Sultans of sprawl: Texas’ volume builders

Texas suburbs are growing faster than anywhere in the country, and these developers are their lords, mayors and financiers

Lennar's Richard Beckwitt and Rastegar Property Company's Ari Rastegar
Lennar's Richard Beckwitt and Rastegar Property Company's Ari Rastegar

American cities are in a crisis of growth. Some don’t have enough of it — places like San Francisco and Chicago desperately need investment and tax dollars to keep from spiraling into decline. Others, like New York and Miami, have plenty of people but appear incapable or uninterested in building enough housing to keep rents out of the stratosphere.

Growth — or its absence — can kill. 

But there’s another way to handle growth, and it’s being tested in the sprawling suburbs and exurbs of Texas. Three of the five fastest-growing cities in the country — Georgetown, Leander and New Braunfels — sit on the outskirts of Austin. At its current rate, Georgetown will double its population in less than seven years. All along Interstate 35, connecting Austin to Dallas and San Antonio, boomtowns like Round Rock, Pflugerville, Buda, Kyle, San Marcos, Dripping Springs and Wimberley are blooming into cities of their own. 

Texas’ supercharged sprawl is powered by its volume homebuilders, who are gaining new political, financial and cultural clout. Nowhere is their sway clearer than in the Austin area, where the state’s top 30 volume builders accounted for 90 percent of home starts last year. Some of these firms are national names, like Lennar and D.R. Horton, but local upstarts are also getting in on the action: in 2021, Austin-based MileStone Community Builders sold 606 homes in the area worth $387 million. The companies build houses by the hundreds and turn empty fields into the American dream. 

Along Ronald Reagan Boulevard in Leander, whose population grew 10 percent last year, wildflowers paint the land purple and yellow, but every mile, something else sprouts up on the side of the road. Just as a highway sign advertises fast-food stops, in Leander there are signs directing drivers to the mass-built neighborhoods across the city.

Turning off Reagan and onto a barely paved country road, you’ll eventually reach Larkspur, a 600-acre mega-neighborhood developed by MileStone. The project will include at least 1,500 homes. From above, it takes the shape of a kraken, with long limbs unfurling out into cul-de-sacs lined with tidy lawns. 

The homes differ just enough that it’s hard to identify any kind of pattern, but after a while, you get a sense of déjà vu from all the two-level, detached single-family houses with front-loading garages and no mailboxes. But there’s something else, too: buyers. 

Even as dirt piles and construction equipment linger on Larkspur’s periphery, people are moving into the project and dozens like it in places like Leander.

The millions of people pouring into the Lone Star State want a white picket fence and an office not in a central business district, but not in their guest bedroom either. The sultans of sprawl are happy to oblige. 

Cul-de-sac city

Ari Rastegar came to Kyle to wrangle the future out of farmland.

Late in March, Rastegar broke ground on Infinity Estates, a 318-acre mega-development 20 miles south of downtown Austin. “Mixed-use” doesn’t do it justice: As of the latest plans, the project will include up to 977 single-family houses, 1,400 apartments, a shopping center, 60 acres of parks and an elementary school. 

Despite the size of his project, Rastegar bristles at the term “mass homebuilder.” 

“We might build more houses than D.R. Horton,” referring to the Arlington-based giant with a market cap of over $30 billion, but “the last thing we will ever want to be is a mass homebuilder.”

Rastegar’s preferred term for this type of project — “futuristic suburbanism” — gets at the difference between building rows of copy-paste houses and one of these projects. These aren’t the neighborhoods of old suburbia: They have apartments, shopping, workspaces, townhouses, rentals and parks. 

In the future as Rastegar envisions it, denizens of Kyle or any of the other sprawling sultanates can drive into the city on the weekend — but they won’t need to. 

“People want identity in their own little community, they want identity on the street, they want an identity in their elementary school, they want identity at their Starbucks, because it gives them meaning in a world that is basically undergoing the TikTokification of shorter attention spans,” Rastegar said. “There’s an overload of information, but a lack of wisdom. All of this is a representation of that all put together.”

“We believe in these pocket economies or pocket communities,
and the conglomerate of them is what’s really going to lead to the future.”

