housing market

January Homebuilding Permits Drop in Collin & Denton Counties, Despite Demand

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Call it 'Growing pains, made worse by the COVID-19 pandemic.'

North Texas home builders are struggling to keep up with demand and supply.

January saw a drop in home building permits in some of the fastest-growing communities in Denton and Collin Counties.

“We’ve probably got 600 people a month moving to Celina,” said Celina Mayor Sean Terry. “You can’t build a house fast enough for people to move here. Because we have good schools and we are a very safe community.”

From Celina to Frisco, demand for new home construction continues to outweigh supply and it’s leading to fewer homes being built in some of the hottest housing markets in North Texas.

“I had a lady call me the other day begging to help her find a house in Celina or Prosper, either one,” said Terry. “Every builder she called, ‘we have a waiting list of 1,000 people,’”

Celina issued 151 new home building permits in January 2022, compared to 309 permits in January 2021, a 51% drop.

The city has issued 97 permits so far in February and anticipates issuing a total of 160, according to Terry. Celina issued 205 permits last February, he said.

Neighboring community Prosper reports homebuilding permits dropped to 70 in January.

The town has issued 68 permits so far in February, compared to 43 permits issued during the same time period in January, and expects to finish the month with 70 permits.

Homebuilders continue to face material, labor shortages, and in some cases, a lack of finished lots.

“If there's not finished lots available, then you can't build a house,” said Lisa Dritschler, president of McClintock Homes. “In some areas, you may see a gap between the absorption rates that have been so fast-paced in recent months in the past year, where the growth has been phenomenal. And then you may have a gap where lots aren't ready to be built on yet.”

McClintock Homes is currently building along the I-35 corridor from Gainesville, Valley View, Sanger to Denton.

Dritschler said the cost of lumber is three times what it was pre-pandemic.
Some builders have resorted to what’s called ‘spec and release.’

“They'll build a spec house and wait till after framing stage or even after sheetrock stage, when they can shore up their actual cost before they release the sales price on it,” she said.

M/I Homes, Inc. currently has projects in Frisco and Celina.

“To see Celina, Frisco, McKinney’s permits drop is not a surprise,” said Chad Tschetter of M/I Homes, Inc. “One, they don't have as many lots on the ground right now, so we can't sell as many homes and the supply chain is still a big problem for us.”

The pandemic, he said, has forced builders to change their business model and find a ‘new normal.’

M/I Homes, Inc. will soon open a new community in Celina.

“We have over 2,000 people on a waiting list and so we know we can only really start six homes a month in that community, so it really puts us in a bad spot with customers because we feel for them,” he said. “A lot of times we just have to do a lottery-type format because there’s no fair way to do it.”

Those eligible for the lottery system have already been approved for a mortgage.

Residential Strategies, Inc. of Dallas tells NBC 5, ‘we have a construction capacity issue in DFW and across the nation.’

Housing analyst Ted Wilson said simply put, there’s only so many workers to go around.

The percentage of new homes being completed decreased last year, according to Residential Strategies, Inc.

Completing projects is taking longer too, in part because of rising construction costs.

Some builders say there's now a brick shortage to contend with.

On average, a home is currently taking an average of 219 days to build compared to 130-140 days in years past, according to Wilson.

Builders hope homebuyers understand they too are frustrated.

“I would just ask everybody to be patient and to be flexible and to be able to react quickly,” said Dritschler.

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