The difference between the best-selling communities for public and private builders closely follows their respective business realities. For example, the best-selling communities highlighted above for public builders offer 4% larger homes with a 9% lower price per square foot and are part of 40% bigger communities compared to private builders. The difference is, in part, due to less expensive capital, economies of scale, and the need to sustain a healthy backlog.
Homes Are Larger And Further Out In Dallas
In Dallas-Fort Worth (DFW), the top market for new home production in the country, many of the same stats hold true with some exceptions: The average size of the best-selling homes in DFW are 7% above the national average at 1,700 square feet, the top communities are 30 miles from the CBD versus 20, on average, nationally, and detached product is still king, representing all of the top communities for both public and private builders.
Our Senior Vice President of Advisory and Texas expert, Bryan Glasshagel, believes there’s strong demand for attached product in DFW but the market share is more limited than in some other top metros across the country.
Bryan attributes the divergences from the national trends on three main things:
- Land has yet to reset in many locations. Land prices are still high in DFW, which gives builders two main options when trying to hit attainable prices: look to more attainably priced locations or shift to smaller lots. Bryan notes that the core of the market in DFW is 50’ wide lots with pricing ideally under $350,000.
- Strong growth and affordability drive development outward. DFW is a market known for urban sprawl and many established suburbs are 25 to 30 miles from the CBD. Bryan indicated the availability of land and the ability to deliver affordable homes causes builders/developers to consider further out locations.
- Municipalities and residents push back on density. As mentioned, 50’ wide lots are the core of the market, but demand exists from a pricing perspective to go smaller. NIMBYism, both from residents and many of the Metroplex’s 212 municipalities, make it difficult to get the market from where it is today to a point where more affordable homes can be delivered in closer-in locations.