We know the story: In the pandemic, a wave of new residents flooded into Texas. No income tax, cheaper homes and plenty of good barbecue joints.
In fact, six of the 15 fastest growing cities in the country from July 2021 through July 2022 were in Texas, the only state with more than three on the list.
That presented a massive opportunity for developers, with homebuilders such as Lennar developing entirely new cities on the outskirts of Austin, Houston and Dallas. But will a bust come after the boom?
“When interest rates started to rise and mortgage rates rose alongside them, buyers started to cancel home buys,” TRD reporter Joe Lovinger says on the latest episode of TRD’s podcast, Deconstruct. “Almost immediately you saw a lot of homebuilders start to dump their development sites.”
In the segment, Lovinger talks about some of the challenges Texas homebuilders and other commercial real estate owners are facing in light of interest rate hikes.
“They’re all very afraid to have non-performing homes on their balance sheets,” Lovinger said of homebuilders. “They want to be able to have homes sold before they can even build them, if possible.”
Lovinger also discussed how office owners are grappling with a wave of subleases and how that could lead to swaths of vacancy.
“There’s just been a ton of new office development in the last five years, and we’re seeing a lot of even that top-tier space come up for sublease,” he said.
Tune in to the full conversation now streaming on TheRealDeal.com, Apple, Spotify, Stitcher, Pandora and more.
Read more
Commercial
Dallas
Vultures circle as distress emerges in Texas
Commercial
Texas
Distress a long-term trend in Houston
Commercial
National
Deconstruct podcast goes inside the Flatiron flaker’s motives