Despite the sluggish housing market, Carrollton-based LionsGate Homes has started building homes in central west Arlington, in an area where new construction has been scarce in recent years.
In a development called Enclave of Shady Valley, off Pioneer Parkway and Green Oaks Boulevard, LionsGate has one model and two speculative homes under construction, with plans to start three more spec homes in mid-November, said Leeroy Lindamood, the company's community sales manager.
Lindamood called the development "a hidden gem," because lots in so-called "in-fill markets" are hard to find. They are happy to have them, he said. His company plans 45 homes in the subdivision, which was started by another builder and never completed.
"There's a lot of growth [in population] and not as many builders," Lindamood said.
During the last four years, builders have whittled down their inventories and started work on fewer homes as demand declined during the Great Recession. But there are also fewer lots available for them to build on as developers pull back in a tighter lending environment.
David Brown, Dallas-Fort Worth director of Metrostudy, a provider of housing industry information, said some builders have missed out on sales because they don't have enough speculative homes constructed. Metrostudy's latest Dallas-Fort Worth numbers show that the market has a little more than 3,000 new homes for sale, down 72 percent from the peak in 2006, when more than 10,000 were available.
"This is the lowest we've got on record," Brown said. "It really is very much an issue."
In Tarrant County and the surrounding area, new home lots are mostly constrained to high-demand areas, such as the Alliance corridor and Keller.
Jay Brown, a custom home builder in Northeast Tarrant County, stopped looking for lots to build on last year.
It was quite a change for Brown, who for more than 20 years built as many as 10 luxury homes a year, a blend of custom builds and speculative properties. As the housing market declined, Jay Brown said he no longer wanted to build homes on the hope that they'd sell.
After building only one house in 2010, Jay Brown moved on to commercial opportunities and is building an assisted-living center in Keller. "You rely on referrals from previous clients in a market like this, and you can't build spec homes to have on the ground for potential clients to see your work," said Brown, owner of Tahoe Custom Builders. "It's a Catch-22."
Ted Wilson, a partner with Residential Strategies, a consulting firm in Dallas, said because of the focus on the so-called "A" markets, there's concern that lot supply is running out.
"Where are the lots going to come from?" Wilson said. "There are no loans, and the equity required is much higher. Lot supply is an issue."
In the most recent Residential Strategies report, Tarrant County had 495 lots with streets and utilities in place, a 1.3-month supply. And 1,639 lots were graded and staked and waiting for construction, a 4.4-month supply. There were about 10,000 lot sites selected that could be tapped.
"Many of the production builders are actively scouring these submarkets to find right-priced, well-located lots and are finding fierce competition to contract for lots in the most desirable locations," Wilson said.
With lot supply in question, the industry is thinking about whether builders would be able to meet demand if the housing market suddenly turns around.
"If that were to happen, it could get tight," Wilson said.
David Brown agreed. "There's no doubt we'd see struggles to meet demand in the short term," he said. "Builders remain cautious. We will see a recovery in the housing market next year. It's not going to be a big recovery. The substantial recovery will come in 2013."
Sandra Baker, 817-390-7727