Welcome to Austin, the city with the fastest growing economy and one of the top real estate markets in the country. While the rest of the nation suffered unprecedented losses in the housing market, Austin remained one of the bright spots. New and pre-owned home sales were lower compared to prior years, but never low enough to significantly affect property values as publicized in other markets. During this time cautious builders and lenders began to reduce their inventories and continue to do so today. Families relocating to Austin (or any major US city) will notice a reduction in, or in some cases an absence of new builder inventory (known as spec homes). Production builders are starting model homes again and a limited number of unsold homes may be available. Conversely, custom home builders have only recently begun discussions with lenders on building speculative homes. In many areas of the city there are no new homes for sale. As the demand increases, builders will selectively accept the risk of starting an unsold residence and lenders will support the most qualified builders.
The housing choice for new Austin residents is more limited than before. Apartment rentals are strong and the rates reflect it. Buying a pre-owned home in a great location is an option, along with renting a home (if available) in one of these areas. Another option is “Starting from Scratch”. Specifically, designing and building a custom home. Many associate the word “custom” with expensive. While large custom residences come with a big price tag, custom in and of itself does not necessarily mean more money. In the home building world the word “custom” simply means specifically designed for one family. Doing the math, a 3000 square foot home with the rooms arranged to fit individual needs does not necessarily cost more. Many Austin custom home builders do a very nice job starting in the $300,000 price range. However, to stay in that range the builders include finishes within a very specific budget (flooring, cabinets, masonry, appliances, lighting, etc). As you can imagine, a 3000 square foot home can become more expensive to build without getting larger, depending on the finish out a buyer selects. Also, the current trend to build more outdoor living space has impacted new home costs. Outdoor kitchens, fireplaces, fans, lighting and custom flooring contribute to making many outdoor spaces cost more to build than the actual living area square footage. As such, watch for more builders to quote prices for the “covered area” vs. the living area of a home. If the 3000 square foot home above has another 1500 feet of outdoor living area the cost will be significantly higher.
Starting from scratch begins with locating a suitable building site in the area desired. The best first step is to find a Realtor who has access to available land inventory. Next, interview builders who work in your desired price range, and try to find someone you trust. This can be done by reviewing their product, checking their references and screening for a personality match. Engaging a builder up front will help with design and lot selection while focusing on a predetermined budget. Every builder I know has at one time or another met prospective home buyers who have purchased land and designed plans that cannot be built within their budget. All families have a budget. While our firm focuses on high end custom residences, the buyers we meet who plan to spend 2 million dollars on a home never want to spend 3 million. Assistance with budgeting and cost control in the beginning is the secret to a happy ending when “Starting from Scratch” on a new home. Searching for “the lowest bid” typically turns into a “you get what you paid for” scenario. As in any business, there is always someone willing to work for less. In homebuilding, the plan of the lowest bidder is often to make it up along the way. This rarely results in the “happy ending” for the builder or the buyer.
The timing to start a new home from the ground up in Austin Texas has never been better. Low interest rates and eager contractors combine to help new home buyers get the most home for the money this year. Welcome to the Live Music Capital of the world and home of some of the friendliest people in Texas.
About the Author:
Steve Zbranek is a two time “National Master Builder of the Year” and four time “Custom Home Builder of the Year”, a past president of both the San Antonio and Austin Home Builders Associations and the 2012 Lake Travis Chamber of Commerce “Citizen of the Year”.