Editor’s note: Tales from the great Texas land rush

The destiny of Texas seems manifest.  

With a relatively affordable housing market and an influx of West Coast residents and Fortune 500 companies, the Lone Star state feels like the part of the country with the most room to grow. 

Manifest destiny, or the belief that Americans were meant to expand westward, was mainly a real estate story. A similar one is now happening in Texas: the pursuit of cheaper land which will one day be more valuable.  

The rise of Dallas and Houston, the country’s fourth and fifth largest metros, looks unlikely to stop anytime soon, and Austin remains one of the fastest-growing U.S. cities.  

Contrast that with the three largest cities, New York, Los Angeles and Chicago, where development seems gridlocked. These days politicians there want more affordable housing but lack the political will to actually build it.  

New York lawmakers wiped out the governor’s housing plan last month. As senior managing editor Erik Engquist writes, “The values of existing homes will be higher because of tight supply. That will mean more homelessness, higher rent burdens and more population (and political power) shifting to other states.”

In Chicago, the industry is concerned about its new mayor-elect, who was not its preferred candidate and has proposed tripling the tax on real estate sales above $1 million and taxing commuters at a time when the city’s downtown Loop needs all the help it can get. 

And in California, the state is trying to let developers build even when growth-averse towns aim to stop them. It’s a noble idea, but the blunt-force approach could result in little more than lawsuits and stalled projects. 

Finally, even in Miami, the pandemic’s darling, the market has started to slow. There is only so much land before you run into the Everglades. And now the state is passing massive affordable-housing bills because so many people are getting priced out. 

Enter Texas, where everything feels open. The average time it takes to get a building permit in Dallas is an incredibly short 35 days, and newspaper editorials complain that even that is too long.  

With that in mind, we’re sizing up some of the state’s key players in this issue, including our first-ever ranking of Dallas’ and Houston’s top residential brokerages.  

Compass and Ebby Halliday were the top two firms by sales volume last year in the city of Dallas, with the relative newcomer and a venerable 78-year-old firm each breaking $2 billion. In Houston, Compass finished tops despite setting up shop there just five years ago.  

Elsewhere, we look at the brokerage selling Austin’s first true “titans-of-industry” project, the $830 million Four Seasons Private Residences Lake Austin. The development is aiming for the kind of global wealth that typically sticks to New York, L.A. and Miami. 

With all that open space comes an attitude: Don’t mess with Texas.  

That’s captured in our cover story this month, a profile of hotel mogul Monty Bennett, whose Dallas-based companies oversee just shy of $4 billion in assets. Even among notoriously scrappy real estate developers, he’s known as a fighter who has mixed real estate with aggressive forays into politics and publishing.  

Speaking of politics, on page 30 we break down the controversy surrounding Harlan Crow, the Dallas real estate legend who became the reluctant subject of media scrutiny last month when ProPublica released a report detailing decades of friendship — and all-expenses-paid vacations — between him and Supreme Court justice Clarence Thomas.    

Zooming out, a looming concern in Texas — and everywhere — is the fate of the office market. Dallas, Houston and Austin have higher back-to-the-office rates than most major cities, but the existential future of their central business districts remains an open question.   

Some are looking to profit on the uncertainty. As reporter Rich Bockmann writes, Wall Street hotshots believe the next big short is on offices. Short sellers are placing billions of dollars’ worth of bets on an esoteric corner of the securitized mortgage market. But the investments carry an extreme risk, and have been dubbed “the widowmaker.”  

From Dallas to derivatives, from big open country to the big short, enjoy the issue.