NORTH TEXAS REAL ESTATE BLOG

Al Hewitt

Premier Nationwide Lending

214-423-6300 ext. 223

ahewitt@pnlending.com

From the numbers we are getting……Texas is currently leading the country in permits and starts on new homes. This is great news, considering the housing market over the last two years has been considered soft. Houston, Dallas, Austin and San Antonio combined to have 48,718 permits issued for single family homes over the last 12 months ending in May, and as a state we had 64,000 total permits pulled. Texas as a state beat out California and Florida-based on information obtained from John Burns Real Estate Consulting. It seems to show that Texas did not see the same wave of downturn that other states seemed to have experienced. Much of this I feel is because of the low labor costs, and the reasonable percentage Texas see’s each year on its appreciation. If you do not go upward as drastically on your appreciation, then you do not have as massive a downturn when the market turns soft. The hope is that builders are not just building homes for the fun of it, however, I would hope that is not the case and do not suspect it is as capital is not easy to come by these days and the builders that are still out there are hopefully being smart with it. From what I have seen in the North Texas Market, many builders have shy-ed away from the extreme number of speculative homes they used to build. We are seeing allot less inventory homes available based on market conditions. Texas like the rest of the country has had its housing issues, but what we saw as a state was a ripple….not like the wave other states have seen across the nation.

Helpful Hints…..

New home buyers typically are not aware of how a production builder operates, I have listed some information here that I hope will lead you in the right direction. I have listed my contact information at the bottom, if you have questions or comments, please contact me. Thanks!

Well let’s start first of all with what type of builder you are building with. There are production builders who build many homes in a year, from 1000 to many thousands. The majority of the production builders utilize the same plans over and over, offering several variations of elevations as to try and make the neighborhood look different. So as not to have the same look on the home three doors down. Production builders generally do not change foundations or move walls. They are streamlined as to provide you with a great home at a great price and that is why they limit changes. Production builders as I mentioned sell to many different clients and if they were to accommodate every change that every home buyer wanted, they would not be able to keep up with it, much less being able to price their product within reach of the buyers. With that being said. Most production builders will offer you the opportunity to pick from a limited selection of items to go into your home, such as floorings, countertops, limited selections of cabinetry, paints, plumbing and lighting fixtures etc… As a client you normally limited by a certain time to have all your selections made regarding your home. This is due to the fact that the builder has to order these items and sometimes there are lag times from the manufacturers, so in order to get the materials to the jobsite in time to put them into or on your home, they have to limit your time in selecting them.

Then there is the custom builder-generally speaking a true custom builder will build to your specifications, many times they have in house architects that can engineer what you want specifically. They will move load-bearing walls; they will add to your foundations, they will roll pools into your deal etc…

Home sites….

Builders generally operate neighborhoods one of two ways. The first way is called lot options, where they put there signs on the lots and actually do what they call a take down (buying the lot from the developer) once a buyer has contracted to purchase a home. Why would they do it like that? Well it allows mainly production builders, to leave a neighborhood if it is not successful, thus again saving money. It also allows them to keep their overhead low as to be able to purchase land elsewhere. The other option builder’s use is to purchase land and develop it themselves. I feel much more confident when the builder develops the land themselves. Why? Because if they have spent the dollar to develop, they have much more stake in the game, meaning they are not as eager to leave if the neighborhood does not succeed, it means they will try everything to make the neighborhood successful, before throwing in the towel.

The home sites with today’s production builders have gotten quite small in the Dallas area, the reason for this is naturally the land is now costing the builders more to purchase and develop. In today’s market…if you want more land it will cost you much more money. Normally charged as a lot premium. Lot premiums might be charged on lots that are oversized, back up to golf courses or are heavily wooded. Even though the builder may not have paid more for these lots, you will, because the builder can improve their margins by doing so.

Builders normally check the soils by doing soil samples. The way it has been explained to me here in the Dallas area, is that the builder will hire a company to come in and do core samples of the soil. A core sample might be measured as approximately 3-6″ wide and 6 to 10′ deep. With this sample they will check the plasticity index on the soil. This tells them how much the soil will shrink or swell with moisture absorption. They want to be able to engineer a foundation that will have the least propensity for movement. So they will find out what the worst-case scenario is for the land overall and engineer a foundation that will work with the worst-case scenario and utilize that foundation throughout the neighborhood.

Foundations….

Many builders here in the Dallas area use what they call a “post tension foundation” or you might here the term “floating foundation”. This is a foundation that uses very little rebar; instead they use thick steel cables to support the foundation. These cables are overlapped throughout the foundation at specific intervals. Once the foundation has been poured a company will come out and stretch these cables to specific poundage. What this does is binds the concrete to itself and keeps the foundation from cracking with movement of the soils. Thus the term “floating foundation”. I have been around the building industry for some time and I can tell you that I have yet to see a floating foundation fail. That is not to say that it does not happen, however, most builders went to this foundation as an alternative to the rebar foundation. The reason? Because they had less failure on the post tension foundations, thus saving themselves the repair costs or worse, buying the home back, due to foundation issues.

Framing….

