When Compass broker Matt Holm bought his first Tesla in 2013, he loved it so much he started a fan club.
Holm, one of Austin’s biggest brokers by deal volume, is better known to electric motorheads as the president of the Tesla Owners’ Club Austin. From his dual perch atop Austin’s housing market and Tesla fandom, Holm took note last week when news broke that Elon Musk will partner with volume homebuilder Lennar to construct 110 homes near the headquarters of the Boring Company, Musk’s tunneling and transit firm.
As Musk has moved pieces of his business empire and thousands of employees to Central Texas, he has accelerated the area’s meteoric population growth and housing needs. If all goes well, Musk and Lennar’s new development may be a beta test for a quintessentially Muskian approach to the housing crisis: Just build it yourself.
Musk’s Austin-area workforce is expected to grow to tens of thousands of employees at Tesla, the Boring Company, aerospace company SpaceX and broadband internet startup Starlink. Musk says the Tesla Gigafactory in Pflugerville alone could employ 20,000 or more people. As Holm points out, 110 homes is just a drop in the bucket.
“That’s not even going to touch his needs,” Holm said. “There’s thousands of homes needed, not hundreds.”
Musk has famously ambitious goals: Spark an electric car revolution, end traffic and colonize Mars, to name a few. Central Texas is the nerve center of Muskworld, and all those thousands of workers need homes. If he wants to accomplish his goals, the billionaire will need to become a builder.
Project Amazing
Musk’s bid to end traffic is testing its product in a town that usually doesn’t get much traffic at all. The Boring Company, which aims to alleviate bottlenecks by tunneling beneath cities, is testing its tunneling technology on farmland it owns in Bastrop County.
In all, SpaceX, the Boring Company and its subsidiaries own at least 275 acres off of FM 1209 and FM 969, almost all of it bought between April and June 2022, according to deed records. That leaves plenty of room for more developments should Musk and Lennar choose to keep building.
The mostly undeveloped parcels sit along farm-to-market roads originally built to transport agricultural goods to towns. Longtime Texas Monthly editor Paul Burka once wrote that the farm-to-market roads spirited the farmer’s kids away to the city, but in Bastrop, they’re bringing the city back out to the farmer.
As corporate giants like Tesla, Samsung and Apple have built factories and offices in the sprawl surrounding Austin, their high-paid workers are looking to live in the bucolic farmland nearby.
Musk and Lennar’s housing development, named “Project Amazing” in plan filings, will rise on 70 acres of farmland not far from a bend in the Colorado River. An original plan called for two phases of development totaling 211 homes, but the second phase was removed last year, according to Bastrop County Court documents.
Otherwise, Lennar and Musk have revealed few details about the project. In fact, Lennar’s role in the project only came to light because last month, County Commissioner Mel Hamner said the two were working together on the project. Hamner, Lennar and the Boring Company did not respond to requests for comment.
“Elon’s talked about that in the past, that Austin needs to build more homes, so him going around local government to solve that problem is very interesting,” said Brandon Eckhardt, an Austin area agent.
Eckhardt has worked with several clients employed by Musk’s companies, and says housing was always one of their biggest concerns, particularly in 2021, when houses were routinely selling for $50,000 to $100,000 over listing price.
“When I’d talk to people from California or Washington they understood, but people from Pennsylvania or Michigan could not figure out how they were going to make it work,” he said.
Both Holm and Eckhardt agree that once interest rate hikes stop, bringing renters back into the buyer pool, the market will catch fire again.
“He’s kind of getting ahead of the punch, because the moment interest rates begin to change,” Eckhardt said, “we’re going to go right back into what we’ve had.”
While he doesn’t expect the full-blown fracas of 2021, the fundamental problem of low inventory persists, Eckhards said.
The showman and a steady hand
While Austin has not yet achieved Houstonian levels of sprawl, tech workers are pouring into its satellite cities and suburbs. New Braunfels and Leander ranked in the country’s top ten hottest areas for home sales in a recent report from Opendoor. In Pflugerville, where the Boring Company is headquartered, the population grew by 44 percent over the past decade.
That growth has drawn some pushback from locals concerned about development to come. An application in July from the Boring Company’s land ownership entity, Gapped Bass LLC, to dump up to 142,500 gallons of treated wastewater a day into the Colorado River has drawn 153 public comments. One local even started a podcast called Keep Bastrop Boring that has monitored the Boring Company’s moves at the tunneling test site near Musk and Lennar’s planned housing development.
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Lennar has already built two communities in Bastrop and 34 developments in the greater Austin area. The company delivered nearly 13,000 homes in Texas last year, roughly 2,000 more than it built the year before, according to SEC filings. While Lennar consolidates its various markets into regional categories like East and West, it considers Texas a market of its own.
While Lennar and Musk have not explicitly teamed up to build homes before, Lennar specifically mentions the Tesla Gigafactory in marketing materials for Bastrop Grove, a batch of about 150 homes just five miles from the site of Project Amazing. Lennar also invested in the Boring Company’s most recent fundraising round, along with real estate players Brookfield, Tishman Speyer and Dacra.
Lennar is a model of corporate efficiency, mass producing homes at a scale and speed few competitors could hope to match. During the pandemic, Lennar ramped up production even further: The company spent $25.2 billion building homes last year, up from $18 billion in 2020. In the same span, its revenues from homebuilding jumped to $32 billion, up 50 percent in just two years.
Musk has drawn a bevy of headlines in recent months, sometimes to the detriment of Tesla’s stock value. The carmaker’s share price fell 65 percent in 2022 amid investor concerns about Musk’s focus on Twitter, the social media platform he purchased after a heavily publicized will-they-won’t-they corporate courtship. In 2018, he settled with the SEC for $40 million over a tweet that said he had arranged funding to take Tesla private at $420 a share, an apparent weed joke that the government considered securities fraud.
There are still plenty of question marks surrounding Project Amazing: Will Lennar 3D-print the homes like it is currently doing in Georgetown? Will Musk employees all want to live together, or will Musktown welcome outsiders, too? If Musk is going to become a homebuilder, he won’t shy away from experimentation. And out in Bastrop County, he’s experimenting every day.