Slab farming and ‘nuisance’ houses are the latest solutions offered by developers to Texas’ mounting supply and demand imbalance.
With demand for the homes for sale and single-family rentals that his company builds going through the roof, newly appointed CEO Cyrus Zadeh is overhauling Camden Homes’ entire business model, according to his interview with the Dallas Business Journal.
“Right now, we’re slab farming,” said Zadeh, whose father Ted Zadeh founded Camden in 1998 with partner Simmie Cooper. “We’ll pour about 75 slabs all at once in one subdivision so that we can keep up.”
Camden now has a pipeline of more than 4,500 lots and is on pace to build more than 800 homes in the next year.
The Dallas-based developer’s average sales price is about $250,000, according to Zadah. “Everything we do is in the entry-level, first-time home buyer space, so I think the most expensive house we sell right now is $350,000.”
To maintain these low prices, Camden buys up “nuisance” houses that were acquired by the city government 10 years ago — “places that were abandoned and things like that,” as Zadah calls them, “drug dens and whatever else.”
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For both the for-sale and for-rent listings at these price points, “there’s a waiting list of anywhere from 20 to 30 families for a house,” says Zadah. “Houses only last 24 to 48 hours, if there’s a cancellation.”
“We’re not doing extensions if people are not able to get the financing or things like that,” Zadah said. “If we increase prices at our price point every week, we have not seen a pullback on demand.”
If Camden raises the price of a home over a certain point, but the home is appraised for much lower, “we’re not selling the house for a lower price,” Zadah says.
“We’re finding somebody (a buyer) who can cover the gap.”
The Dallas-based homebuilder is 100 percent privately owned with no outside equity, according to Zadeh. “We do all of the horizontal, put the streets in, entitlements, then we will build houses from scratch, all new construction, and then we do build-to-rent for our own portfolio,” Zadah told the Journal.
“We’re vertically integrated from start to finish, whereas the majority of people that I see out there are in one of the silos. They either do land development and they don’t build houses, or they don’t do property management or they’re a property management company that doesn’t do new construction and they have to buy lots from someone else.”
[DBJ] — Maddy Sperling