steps to meet growing demand from retirees and investors moving to Central Texas from outside the state, and from professionals finding employment.
“We have five pretty solid residential additions going on, including the latest phases of Badger Ranch, which are going well, Lake Forest 1 and 2 behind our family center and our newest addition, The Hoyt, on the west end of town,” Woodway City Manager Yost Zakhary said. “These are very nice, high-end executive homes. We’ve had a nice year and we expect that trend to continue for at least the next 18 months.”
The arrival of such housing stock could relieve price pressure on those seeking a new address. The A&M Real Estate Center reports Greater Waco has a 2.8-month inventory, which means sellers hold the advantage at the bargaining table. A six-month supply represents a level playing field, with neither the buyer nor seller holding the upper hand, according to real estate experts, including Gaines.
So, the question becomes whether subdivisions sprouting across Greater Waco will better satisfy demand and put downward pressure on prices.
“That’s hard to say,” Gaines said. “Construction would not be as lively as it is now in Waco if market demand were not there, and there is always going to be demand for new homes. It could be builders simply have some catching up to do, and it remains to be seen the impact on prices.”
Local contractors have complained about the scarcity of lots on which to build in and around Waco. Zakhary said subdivisions bound for Woodway “are taking up the last residential space we have available.”
For most contractors, developing new sites requires securing financing to buy land and installing infrastructure for home construction, Gaines said.
Companies such as D.R. Horton, Stylecraft and John Houston Homes, all Texas based, have the clout to purchase large swaths of acreage on which to build over years or even decades, Gaines said.
Houston Custom Homes entered the market in 2014, and since then has built 177 homes and involved itself in the development of eight subdivisions, including Badger Ranch and Chapel Ridge. It has a stake in the new Hoyt subdivision in Woodway and typically builds homes priced at $200,000 and up, spokeswoman Chelsi Frazier said in an email.
“Approximately 60 homes are either under construction or will be complete by the end of 2017,” Frazier wrote.
Scott Bland, president of the Heart of Texas Builders Association, said his Jim Bland Construction and five other local builders are preparing to place a subdivision between Panther Way and Chapel Road in Waco. They are working with local developer Ryan Lindsey and are in preliminary site planning with a goal of having 70 lots in the first phase.
“Our hope is to slow down the rising cost of housing,” Bland said. “Right now, part of what’s pushing up the cost is having nowhere to build. Our existing inventory is low. New construction is not keeping up with demand.”
The group plans to offer homes starting as low as $300,000 and in the range of 1,800 to 2,500 square feet, he said.
“I already know of some would-be buyers who have seen themselves priced out of the market,” Bland said.
The monstrous Park Meadows subdivision taking shape on Ritchie Road in Waco “is blowing and going,” Bland said. “I’m seeing tons of ‘sold’ signs.”
Gaines said D.R. Horton and Stylecraft typically target first-time homebuyers when setting their prices. A D.R. Horton website devoted to Park Meadows shows home floor plans in a variety of styles and carrying prices ranging from $168,000 to $212,000.
Hewitt City Manager Adam Miles said construction activity is percolating in the Waco suburb and appears ready to boil.
He said John Houston Custom Homes is building homes in a new neighborhood called Sunflower Ridge. A preliminary plan has also been received for a fresh subdivision called Moonlight Park, a project of downtown Waco developer Cody Turner located at Hewitt Drive and Old Temple Road. Miles said it will feature 72 lots for home construction.
“There seems to be almost an insatiable desire for homes now, with people wanting to live in Hewitt, China Spring and McGregor,” he said. “There would be even more homes sold if the housing stock were greater. People can’t sell their homes and move because they have no place to go.”
- S — Sunflower Ridge (Old Temple Road and Spring Valley Road)
- M — Moonlight Park (Hewitt Drive and Old Temple Road)
- B — Badger Ranch and The Hoyt (off U.S. Highway 84)
- L — Lake Forest (near Estates Drive and Bosque Boulevard)
- C — Chapel Ridge (Panther Way and Ritchie Road)
- P — Park Meadows (west side of Ritchie Road)
Stylecraft CEO Doug French said the company entered the Greater Waco market in 2006, starting with China Spring.
“We’ve built 500 homes and probably have 60 under construction now in China Spring and another 30 to 40 lots on which we plan to build,” French said.
He said Stylecraft is starting construction of one new house a week in Park Meadows, and most are priced starting at about $170,000.
“There has been talk of rising home prices in Greater Waco, but the homes we’re building in Park Meadows probably would command more than $200,000 in Bryan-College Station, where we are based,” French said. “Home prices in this area remain a bargain.”
Kathy Schroeder, who oversees residential services for Coldwell Banker Jim Stewart Realtors, said whether the addition of new subdivisions will stabilize prices depends on several factors, including the price of building materials, which have seen increases in recent months, and lot prices.
“The cost of building a home is the cost of building a home,” Schroeder said. “Value is determined by supply and demand.”
She said homes in some areas of Greater Waco are so much in demand buyers arrive with offers in hand “with the whisper” of availability.