Then And Now
During the past 30 years, James R. Harris Partners and its associated firms have provided lots and housing for more than 130,000 people in the Fort Worth and Dallas area and in Austin, and we have bought and upgraded numerous commercial buildings.From my perspective, five key elements of the real estate business have changed: 1) the buyers, 2) the houses, 3) the builders, 4) the lenders, and 5) the governance of land.
The Buyers Have Changed
In 1979, the typical home buyer was a husband and wife with two or three children looking for a new house with a yard in a new neighborhood with good schools. The central city was left behind by most new home buyers. Today, that suburban family with children is still looking for a nice new neighborhood with good schools.
And the central city has come back. Buyers with children who can afford private schools are there, along with couples without children, but fully a third of new home buyers are single. And mainly because of the huge increase in the single buyers, the average household size has decreased from above three to a little over two people per dwelling unit.
The Houses Have Changed
At the same time that household size has decreased, the average new house size has increased, going from just above 1,900 sq. ft. to over 2,400 sq. ft. Much of this increase has been caused by the increased affluence of the new home buyer.
The Builders Have Changed
The builder providing new houses 30 years ago was a small operator, usually building no more than 20 to 30 houses a year. No big volume, public builder existed then. Today, the top ten builders in our area account for over 60% of all new houses sold. Most of the small builders went out of business during previous real estate recessions.
The Lenders Have Changed
In 1979, banks provided all of the money needed to develop land and build houses. Beginning about 1990, builders began tapping into public equity markets as well as private equity funds. Huge amounts of money began to flow into the real estate development business.
Land Governance Has Changed
Many smaller, suburban towns hardly existed in 1979 but mushroomed with a) houses bought by families looking for better schools and neighborhoods and b) development policies more pro-growth than their big-city neighbors. Beginning in the 1960s, larger cities such as Fort Worth and Dallas suffered from declining schools and deteriorating housing. But some cities caught on and sought to encourage growth using more enlightened zoning and development policies.
This, along with the changing demographics, has also caused a resurgence in central-city neighborhoods. Cities and other governmental entities also contracted the “developer wannabe disease” and jumped feet-first into developing and building projects that ended in disaster for taxpayers. Most city-initiated projects have failed. Public/private partnerships in which the city provided assistance to the developer in the form of incentives, tax abatements, TIF money, etc., have been more successful.
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