The Clank and Beep of Texas

Some people see the future. I’ve heard it.

The sound starts in the early morning. First, it’s the rumbling and clanking of heavy earth-moving equipment. Then it’s the beep-beep-beep of the same equipment backing up. The sound lasts all day. It has been a feature of our daily living for months.

Fortunately, the sound is coming from a mile or two away, across a valley to the nearby ridge. A long ochre caliche scar extends like an artery across the top of the ridge.

What I’m looking at is the beginning of a suburb for the once-sleepy town Dripping Springs, a place that was considered a far exurb of Austin just a decade ago. It’s a development called Legacy Hills. Once a large ranch, it is in the second stage of being divided into 5- to 10-acre parcels, with starting prices upward from $300,000.

Yes, you read that right, about $60,000 an acre for land that isn’t close to anything. Skeptical? Well, let’s leave it at this: Our property is about 3 miles from the entrance to Pedernales Falls State Park. In a typical day, I see more deer than people unless I drive somewhere. To get more removed in Texas, you’ll have to look to the border counties and the west.

Things Change

When we moved to Dripping Springs in mid-2009, which you can read about here and here, Texas was doing better than most of the country, but any online exploration still produced an abundance of short sales. Most houses sold at discounts to their asking price.

But that was then.

While population growth in the entire country was 7.4 percent over the Census decade, it was twice that, 15.9 percent, in Texas as a whole. It was 20 percent in Dallas, Houston and San Antonio. And it was even more, 33 percent, in Austin.

But it was a stunning 40 percent in Hays County. That’s where Dripping Springs is.

Texas isn’t all growth

Whatever it feels like in Austin, Dallas, Houston or San Antonio, growth isn’t universal in Texas. We’ve got 254 counties. A whopping 187 of them grew more slowly than the nation as a whole. A majority of our counties, 143, were static or actually lost population. Schleicher County has the dubious honor of being our fastest depopulating county, having lost 29.2 percent of its population.

There is only one requirement to be a shrinking county in Texas: Don’t be near a major city.

The view from 2020 and what 40 percent growth does

When we sold our Dripping Springs house in June of 2020 and moved to where the earth-moving equipment now roams, my wife and I both thought traffic in Dripping Springs couldn’t get worse. We also thought the market couldn’t get any hotter.

We were wrong.

At drive time it can now take 30 minutes to traverse the distance from the last traffic light east of the main intersection in Dripping Springs to first traffic light to the west, a distance of less than a mile. And with new nearby developments being planned or pitched, it’s likely to get worse before it gets better.

If it ever gets better.

The buyer of our house made it into a full-time VRBO rental but quickly sold it, presumably at a profit, to another person who also uses it as a VRBO rental. Recently, the new owner told me that the house was fully rented most of the time, largely because its pool, terraces and view made it like a private resort. I laugh at that because my wife and I used to joke that we had created a tragically understaffed Four Seasons, beautiful but without anyone to make and bring the margaritas.

According to Realtor.com, the September median home price in Dripping Springs was $765,000, up 38.5 percent from a year earlier. It makes you wonder if the town may be rushing toward a Texas version of what some call “the Aspen problem.” Real estate could become so expensive that people who have the regular jobs essential for daily living have to find shelter miles and miles away.

I’m serious.

Imagine a young couple with an income of $10,000 a month. They might qualify for a mortgage in the $400,000s. But that’s far less than the median asking price in Drip’ (as it’s called locally). Loan eligibility could be reduced by pesky student loans, having two car loans in a two-earner family, or not being able to put together a hefty down payment. At $765,000, a 20 percent down payment means $153,000 of available cash.

Few young couples have that kind of money.

I don’t want to call this a bubble. A lot of this upward pricing for real estate is just a reflection of the opportunity we have in Texas. Some of it is the asset inflation created by low interest rates.

But when the youngest generation can only rent, well, we’ve got a problem.

Related columns:

Scott Burns, “Return to Texas, part 1: A Moving Experience,” 10/2/2009 https://assetbuilder.com/knowledge-center/articles/return-to-texas-part-1-a-moving-experience

Scott Burns, “Return to Texas, part 2: The Texas Premium and the Foot and Wheel Vote,” 10/23/2009   https://assetbuilder.com/knowledge-center/articles/the-texas-premium-and-the-foot-and-wheel-vote

Sources and References:

U.S. Census, Texas: https://www.census.gov/library/stories/state-by-state/texas-population-change-between-census-decade.html

251 Goodnight Trail on Air B N B:  https://www.airbnb.com/rooms/45159161/photos?adults=2&children=0&infants=0&check_in=2022-01-05&check_out=2022-01-12&translate_ugc=false&federated_search_id=be08958c-2353-4092-a382-3258c2fdad70&source_impression_id=p3_1634227508_qXjLzP5keiH483lG

Legacy Hills development website: https://www.legacyhillstx.com

Legacy Hills parcel listing: https://www.compass.com/listing/23-legacy-hills-johnson-city-tx-78636/838403865077527953/

Median home price according to Realtor.com: https://www.realtor.com/realestateandhomes-search/Dripping-Springs_TX/overview

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Photo: Scott Burns 2021

(c) Scott Burns, 2021