Ari Rastegar, Rastegar Property Company 

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That’s quite the transformation for a town that got its first traffic light in 2007. As one-horse towns become cities in record time, developers like Rastegar are stepping in to provide key functions traditionally handled by the government. 

Before he builds anything, Rastegar will extend Grist Mill Road through the center of his properties. Developer by developer, the city is growing along the road with the help of its private builders. 

In return, municipalities are going out on their shields for their sultans. 

During a permitting hearing for the project, a City Council member raised concerns. Before Rastegar’s team could respond, however, Mayor Travis Mitchell stepped in. 

“The mayor answered all of his questions on our behalf,“ said Ian Cude, a development consultant on the project. “[He] was shutting down a City Councilperson. We just sat back and listened. I’ve literally never seen that in my 27 years of experience.” 

For better or worse, sprawl is Austin’s attempt to address the housing crisis. 

“We believe in these pocket economies or pocket communities, and the conglomerate of them is what’s really going to lead to the future,” Rastegar said. “You’re going to watch us take this blueprint all across the United States.” 

These large projects create their own ecosystem of contractors, developers and partners. Often, build-for-rent firms buy up dozens of homes in volume-built communities, either as a way to meet quarterly earnings goals or, in slower markets, to move stale inventory.

“Since this is really an asset class, the builders have started to reach out to operators like ourselves just as much as we reached out to them,” said Jordan Kavana, founder of Ark Homes for Rent.

Six homebuilders are constructing portions of the neighborhood. Some aim to shake up the cookie-cutter vibe of most master-planned communities — Icon, a construction technology firm specializing in 3D-printed homes, is teaming up with Lennar and Bjarke Ingels Group to build 100 homes in Wolf Ranch that will have eight distinct floor plans ranging from 1,500 to 2,100 square feet. Icon recently announced advances in its technology that will allow architects to mass-print houses with curvy, undulating walls for the same price as boxy houses.

Even Elon Musk is getting in the game. As the billionaire’s business empire grows in Austin, Musk is teaming up with Lennar to construct a neighborhood of below-market-rate houses. Dubbed “Project Amazing,” it will rise near the headquarters of his tunneling company in rural Bastrop County, about 35 miles from downtown Austin. The project is starting with a meager 110 homes, the Wall Street Journal reported, but Musk is considering building an entire town in the area, and entities tied to his companies own roughly 3,500 acres around Austin. 

Texas didn’t invent sprawl. After World War II, the country experienced a baby boom and a massive housing shortage. Returning soldiers met that challenge with sprawl. In the nation’s first experiment with master-planned suburbia, Bill Levitt constructed some 17,000 affordable homes on a stretch of Long Island potato fields that came to be known as Levittown. 

The same pattern is unfolding outside of Austin along I-35 now: a growing, car-dependent population hungry for space but tight on cash. Where Levitt threw in a free television, homes in Wolf Ranch come with solar panels on their roofs.  

Some of the same criticisms apply, too. Sprawl has a greater environmental impact and can lead to mind-numbing commutes, segregation and isolation. The whole thing can seem bland as vanilla ice cream. But high-density development has proven to be a challenging sell even in New York and California. 

The highway that helped birth this sprawl could also kill it. The entry ramps onto I-35 should dispense hypertension medication between 3 and 6 p.m. It takes nearly an hour just to get from the Domain down to Austin proper, a drive that takes 20 minutes at midday. 

Plans to expand the interstate have stalled, and most research suggests that adding lanes would only draw more cars. 

There is some indication that the volume homebuilding fever has broken, at least for now. 

“Buyers are taking more time to purchase, and many need to be convinced that now is the time to buy,” said Rick Beckwitt, co-CEO of Lennar, during a recent earnings call. The firm listed Austin as one of eight markets where it has seen “more significant softening and correction,” forcing it to lower prices, offer mortgage buydowns and fend off cancellations. While numbers have started to rebound, Texas housing starts in January were at their lowest level since 2016.

Rather than spreading out farther, there is the possibility that Austin could climb up. The surface parking lots and pocket parks dotting the urban core could become apartments, housing thousands of people downtown rather than a 20-mile drive away. But efforts to reform Austin’s building code to allow for denser development have led to repeated, expensive and agonizing defeats. 

With a booming population and cheap, abundant land, sprawl is the path of least resistance. So, out stretches Austin along I-35.