As Texas home construction booms, who’s getting left out?
Some people see the future. I heard it.
The sound starts early in the morning. First, it’s the rumble and clank of heavy earth-moving machinery. Then it is the beep-beep-beep of the same device that drives backwards. The sound lasts all day. It has been a feature of our daily life for months.
Fortunately, the sound comes from a mile or two away, across a valley to the nearby ridge. A long ocher caliche scar extends across the top of the ridge like an artery.
What I see is the beginning of a suburb of the once sleepy town of Dripping Springs, a place that was considered an outermost suburb of Austin a decade ago. It’s a development called Legacy Hills. Once a large ranch, it is in the second phase of being divided into 5 to 10 acres with starting prices starting at $ 300,000.
Yes, you read that right, about $ 60,000 an acre for land that is nowhere near anything. Skeptical? Let’s leave it at that: our property is approximately 3 miles from the entrance to Pedernales Falls State Park. On a typical day, I see more deer than people unless I’m driving somewhere. To get more remote in Texas, you need to look to the border counties and the west.
When we moved to Dripping Springs in mid-2009, which you can read about here and here, Texas fared better than most of the country, but any online exploration still resulted in an abundance of short selling. Most of the houses were sold with discounts on their price.
That was then.
While population growth across the country was 7.4% for the decade of the census, Texas as a whole was double that of 15.9%. In Dallas, Houston and San Antonio it was 20%. In Austin it was even 33%.
But it was an astonishing 40% in Hays County, where Dripping Springs is.
Texas is not just about growth
Whatever it feels like in Austin, Dallas, Houston or San Antonio, growth is not universal in Texas. We have 254 counties, and a whopping 187 of them grew slower than the nation as a whole. The majority of our counties, 143, were static or have actually lost residents. The district of Schleicher has the dubious honor of being our district with the fastest depopulation, as it has lost 29.2% of its population.
There’s only one requirement to being a shrinking county in Texas: don’t be near a big city.
When we sold our house in Dripping Springs in June 2020 and moved to where the earthmoving machines are now, my wife and I both thought the traffic in Dripping Springs couldn’t get any worse. We also thought the market couldn’t get any hotter.
We were wrong.
While driving, it can now take 30 minutes to cross the route from the last set of lights east of the main intersection in Dripping Springs to the first set of lights in the west, a distance of less than a mile. And with new developments being planned or planned nearby, it is likely to get worse before it gets better.
If it ever gets better
The buyer of our home made it a full-time VRBO rental, but quickly sold it, presumably at a profit, to someone else who also uses it as a VRBO rental. Recently the new owner told me that the house was fully rented most of the time, mostly because the pool, terraces and views make it like a private resort. I laugh at it because my wife and I always joked that we had created a tragically understaffed Four Seasons, beautiful but with no one to make and bring the margaritas.
According to Realtor.com, the average house price in Dripping Springs in September was $ 765,000, up 38.5% year over year. It leaves you wondering if the city is possibly headed for a Texan version of what some refer to as “the Aspen Problem”. Real estate could get so expensive that people who have regular jobs that are essential for everyday life have to look for miles and miles of shelter.
I’m serious.
Imagine a young couple with a monthly income of $ 10,000. You could qualify for a $ 400,000 mortgage. But that’s far less than the median asking price in Drip (as it’s locally called). Creditworthiness could be reduced by onerous student loans, two car loans in a two-earner family, or the inability to put together a large down payment. At $ 765,000, a 20% deposit means $ 153,000 of available cash.
Few young couples have that much money.
I don’t want to call this a bubble. Many of these upward real estate prices just reflect the opportunities we have in Texas. Part of that is wealth inflation caused by low interest rates.
But if the youngest generation can only rent, we have a problem.
[ad_1]