Tyler Prepares for a Building Boom

Construction professionals seeking home building job leads should check out HBW’s building permit reports for the DFW metroplex and surrounding counties. According to a recent report by the Smith County Appraisal District, the market for newly-built homes in Tyler and Smith counties is red-hot. Demand is on the rise—especially for high-end homes—but housing inventory is dwindling, creating a tremendous opportunity for builders in East Texas.

Realtor Amy Montayne of Montayne Team says that, “there are just so many people moving to Tyler, migrating here from other states and big cities. It’s exciting, but we’re working ourselves to death. It’s a very, very competitive market.” The seller’s market here is “getting crazy” as Montanye puts it.

Homes in Tyler and Smith counties are snapped up almost as soon as they hit the market. Length of time on the market is one of the key real estate market indicators, and it’s also a bellwether of an area’s economic situation. According to Drew Dunklin, analyist for the Appraisal District, “The [current] median days on market is the lowest I can find in the last 20 years or so, down to 42 days,” which is less than half of the 10-year median average of 90 days, “and supply is down to a record low, where it was in 2006-2007.”

The Tyler market currently sits as 97 to 98 percent sales-to-asking price, which is remarkable considering that it’s areas like Dallas and San Francisco that buyers are “seeing well over 100 percent of asking price. We don’t see that as of yet,” says Dunklin, Currently, builders are just barely keeping the housing stock supply level high enough to meet the demand. A normal, healthy inventory for a new home is five to six months, and Tyler’s inventory now sits as 5.3 months. The incredible demand hasn’t resulted in outrageously inflated asking prices—yet—but Tyler is headed out of the Recession.

New home construction is approaching historic levels. The construction peak for Smith County, occurring 2005 & 2006, saw 1,000 homes built each year. 2014 saw 800 new homes built, and more than 1,000 have been permitted for 2015.

Current market trends indicate that high-end homes—anything over $300,000—are selling incredibly well in Tyler.Historically, the high-end house market has been somewhat cautious in Smith County, but with an improved economy, “those individuals ready to move up to those homes are in a financial situation to do so,” says Dunklin, “there’s more confidence in the market and in the economy.”

Builders well be glad to note that the demand for high-end homes is due to increase over the next year. Existing subdivisions are almost entirely built-out, and while there are several lake lots left, Dunklin explains that there hasn’t been “a lot of new subdivisions being platted in that prime price range. There’s a lot of space out there for expansion, but nobody is doing it right now.”

The increase in employment opportunities indicates that demand for entry-level homes will also grow. But as the city has always experienced a shortage in entry-level homes, this trend is expected to continue. The average new home construction price is $238,000, but the entry-level homes have recently been selling for well over $100 per square foot, which the report notes as a historic high for Smith county.

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