Are smaller lot sizes the answer for first-time home buyers? One developer thinks so

Around the Viridian Development in north Arlington, the perspective keeps changing.

Empty fields now have streets and those streets are quickly getting filled with new homes.

“They’ll be framing that house later this week,” said Robert Kembel, president of Nehemiah Company, the developer of Viridian, as he pointed to one lot where the foundation was recently poured.

They’re going so fast that Viridian is on pace to build 450 homes this year.

For the first half of the year, Viridian was the 26th fastest-growing master planned community in the United States.

Two other Dallas-Fort Worth developments also made the RCLCO Top 50. WestRidge in McKinney ranked 14th and Harvest by Hillwood development in Argyle, ranked 27th.

One key to Viridian, according to Kembel, is a mix of home prices and lots sizes. Town homes start at $250,000 but home prices go all the way up to $2 million.

The other selling point are the amenities.

There’s a sailing club, an events center, lakes, 500 acres of open space and another 500 acres of wetlands.

“Whether you’re starting out as a young person or finishing out as a successful career person, you all enjoy the same neighborhood,” Kembel said. “You all walk the same streets. You all enjoy the same amenities. To me, that’s a much healthier community than isolation by income.”

And Kembel believes smaller lot sizes — with high-end amenities — is the answer for first-time home buyers combating rising prices.

Wesley Miller, a research associate at the Real Estate Center at Texas A&M University, said there are signs that’s beginning to happen.

“A lot of millennials are willing to sacrifice things such as a bigger yard in order to get the home they want,” Miller said.

In Fort Worth-Arlington, the square footage of new homes sold through the Multiple Listing Service (MLS) has dropped to about 2,300 square feet. In Dallas-Plano-Irving, the square footage is far higher staying above 2,600 square feet.

Fort Worth-Arlington remains the most affordable housing market among the largest metropolitan areas in Texas with a median home price of $232,000 for all homes sold through MLS. But the price for new homes sold through MLS is far higher with a median price of $308,000.

As a comparison, the median home price in Dallas-Plano-Irving is $278,000 for all homes and $345,700 for new homes.

Austin continues to have the state’s highest price-per-square foot and highest median home prices for all homes at $306,000. The median new home price is $328,000.

First-time home buyers aren’t being priced out just yet but there are challenges.

“I don’t think we’re at that point yet — developers are definitely getting creative — but there is a severe shortage of homes priced under $300,000,” Miller said.

For Kembel, developing differently is nothing new.

The experience of being apart of the Stapleton Airport redevelopment in Denver helped shape his views. He oversaw home building in that development as president of John Lang homes on the site of Denver’s former main airport.

Getting Viridian off the ground wasn’t easy with the real-estate crisis and previous developers had failed at the same site. But he was convinced an urban infill project like Stapleton would work in north Arlington.

The project, when complete, is expected to be worth closer to $2 billion, Kembel said.

“We had a very difficult time getting the market study that would support this,” Kembel said. “Our comps for this were inner city master plans in Denver and Orlando.”

Those comparisons were Stapleton and the Disney development, Celebration, in Kissimmee, Florida. There were also some influences from Baldwin Park in Orlando and other communities, which embrace the concepts of New Urbanism that espouse walkable neighborhoods and open spaces.

Kembel supports the concept but Viridian didn’t strictly adhere to all the principles touted by the Congress of New Urbanism.

“We rejected some aspects and we’ve adopted other aspects,” Kembel said. “We would have looked like Nantucket and that architecture just doesn’t look like Texas. We’re brick and stone.”

While Viridian is a brand-new development, it surrounds the historic site of Bird’s Fort, the earliest organized Anglo settlement in Tarrant County. When Viridian is eventually built out, there will be a cultural center or museum near Calloway Lake where the long-gone fort once rested.

For some buyers, Viridian may still be a little pricey, but Kembel’s company is ready to do similar 550-acre development in Crowley.

Named Karis, the development will include the same mix of lot sizes and houses but it will be cheaper with town homes starting in the $180-190,000 range. At May 7 Crowley City Council meeting, Kembel said Karis would eventually have 2,100 new homes with 120 acres of parks, trails and open space.

They hope to start development in 2019.

This story was originally published July 13, 2018 at 8:00 AM with the headline "Are smaller lot sizes the answer for first-time home buyers? One developer thinks so."