Industry giants in North Texas are weeding out smaller home builders, potentially reshaping residential development in the region for years to come.
Amid a tight lending environment that has left private developers sidelined, publicly traded builders are aggressively acquiring thousands of acres for master-planned communities, squeezing out other players, Bisnow reported.
Publicly traded builders have been particularly assertive in the past year and a half, said Justin Bono, president of Astra Development.
Their share of self-developed lots in Dallas-Fort Worth climbed from 50 percent in 2022 to 60 percent last year, according to Residential Strategies.
The momentum has continued into this year, with public builders starting 14,217 units in the first quarter alone, representing a 48 percent increase from the previous year. To navigate challenges such as high mortgage rates, many public builders are offering rate buydowns to stimulate sales, a strategy inaccessible to smaller developers lacking comparable liquidity.
“I see a lot of smaller developers going away because it’s hard,” said Mehrdad Moayedi, CEO of Centurion American Development Group. “You have to buy a big piece of land to compete with the builders, and the builders have a lot more money than the developers do.”
Publicly traded builders have capitalized on the tight housing supply, reporting substantial profits and stock prices at record highs. Companies like D.R. Horton and Lennar are seeing significant increases in sales and revenue despite inflation and elevated mortgage rates.
Big builders’ substantial cash reserves and access to cheaper debt has made it tough for smaller developers to remain competitive on pricing, said Bob Kembel, a partner at the Arlington-based Nehemiah Company.
Despite these challenges, private developers retain some advantages, such as flexibility in holding onto land and navigating the entitlement process. However, the market’s future dynamics will depend on how public builders respond to evolving conditions and growth needs.
—Quinn Donoghue
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