I often heard clients tell me over the years that they did not like the builders using “finger jointed studs”. They felt like they would not be as strong as solid lumber 2×4, the builders utilize finger jointed studs because of the straightness of this particular lumber. In many cases the amount of lumber being produced to build homes with is huge. Can you imagine with all the homebuilders all needing lumber at the same time; the lumber manufacturers are putting lumber out at an un-godly rate. Thus not allowing the lumber to cure properly, this in turn creates a crooked stud most all the time. With finger-jointed studs, you get consistency with the straightness of the lumber. At that means a truer wall inside the home!

Roofing….

Technology is great! And it has been awesome for you as a consumer, especially in the new home market. Many new products come out each year in the building industry. You have many choices in roofing materials such as composite shingles, metal coverings, tile coverings etc… With shingles, ask your builder to use a 25-year or better shingle. Many times builders will use a 20-year shingle on your roof, I have seen many times that when this happens, on a hot day you can see where each sheet of decking is below the shingles. You will also have problems such as buckling and lifting shingles. A great new decking was introduced some years back as far as decking is concerned and that is “OSB” it stands for oriented strand board and it is lots of wood strands intermingled and glued together, it makes for a very strong decking as well as the fact that its made with young timber which is easily replaced as to not harm the environment. There is also another great product being used as an upgrade decking offered by the builders, and that is radiant barrier decking, this product has a foil like product glued to one side of the decking, the foil side of the decking is placed inward on your roof to block the suns radiant heat from entering your attic. Studies have been run on this product and they have found that it may lower your attic temperature by as much as thirty degrees. Please note that when deciding on these energy efficient products, you must weigh the original upgrade cost by the savings over time that you may receive.

Windows….

Windows have come such a long way; most cities require builders to utilize low e windows. What does low e stand for you ask? Well it stands for Low Emissions, and that in turn means a cost savings to you via you’re air conditioning bill. Low E windows block out a large percentage of the suns radiant heat. Therefore saving you on your electric bill.

Exteriors….

Please note the difference in bricking materials. There are many different types of exterior surfaces used to build homes today. Concrete brick (called CRIK), clay brick such as Acme, Boral etc… These different types of brick look different on a home, so make sure you know what you’re getting into with bricks.   Faux stone and real stone. Both look great, but costs differ significantly, real stone will always cost you more. Stucco, fake stucco, most cities will no longer allow fake stucco to be used, one of the reasons why this is so, is because “fake stucco” tends to hold moisture in the walls and thus creating a possible mold situation in your home. Concrete siding is one of the greatest new products to come out over the last 15 years or so; this product is made with concrete and fiberglass and is pressed while curing to approximately 600 lbs per sq. inch. It will not burn, it does not rot, insects will not destroy it, it does not shrink, swell or warp and the time between painting is significantly longer.

Insulations….

Insulations are getting significantly better, most builders are no longer using fiberglass, they are using a product called cellulose, and most cities regulate what thickness needs to go into an attic and into the exterior walls.

Electrical….

Many time’s builders will allow you to place additional plugs or light switches in your home at additional cost. Please note however that the city regulates specific electrical diagrams and how far each plug will be from each other, whether that is every 6 foot, 8 foot or other. Many times builders will allow you to add additional surround sound wiring, cable jacks and phone jacks if you are only taking the jacks that are offered as standard options, make sure you place those jacks on the outside walls, as it is much easier to add additional jacks later on the interior walls. It is almost impossible to run wire down an exterior wall after the home is built, due to the angle of the roof. Also remember that if your building from scratch, don’t forget the little items like switched outlets in the eaves of the home for Christmas lights or outdoor lighting.

Finish out….

Things like plumbing fixtures, lighting fixtures, carpets, wall textures etc… Do not go over the top with items like these, they tend to create problems with re-sale. No blue or green carpets, stick with neutral colors when picking these items. Wallpapers are not trendy at this time in the Dallas market, so try and stay away from them. Believe it or not, we have found that certain colors, cause homes to stay on the market longer when trying to sell, such as white, pink or gray shades of brick. Things like whitewashed cabinets or odd colored granite, flowered wallpapers etc… If you don’t know, ask! Many times the decorators who work for the design galleries of the builders will help you select the right colors to go into your home, so as to bring the right price and buyers when the time comes to sell!

Incentives….Many times builders will require you use their ancillary services like title companies and mortgage companies to receive their incentive package. At this time this is legal and has been the process for many years. I highly recommend utilizing the services of a Realtor, when dealing with the builders. Many times the Realtors know the tricks of the trade and can be your knight in shining armor when something goes wrong. With the right Realtor you will also know what to expect as the process goes along, as to not be blind-sided at the end of the process. They can help walk you through the build process as well as the closing processes as well. Know that the builder will pay your agents commission, so it does not have to cost you a dime to utilize their services.

I hope this information will help you when choosing the right builder to fit your needs and know that if you have additional questions about buying a new home, please feel free to contact me. If I do not know the answer to your question, I will find out. And feel free to visit my website if your looking in the Dallas/Ft. Worth area, at http://www.dallashomeinfo4u.com/ or call me at 214-908-5080 Cell.