Like many housing development projects throughout the nation that came to an abrupt halt following 2008, the Lake Travis area had its own struggles with developments going into foreclosure, such as Ladera, Sweetwater, Rocky Creek and Spanish Oaks. Those developments have been purchased by new developers and are now under construction, indicating the local housing market may be on its way toward recovery.
"In general, we've had a better year [in the housing market] in 2011 than we did in 2009 and 2010," said Broker Emily Moreland with Moreland Properties. "I certainly look forward to 2012 following that same curve. It may not be gangbusters, but I think it's going to be an upward trend."
Moreland said she anticipated 2012 to be a good year for the housing market.
"The demand in Westlake is huge, but it's pricing itself out of the market for many buyers, so they're looking out in the Lake Travis community," Moreland said. "Rocky Creek and Falconhead West have been a huge success. The high end has been slower above the million-dollar mark."
Moreland said one of the benefits the new developers have over their former owners is that they were able to purchase the lots at a lower price, and some of the legwork is already completed.
"Their investment in the neighborhood is much less than the original developers who had to put in all the infrastructure. It's an enormous savings for them, so they should be able to move forward and make a profit," Moreland said.
In October 2010, Wheelock Street Capitol purchased the foreclosed Sweetwater development, a master-planned community bringing about 1,800 residences in unincorporated Travis County near Spicewood, for $34 million from Bank Midwest. The original developer had already begun constructing some of the roadways and utilities.
Developer Daniel Porter repurchased a portion of Spanish Oaks in March 2011 after Comerica Bank foreclosed on the property. In 2005, Porter had partnered with Hillwood Development Co. LLC and Discovery Land Co. LLC to develop Spanish Oaks but now has full ownership of the development after buying 158 lots and the Spanish Oaks Golf Club. He has about 100 acres of undeveloped land on which he plans to add more homes as well as some mixed-use components in a west and east village.
In July 2011, Taylor Morrison Homes purchased Ladera in Bee Cave, a development near the Hill Country Galleria that had been foreclosed on and was planned for multi- and single-family housing. Taylor Morrison decided to forgo the multifamily homes and build only single-family homes. Two hundred and sixty lots are planned, with its first lots available in early spring.
Rocky Creek was also foreclosed on in July 2009 but was purchased by Hillwood Communities in August 2010. In January 2010, Phase 1 was completed and about 80 of the available 151 homes have been sold. Phase 2, which will add another 100 lots, broke ground in late 2011.
"The new homebuilders are doing well for the most part—they're doing better than any other part of Austin that I know of as far as new home building," said Kenn Renner, Keller Williams – Renner Realty real estate broker. "Resales are competing against that."
While these developers are expecting to add many homes to the Lakeway/Bee Cave market, they said they are adding homes slowly as the market deems the housing is needed.
Many of the developers said they are planning conservatively and expect the projects to be built out in seven to 10 years.
Rentals and multifamily homes
Renner said that while new homes are selling well, there is a housing shortage in the rental community.
"It's a great opportunity for investment, because our rents in Lakeway are going up and will continue to go up. Lakeway is kind of anti-apartments. There will be a shortage of apartment complexes," Renner said.
He said his advice for those looking to sell their home is to hold the property for another year and lease it.
In Bee Cave, Morningside development is set to add 316 condominiums, ranging in price between $160,000 and $240,000, and 62 single-family homes, ranging in price between $240,000 and $300,000, near the Ladera development, which could fill some of the gap for those looking for smaller, more affordable homes.
Reason for growth
Barbara Koenig, a real estate marketing adviser for Sweetwater, said she talked to a couple dozen Realtors to understand the motivators of homebuyers in the area.
"People quickly gravitate to this area not just because the schools are exemplary, but also because the [Lake Travis] high school football team is the best in the state, having won [five] years in a row," she said. "Add to that the quality of shopping in the Hill Country Galleria, local retailers and recreational access to Lake Travis, and [the area is] spectacular."
Regional Director for Wheelock Street Capital Mike Rafferty agreed that the school district was a factor in building homes near Spicewood.
"We were attracted to the general Austin market, but more specifically, Sweetwater is a beautiful piece of land, with a great school district and a combination of attractions," Rafferty said.
Developers and Realtors alike are expecting success in the Lake Travis area within the next few years.
"This is a very viable, desirable place to live, and I believe it's been undersupplied in the past," Rafferty said.
A trend Moreland has noticed among homebuyers is that many are looking for homes in the lower 3,000-square-foot home range with a price point around $250,000 to $450,000.
"I still see a few builders trying to build the huge house, but I'm thinking there are more buyers who are conscious about energy costs," Moreland said.
Hillwood Communities Senior Vice President Brian Carlock said downsizing was a trend he had seen as well.