Crys­tal Falls deal is biggest in years

De­vel­oper’s pur­chase of about 440 acres in re­gion re­flects builders’ grow­ing en­thu­si­asm

Austin American-Statesman - - BUSINESS & PERSONAL FINANCE - By Shonda No­vak

In a sign the lo­cal home­build­ing ma­chine might be crank­ing up again, Tay­lor Mor­ri­son Com­mu­ni­ties has pur­chased nearly 1,200 lots in one of Cen­tral Texas’ largest mas­ter­planned com­mu­ni­ties: Crys­tal Falls in the Le­an­der area.

The com­pany bought the es­ti­mated 440-acre par­cel, in the High­lands at Crys­tal Falls sec­tion, on June 30.

Tim Tow­ell, who heads Tay­lor Mor­ri­son’s Austin di­vi­sion, de­clined to dis­close the pur­chase price. How­ever, Tow­ell said: “I will say it is the largest trans­ac­tion of any home­builder in Cen­tral Texas in sev­eral years that we are aware of, and the largest sin­gle pur­chase Tay­lor Mor­ri­son has made in the U.S. for the past sev­eral years.

It was a cash pur­chase, he said, a sign of the com­pany’s con­fi­dence in the lo­cal mar­ket.

The pur­chase marks the next chap­ter in the 5,000acre Crys­tal Falls devel­op­ment, where about 1,400 houses have been built and a to­tal of 9,000 to 13,000 are ex­pected to be con­structed dur­ing the next decade, said Bill Hinckley, pres­i­dent of the Look­out Group Inc., a Texas-based real es­tate and in­vest­ment com­pany that is Crys­tal Falls’ mas­ter de­vel­oper.

The ac­qui­si­tion also re­flects a new trend. Builders who had pulled in their horns dur­ing

the re­ces­sion are now scram­bling to ac­quire lots to po­si­tion them­selves for a hous­ing re­bound, Hinckley and other real es­tate ex­perts say.

“Ev­ery builder in Austin is run­ning around fran­ti­cally try­ing to buy lots — ev­ery sin­gle one,” Hinckley said.

Hinckley de­clined to say what Tay­lor Mor­ri­son paid for the lots.

Tay­lor Mor­ri­son plans to build four new com­mu­ni­ties at Crys­tal Falls, with at least three of them of­fer­ing new house plans, Tow­ell said. Tow­ell hopes to be­gin devel­op­ment by Septem­ber. Prices are ex­pected to range from the $200,000s to more than $600,000, he said.

Jim Plasek, vice pres­i­dent of land re­sources for Tay­lor Mor­ri­son, said that as the com­pany’s Steiner Ranch com­mu­nity off RM 620 nears com­ple­tion, “we’ve been look­ing for the next log­i­cal step in Austin.” Crys­tal Falls, with its ameni­ties, prox­im­ity to Lake Travis and shared school district (Le­an­der) with Steiner Ranch, “fits the bill per­fectly for Tay­lor Mor­ri­son.”

‘Slim pick­ings’ for re­gion’s lots

Be­cause builders pulled back dur­ing the down­turn and credit got tight for new lot devel­op­ment, lo­cal hous­ing ex­perts have warned that the re­gion could face a short­age of lots in de­sir­able ar­eas..

With a six-to seven-month sup­ply of new and ex­ist­ing homes on the mar­ket, “there is no ex­cess hous­ing in­ven­tory,” said Terry Mitchell, a lo­cal de­vel­oper and builder. “The big con­cern among res­i­den­tial real es­tate com­pa­nies is the con­tin­ued cap­i­tal con­straints that pre­vent the re­place­ment of lot in­ven­tory. With around 2,000 lots un­der con­struc­tion, we are ab­sorb­ing lots faster than we are re­plac­ing them. Some­time in 2011, we may well see ev­i­dence of a tight hous­ing mar­ket.”

Joe Dun­can, owner of Dun­can Com­mer­cial Prop­er­ties, which rep­re­sented the Look­out Group in the land sale, said there’s no ques­tion there’s a short­age of lots ready for houses in cer­tain ar­eas, at a time when low mort­gage in­ter­est rates and pop­u­la­tion growth in Cen­tral Texas are revving up de­mand.

“If you were a builder com­ing in look­ing for lots, it would be slim pick­ings,” Dun­can said.

The lat­est sur­vey by Met­ros­tudy, which tracks the lo­cal hous­ing mar­ket, “shows just over a one-year sup­ply of de­vel­oped lots re­main­ing in Steiner Ranch, which is ex­tremely tight,” said El­don Rude, Met­ros­tudy’s Austin di­rec­tor. “Fur­ther­more, there are few avail­able sin­gle-fam­ily lots re­main­ing in the 620 and 2222 cor­ri­dors for homes priced un­der $500,000” that are in the Le­an­der school district.

At Crys­tal Falls, about 1,000 of its 5,000 acres have been de­vel­oped. Started by the Look­out Group in the mid-1990s, Crys­tal Falls is the last un­de­vel­oped area of Hill Coun­try in the re­gion’s boom­ing north­west cor­ri­dor, Hinckley said.

‘Bullish on Austin,’ thanks to growth

Hinckley said Tay­lor Mor­ri­son is “bullish on Austin.”

“We have bet­ter job growth and bet­ter net mi­gra­tion than any ma­jor mar­ket in the coun­try,” Hinckley said.

Rude also noted last week that the strength­en­ing Austin job mar­ket should pro­vide some trac­tion for the hous­ing mar­ket this year.

From April 2009 to April 2010, the AustinRound Rock metro area grew at an an­nual rate of 2.75 per­cent, an ad­di­tion of nearly 47,000 peo­ple, City of Austin de­mog­ra­pher Ryan Robin­son said. The rate has slowed a bit from the April 2008-April 2009 pace of 3.5 per­cent.

In the lo­cal hous­ing mar­ket, build­ing picked up in the sec­ond quar­ter, with con­struc­tion start­ing on nearly 11 per­cent more homes than a year ago and 32.3 per­cent more com­pared to the first three months of 2010, ac­cord­ing to Res­i­den­tial Strate­gies Inc., which tracks the newhome mar­ket. The re­search firm said there are signs that ac­tiv­ity will con­tinue to pick up.

Tay­lor Mor­ri­son is ranked the nation’s No. 1 pri­vate home­builder by Builder mag­a­zine.

Bill Hinckley

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