Note: This article is part of our State of the City project in which The Dallas Morning News examines some of the most critical issues facing our communities. For more topics, see our look at the Dallas economy in the coming days.
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Dallas-Fort Worth is the nation’s leader in new home construction, adding over 70,000 units annually.
But not so much in the city of Dallas.
Last year, only about 1,500 of the more than 47,000 single-family homes built in D-FW were put into operation within the city limits of Dallas.
Dallas only accounted for around 4,000 of the region’s 30,000 rental units last year.
Builders say high land prices, community opposition, and city bureaucracy make it difficult for them to provide the housing Dallas needs – especially affordable homes.
Housing construction in Dallas has been declining in recent years. Building permits for single-family houses have been declining since 2018.
The COVID-19 pandemic has made the situation worse.
And with nearly 75,000 people moving to North Texas in 2020, the housing shortage has worsened across the region.
The process of obtaining permits and engineering permits to start a residential project in Dallas can take months, according to builders.
“It’s hard to do it,” said Cyrus Zadeh of Camden Homes. “It’s not because there is no demand for apartments. That’s because it’s a long process. “
The pandemic left hundreds of home building permits backlog in Dallas and longer waiting times for home builders. The city even turned to outside service providers to try to overcome the permit backlog.
A sign on the door of the model home informed prospective homebuyers that inventory at Camden Homes’ Kensington Valley Home project in southeast Dallas was sold out on May 20, 2021. (Lynda M. González / photographer)
Camden Homes has two new communities in southeast Dallas and has buyers queuing for the homes. His first project – Kensington Valley near the intersection of Interstates 635 and 20 – includes 112 homes.
“We’re sold out,” said Zadeh. “Everything costs less than $ 300,000 – that’s about as cheap as you can get it.”
Average home prices in Dallas County hit an all-time high of $ 320,000 in April – up 24% in just one year.
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Camden is also building 220 homes in its Teagarden Estates just south of Interstate 20 and adjacent to Ebby Halliday Elementary.
“We have already sold and closed 13 houses there,” said Zadeh. “These deals will be well received if you can hit the finish line. Any developer will tell you the biggest hurdle that the development and design process in the city of Dallas has historically been protracted. “
Phil Crone, the top executive of the Dallas Builders Association, estimates that Dallas lost between 500 and 900 starts in 2020 because the city allowed delays.
Home builders say they can get houses in suburbs of North Texas in half the time or less than Dallas or less.
“In every corner of town, as soon as we can build it, someone wants to live there,” said Crone. “Many would like a single-family house and live close to the city center, where they work and live socially.”
Crone said the cost of land and neighborhood opposition to construction is also hampering construction in many areas of Dallas. And the opposition is not just directed against cheap housing.
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Last month, Camden Homes built homes in the Kensington Valley in southeast Dallas. The community is near the intersection of Interstates 635 and 20 and has 112 homes.
(Lynda M. González / photographer)
“I see it happen quite a lot,” he said. “It’s frustrating when people think half a million dollar home is a hateful place to be in the neighborhood.”
The city government says it is making progress in reducing delays.
“Employees have cut the time frame to five to seven weeks,” said Dallas city councilor Chad West. “It is certainly better than it was. But it’s not nearly what is acceptable. The approval office is our key to living and building in the city. It is our source of income. We have to fix that. “
But it’s not just the regulatory muddle that is holding back home construction in Dallas.
With the recent appreciation of residential real estate, finding land in Dallas neighborhoods to add housing is even more of a challenge, according to builders.
“It’s hard to find a good location within the city limits that makes sense to build a new family home,” says custom builder Jeff Dworkin. “I can buy a lot in a neighborhood where houses sell for $ 1 million or $ 1.2 million, but it costs me half a million. The numbers don’t work. “
It also means that the price tags of the demolition house projects are out of the reach of most buyers.
“The houses we build are not expensive for most of the people who live in the neighborhoods,” said Dworkin. “The prices have gone up to the selling price, but that doesn’t make it any more affordable.”
