The Availability Gap –The Mueller redevelopment in Austin TX has two gaps. The first is the availability gap which I discuss here, the second is the affordability gap which l cover in part two. What does this mean for buyers, sellers and builders at Mueller?
What is the Mueller Availability Gap?The builders are currently selling their remaining Phase II homes. Phase III lots have not been developed by Catellus – it’s an estimated cost of around $5m-$8m to do so according to one source. Some have speculated that this is due to share price concerns of ProLogis – the parent company of Catellus.
So there’s a gap between the last homes of Phase II which may be all sold out by the end of the year, and the start of Phase III homes.
How long will it take for the lots to be developed? Estimates run at 6-8 months, so if the developer started today, it might be February 2010 before the lots were released to the builders. Which might mean a 4-6 month build time resulting in no new homes becoming available until June 2010 at the earliest. And that’s if the developer starts today.
So how many homes are available at Mueller? If you look at David Weekley, they have 13 single family homes available, and 19 row homes for Phase II. Meritage have less homes available than that. Standard Pacific have homes available in the higher price ranges ($500k+) and Streetman have larger homes and around three town homes available. Saldana have two homes available in the second Garden Court.
What does this mean for the Mueller builders? With a dwindling supply of homes, and a fairly bouyant demand, I would expect prices to go up. One builder is already limiting the number of sales per month in conjunction with raised prices.
What does this mean for other sellers at Mueller? One great time to compete with active builders offering new homes is when there is a shortage of supply. If I were going to sell my home at Mueller, I would time it when there is little other builder choice. I would expect to see smart sellers putting their Mueller resale homes on the market here in the next 10 months.
What does this mean for buyers at Mueller? If buyers have concerns that the developer is slowing down, they may start to worry about the town center starting later, and other amenities arriving later. This could put people off. In my opinion it’s not a matter of if the town center arrives, it’s more when.
Buyers are going to be choosing from less new home options in the $300-$400,000 range towards the end of 2009, and may see rising prices there. Buyers still have great options in the $400,000+ range. I would expect there to be more choice in the resale market too.