Homebuilding in north Dallas suburbs slumping due to declining market

Homebuilding falls in north Dallas suburbs due to rising costs and material shortages

(iStock/Illustration by The Real Deal)
(iStock/Illustration by The Real Deal)

Home building in Dallas’ northern suburbs is declining, with building permits for single-family homes dropping this year from a year earlier.

The decline can be seen in suburbs including Frisco and Proper, though most are seeing a significant drop, the Dallas Business Journal reported. Frisco has fallen by about 42 percent, racking up only 745 so far this year compared with 1,283 single-family permits in the first five months of 2021.

So far, Celina’s slid 34 percent, with permits for only 887, Prosper has dropped by 17 percent, and the Princeton and McKinney areas are down 14 percent and 11 percent, respectively.

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Some builders in these areas are simply slowing construction due to rising material costs and supply chain problems, and the single-family market in Frisco in particular is reaching buildout status, said Dennis Pitt, senior vice president of Gehan HomesPitt.

“Frisco as a whole is running out of space to build strictly residential projects,” he said.

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“When you go up the Dallas North Tollway and you hit Plano and Frisco and Prosper, then Celina, what you see is so many subdivisions going on in, like, Frisco, that go back to 2014. The number of deals in Frisco was very, very high,” he continued.

This is a decline that has persisted in areas like Frisco and Celina since 2020. Frisco saw a total of 2,445 permits issued for the whole year in 2020, though Celina saw an uptick in 2021 of 2,516 building permits compared to 1,862 in 2020.

That hasn’t been enough to keep pace with larger cities like Denton, with demand for new home construction outweighing supply in the cities north of Dallas, homebuilders are simply unable to keep up.

“What typically happens in this environment is that construction booms because there’s not enough supply,” Pitt said. “But with the supply-chain challenges and the inflationary effects on building supplies, it’s just exacerbating the problem.”

Most experts believe the issues presented by the supply chain and interest will continue throughout 2022, and while they may spell good news for homebuyers thanks to the rise in home values, sellers will need to carefully consider their options as they navigate the market further.

[Dallas Business Journal] — James Bell

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