Housing permits, building on the rise in area’s communities[/caption]

Land prices, construction costs and high consumer demand put pressure on builders and buyers

When driving down streets in Round Rock, Pflugerville or Hutto, it is not uncommon to see newly built homes next to wooden frames and concrete plats as homebuilders expand their stock to meet demand.

These cities reported increased interest from homebuilders in constructing single-family homes in 2014. City officials are anticipating even more building in 2015.

In 2014, 279 new home builds were permitted within Round Rocks city limits. That is a slight increase from previous years229 in 2013 and 257 in 2012. All those numbers are a far cry from Round Rocks peak years of 200006, when single-family home permits ranged from 1,147 to 1,717 annually.

However, according to city documents, the pace of construction of single-family homes is rising, with an estimated 392 homes to be built in 2015 and 686 homes in 2016.

Pflugerville, on the other hand, is reporting record-breaking numbers in 2014. Pflugerville reported 721 homes built in 2014. Its previous peak was in 2013, with 544 homes built. Pflugerville also, unlike Round Rock, includes the number of homes built in its extra territorial jurisdiction, or land outside the city limits that the city reserves the right to annex at a later date.

Hutto reported 429 homes built in 2014 and steady increases from 2013, with 367 homes; 2012, with 226; and 2011, with 189 homes. The citys peak year on record was 2006 with 781 homes built.

Pflugerville and Hutto did not provide estimates for 2015, but city officials said they anticipate growth there as well.

"There is a massive amount of building going on all over," said Jack Stapleton, board president of the Williamson County Association of Realtors. "The builders are getting as many building permits as they can get their hands on to just keep up with the massive growth."

Looking for space

Homebuilders typically start building on land that has been platted and had utilities extended to it.

However, ready-to-build land is becoming harder to find, so builders are focusing on infill development, or creating more houses in limited space, according to Austin-based developer John Lloyd.

"It used to be a developer would buy 100 acres, develop it and then buy 100 acres next door from the farmer who would own that," Lloyd said. "The supply has gone down dramatically."

He said in markets with a great deal of square footage of undeveloped land, such as Hutto, Pflugerville and some parts of Round Rock, the problem becomes extending utilities, such as water and wastewater.

"Your off-site costs are huge if you have to drag utilities a long distance," he said. "In a lot of cities around Austin, water and wastewater are starting to reach capacity."

William Guerin, Hutto director of development services, said infill development can be beneficial for the city because it creates more return from the cost of utilities and land.

"[Infill development] provides shorter walking distances when the land around it is already developed," Guerin said. "It provides better connectivity that way."

Much of the housing growth in the area has been from infill development. However, there are new subdivisions coming online. Vizcaya, in northeast Round Rock, is selling its first homes in 2015, according to statements from Taylor Morrison, the subdivisions builder. At build-out Vizcaya is expected to have more than 1,000 homes. Sorento in Pflugerville built its first homes in 2014 and is expected to have about 944 homes at build-out, according to city documents.

With such high interest, developers are looking at more enjoined units, such as apartments and townhomes, to meet the demand.

For instance, Round Rock city documents show 158 townhomes were built in the city in 2014, compared with 279 single-family residences in the same year. Furthermore, the number of enjoined units in the city has shown drastic growth, with 32 townhomes built in 2013 and 10 built in 2012. The citys records show no townhomes built in the years before that going back to 2000, when the records begin.

Vaike OGrady, marketing director at Newland Communities, the builder of Teravista in Round Rock and Georgetown and Falcon Pointe in Pflugerville, said Newland continues to build homes in Teravista, but mostly in Georgetowns jurisdiction. She said if Falcon Pointe continues selling at the pace it has been, the neighborhood will be sold out in 2017. After that community management will be handed over to a Homeowners Association board.

"Well be moving out of Round Rock and Pflugerville [after current developments are built out]," OGrady said. "Unless we find something new, which we'd love."

Affordability

Even as the amount of space to build homes tightens, people continue moving to the area.

"If you ask the homebuilders in the area theyll tell you theyve been real busy, and sales have been reasonably brisk," said Jim Gaines, research economist for the Real Estate Center at Texas A&M University. "But because of the cost of labor and the cost of material and land theyve been forced to build at a higher-priced category."

Gaines said the Real Estate Center, which tracks housing trends throughout the state, has recently seen fewer homes built in the sub-$200,000 category than in previous years.

Gaines said mortgage credit has also tightened. He said builders are focusing on higher-end homes to find buyers whose financing is more likely to go through.

"The failure of new home mortgage applications has been much higher than they have been historically," he said. "So many builders say, 'It's not worth the trouble [to build more affordable houses].'"

Stapleton said new home builders are helping the market stay healthy. He said for the past two years realtors have seen low inventory numbers in the area, and January was unprecedented in the number of homes sold.

"The spec homes [home builders] are building are selling right around the time they finish them," Stapleton said.

He said historically inventory would sell in approximately 45 to 60 days after completion.

"The stuff in the mid [$200,000s], they cant keep them on the ground," he said.

Stapleton said two years ago a single-story, 2,000-square-foot home in Teravista usually sold for about $175,000. That same type of home is now selling for about $245,000, he said.

OGrady said Newland would like to build more homes closer to $200,000, but construction and labor costs have restricted that.

"One of our biggest challenges is trying to provide homes a typical Austin person could purchase," she said.

Diversifying housing stock

As developers are trying to get more lots on less space, city officials are looking to increase the number of large-lot homes.

Round Rock City Manager Laurie Hadley said when developers want to build a single-family subdivision the city works with them to bring in different kinds of houses and lot sizes.

"We'll let them have some smaller lots, some 5,000-square-foot lots, which is a little smaller than we like, as long as they trade it off with a certain amount of half-acre size lots," Hadley said." In general you just want to have a variety of housing so you attract a variety of people."

Hadley said the city wants more diverse lot sizes because single-family developments that are too dense lead to more pressure on infrastructure.

Pflugerville Assistant City Manager Trey Fletcher said the city is amending its development code to create a variety of housing stock in the same subdivisions.

"We're looking to diversify," Fletcher said. "And to make sure we have the tools in our toolbox to not just accommodate that kind of [development] pressure but to accommodate it in a way thats compatible to our community."

Guerin said Hutto is not focused on lot sizes but that the city amended its development codes in 2009 to improve design standards on residential and commercial development. He said changes included more connectivity between streets, improved landscaping standards and higher building standards.

"Development was just held to a higher standard under our new development codes compared to what was in place with the last code," he said.

Hadley said regardless of lot size, Round Rock wants to encourage high-quality development.

"When you look in a fast-growing region and you start seeing those subdivisions where Monday its a vacant lot and Friday they're going vertical and they're just kind of slapping the houses up, [those homes] don't tend to last as long," she said.

Tim Timmerman, the developer behind Huttos Star Ranch and the forthcoming Kenney Crossing in Round Rock, said he worked with the city of Round Rock when determining the lot sizes of his new development.

"We had some parameters the city wanted met, so we have some larger lots," Timmerman said. "It was a give and take. [] It made a lot of sense; its not a one-size-fits-all [development]."