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Guess where more new homes are being built: California or Texas?

Elizabeth Trovall Aug 11, 2023
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While new construction in California, top, often gets bogged down by red tape, new builds make up more than a third of home inventory in Houston. Justin Sullivan/Getty Images; Spencer Platt/Getty Images

Guess where more new homes are being built: California or Texas?

Elizabeth Trovall Aug 11, 2023
Heard on:
While new construction in California, top, often gets bogged down by red tape, new builds make up more than a third of home inventory in Houston. Justin Sullivan/Getty Images; Spencer Platt/Getty Images
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Low inventory and high mortgage rates have been bad for home sales. And many people locked into lower interest rates are staying put, which means that many new home sales are coming from new construction.

But in some places, like Texas, it’s easier to build new homes than in others, like California.

In Houston, new builds make up more than a third of home inventory, according to Redfin’s Daryl Fairweather.

“In Texas, there is a lot of available land for development [and] that land is a lot cheaper than it is in California,” she said.

Just 6% of home inventory in Los Angeles is new construction. “And Texas, in general, is just more pro-development than California is,” Fairweather said.

“We have added on delay and fees that are unparalleled, unmatched and out of control,” said Dan Dunmoyer with the California Building Industry Association.

It can take 15 years for a development to get through all the red tape, Dunmoyer said.

“Last year, we did roughly 130,000 permits were pulled for new builds,” he said. “So Houston and Dallas-Fort Worth built more homes than all of California.”

And a lot of those Californians who can’t afford to get into a home are moving to Texas, noted Bryan Glasshagel with real estate data firm Zonda.

“You’ve got the four major Texas markets in the top 10 in terms of new home construction activity as of the second quarter,” he said.

Even with high interest rates, Houston had more sales of new homes in the first half of this year than it did in the same period in 2019, before COVID hit.

“It’s really tied to that, right?” Glasshagel said. “There’s a lot of land. We can continue to grow. We’ve got the, you know, I think the favorable tailwinds. We have a migration coming in state.”

But that migration has another effect: “The cost of the land, it’s been creeping for a very long time,” said Jesús Vassallo with Rice University.

Land prices are going up as newcomers move in, making houses in Houston less affordable for the people who already live there.

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