Builders looking for construction sites near Dallas often have few options.
“To date, single-family homes are available in Dallas, but land prices and material shortages and cost increases have compounded the challenge of getting new projects to the finish line,” said Adam Stetson of Storybuilt Homes. “Storybuilt is still very optimistic in the Dallas single family market. However, we also recognize that deploying homes in today’s market requires smart and efficient development. “
Storybuilt has developed several small single-family home communities near Dallas.
“We believe that people choose to live in Dallas to be close to their culture and work life,” said Stetson.
In Dallas, too, affordable new housing is in short supply. Most of the city’s recently built apartments are high-end units. Downtown – including Uptown and Downtown – where most of the Dallas homes have been built, rents an average of $ 1,724 per month, according to Richardson-based technology company RealPage. That compares to a regional average of $ 1,195.
Developer Palladium USA has just opened a cheaper rental community in Dallas Red Bird, and the project already has a waiting list. Rentals start at less than $ 1,000 and rise to more than $ 1,800 per month.
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Palladium USA’s 300-apartment project in Dallas Red Bird is part of the redevelopment of the old Red Bird Mall and is more than 90% let. Rentals start at less than $ 1,000 and rise to more than $ 1,800 per month.(Juan Figueroa / employee photographer)
The 300-apartment Palladium RedBird project, which is part of the redevelopment of the old Red Bird Mall, is more than 90% let. Palladium USA CEO Tom Huth said he could rent a lot more workers’ homes if he could find the sites to build.
He has two other projects in the works within the Dallas city limits.
Another residential complex that Palladium USA plans to build in southwest Dallas is met with vigorous opposition in the neighborhood. Neighbors in the Mountain Creek area of Dallas say they no longer want workers’ housing.
“We want high quality living,” said a local resident at a recent city council meeting.
“There’s a lot of NIMBY ism and politics that make these deals difficult to do,” said Huth, who also builds outside of Dallas in locations like Glenn Heights and Garland.
Most of his projects include a large part of the tax-deductible rental units. Tenants do not receive direct support payments, but the developer can sell the tax credits to reduce their costs.
“Our Glenn Heights waiting list is 120 for a 270 unit development,” said Huth. “We can’t meet the demand out there.”
Huth said there are fewer and fewer attractive, demarcated, and affordable housing locations in the city of Dallas.
“Everyone is talking about the housing shortage,” he said. “Is it 20,000? Is it 30,000? It’s huge. It’s probably more than that. “
Almost 30,000 new homes will open in Dallas-Fort Worth this year, but very few of those are affordable Dallas rental units.
According to RealPage, the number of new homes being added each year within the Dallas city limits has been declining since 2017. About 4,000 were completed last year – less than half of the total new homes in Dallas five years earlier.
“Yes, it’s a fight in the city of Dallas,” said Greg Willett, RealPage’s chief economist. “I don’t think anyone is questioning that if you can offer workers’ housing anywhere in the country, potential tenants will be lining up for it.
“But it’s hard to get this going financially. Conventional sources of finance are not interested in less than premium locations where builders cannot achieve the higher rents. “
Features of our State of the City project’s look at the Dallas economy:
Overview: Pandemic deepened the economic divide in North Texas
Editorial: To give poor children a chance, Dallas should address these trends
What’s next: Dallas faces the challenge of attracting workers following the pandemic
SWOT: An Analysis of the Dallas Economy
Jobs: The labor market is facing a turning point – with lasting changes
Income: wages are rising, but not for everyone
Real Estate: Why Building Homes in Dallas is Difficult
Small Business: Can Small Businesses Recover?
Mayor Q&A: Eric Johnson talks about the Dallas economy
Opinion: Strong local partnerships promote economic mobility, says Dallas Fed
Opinion: What suburbs can cities like Dallas teach about economic mobility?
Opinion: Small business start-ups create economic mobility
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