Explore the Slowdown in New Construction with a Design-Build Company in Austin

By Bat City Builders LLCUncategorized
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Becoming a homeowner of a new design-build in Austin concludes the end of a very intimate experience. Over time, you really get to know your contractor, and vice versa. But long before you get to that point, you need to familiarize yourself with the Austin market. This way, you do not go into a consultation, and then the home building project, with false assumptions about what to expect.

Austin was once one of the hottest real estate markets in the country. We have seen people from every state flocking to the area, buying up and building properties. Yet, with the state of our economy and subsequently the construction industry, we are seeing the market cool off at an alarming rate. Here is what you need to know about the housing slowdown.

Developers have stopped developing land.

There are two main challenges for acquiring and developing land. First, there is the fact that municipal/county approvals are needed. At the same time, developers are having to tackle the physical challenges of a site. While these hurdles are a constant, it has become increasingly apparent that labor shortages are impacting land development. Over the course of the pandemic, home builders in Texas were in high demand. They couldn’t build homes quickly enough to meet that demand. The labor shortage is projected to only continue to increase, which is why there has been such a push toward getting the next generation to enter construction-related career paths.

How long does it take to produce a home?

The full process for new residential developments can take many years. The issue is that, in combination with the labor shortage, we can soon expect to go through the phase of not having homes again. It isn’t a matter of diving headfirst into groundbreaking. There is so much time spent on designing plans for the land and getting the necessary approval. For your own custom home building, however, you can expect it to take between one to two years. This period of time involves finalizing plans and obtaining permits, as well as the actual construction of the home. Make sure to factor in time for unforeseen delays during your design-build in Austin, too.

Interest rates are being driven up.

Rising prices are something that affects all of us in day-to-day life. For the architecture, engineering, and construction (AEC) industry, it means materials becoming more expensive and, in turn, projects becoming more expensive. Design-build professionals in Austin and beyond face the potential for reduced profits. A big part of this is interest rates. In October, it was announced that the Federal Reserve would raise interest rates to the 20-year high of 6.92%. Alongside this rise, over these past few months, it has been the case that the South’s total housing has been plummeting. While there is still demand for commercial construction, AEC companies must prepare themselves for instability.
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Photo by RODNAE Productions on Pexels

What is happening with the mortgage market?

Economic uncertainty has resulted in public sentiment toward the housing market falling to the lowest level in over a decade. Because the Federal Reserve is raising interest rates, it is more expensive to borrow money. While this shouldn’t discourage you from buying a design-build home in Austin, it is something you need to be mindful of. This is also the case for those who are planning on selling their home, given that listing could result in increased financing costs on a new property. Essentially, with the rise in mortgage rates, the number of would-be homebuyers has been slashed. Between these rates and the rising prices of homes, more and more prospective buyers are being squeezed out of the market.

Single-family construction permits dropped.

The number of new groundbreakings for single-family homes is the lowest it has been in more than two years. According to the Texas Real Estate Research Center, single-family construction permits in Texas, specifically, have now dropped below 10,000 units. These permits fell in every major city except for Houston. Even the nation’s largest home builders are reporting serious jumps in their cancellation rates. You might be surprised to learn that, although there was a stunning 80% fall in single-family housing between 2006 and 2009, it occurred much slower than what is happening currently. We are in the midst of a historically sharp turn due to the fear of homebuyers.

Will the slowdown affect my new custom home?

The fact of the matter is, when you commit to building a custom home in Texas, you need to be aware of the risks that come with it. Your project can face several different challenges, including what is currently happening in the market. If you recognize the time and money that will need to be put into a design-build in Austin, just ensure that you are working with an expert team. Your general contractor will be your single point of contact, and they will handle any setbacks without putting any of the worries on your shoulders.


Dawn Price is the owner and CEO of Austin-based Bat City Builders. With the creation of her company, she set out to create a transparent business model that keeps homeowners at the forefront. Price’s goal is to maintain open communication with every client throughout the home building process. Despite the construction slowdown, Price and our team continue to offer the same reliable services. Ready to get your design-build in Austin kicked off with one of the top home builders in Texas? Send us a message today. We are looking forward to hearing from you!

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