Exurban Development

7/29/2019 Exurban Development

1/25


2/25

Exurban ResidentialDevelopment in TexasExurban ResidentialDevelopment in Texas

T A&M U i it

Jennifer S. CowleyAssistant Research Scientist

Steve R. SpilletteGraduate Research Assistant


3/25

Exurban ResidentialDevelopment in Texas

IntroductionDefining Exurban ResidentialEconomics of Exurban Residential Development

Market Characteristics

Development Considerations

Conclusion

Appendix

Contents

1

Exurban ResidentialDevelopment in Texas

4

7

11

13


4/25

Jennifer S. CowleyAssistant Research Scientist

Steve R. SpilletteGraduate Research Assistant

Exurban Residential

Development in Texas

Exurban Residential

Development in Texas

Introduction

Many people dream of living in thecountry where they can enjoy fresh air,ride a horse, see the stars, relish the

tranquility and leave city hustle andbustle behind. Today, Texans aremaking this dream come true. Con-struction of residential developmentsbeyond city suburbs is occurring at arapid rate across the state. Real estatelicensees working in rural areas areincreasingly finding opportunities tosell to customers who have neverbefore lived in a rural area. This reportexamines the development process forexurban residential properties,including determining the demograph-ics, market characteristics, prices andland planning process.

Defining Exurban Residential

The termexurban residentialcan bebroadly defined to include many forms

of residential development in ruralareas, from manufactured home parksto lake resort condominiums toranchette developments. This reportfocuses on a rapidly growing form ofexurban residential development the restricted rural subdivision for site-built homes

factured housing or mobile homes.Another type of residential subdivisionsprung up on the shores of Texasreservoirs built during the twentieth

century and featured moderatelyrestricted subdivisions appealing tobuyers wanting second homes.Upscale resort developments alongscenic lakes, such as Horseshoe Bayalong Lake Travis outside Austin,featured second home or retirement-oriented residential uses.

In the 1990s, the increasing numberof middle-aged, affluent homebuyers

and the growth of employment on thefringes of metropolitan areas resultedin an increase in restricted ruralsubdivisions. These developments,which are the focus of this report, aregenerally characterized by residentiallots from one-half to 20 acres and ofteninclude strict deed restrictions requir-ing site-built homes as opposed tomanufactured homes. Such develop-

ments are sometimes located adjacentto natural attractions such as lakes, butoften the locations are consideredattractive simply because of their ruralatmosphere. Most are located inunincorporated areas administered atthe county level.

being driven by other potential uses,such as hunting leases, ranchettes forweekenders from metropolitan areasand exurban residential subdivisions.

According to a study by the Agricul-ture Program at Texas A&M University,with assistance from the Real EstateCenter, economic and demographictrends are also causing fragmentationof rural land ownership in the easternhalf of Texas. The study states thatsince 1994 consumers, primarily fromurban areas, have dominated themarket for rural land. Most of these

consumers want land for recreationalpurposes such as fishing, hunting orhorseback riding. Sellers of rural landare often motivated to sell because offinancial stress or because personsinvolved in farming or ranchingbusinesses are retiring without youngerfamily members to take over. Giventhese trends, the option of creating anexurban residential subdivision or

selling to a developer is economicallyappealing for many rural landowners.

Figures 1 through 7 in the appendixsummarize median price trends forrural land in areas of Texas whereexurban residential development ispopular. Texas statewide rural land


5/25

land prices can exceed $2,000 per acrein subregions that are particularlypopular because of their scenic orrecreational appeal and proximity tomajor urban centers. Current andhistoric rural land prices are availablefor specific areas of Texas on the RealEstate Centers website at http://recenter.tamu.edu.

For some areas, Multiple ListingService (MLS) data are available as an

Table 1. North Texas MLS Vacant Land Sales, 2000

Median Percent Change in PriceArea Sales Price from Year Ago

Navarro County 97 $31,440 26

Celina ISD 40 38,250 (10)

Fannin County 40 31,620 2

Wise County 129 35,090 28

Hood County 263 28,550 49

Parker County* 30 30,000 7

Parker County 38 29,950 (32)

Parker County 45 36,000 13




*MLS divides Parker County into 12 subareas.

Source: Real Estate Center at Texas A&M University

Table 2. Austin MLS Vacant Land Sales, 2000

Median Percent Change in PriceArea Sales Price from Year Ago

Bastrop County 216 $10,500 18%

Elgin 36 27,000 15%

Dripping Springs ISD 184 30,000 28%

indicator of price trends and salesactivity. Tables 1 and 2 show MLS datafor vacant land sales in rural areasoutside Austin and Dallas-Fort Worthwith at least 25 sales in 2000. Price-per-square-foot data were not avail-able.

North Texas had increases over 1999prices in all areas but the Celina ISDand part of Parker County. The datashow mixed results for median sales

prices for the Austin area, however,with some areas appreciating, someunchanged and some declining. Thiscould be because of generally increas-ing prices per unit of land, whichwould raise the median price, and anincreasing number of smaller tractsbeing sold in certain areas, whichwould tend to lower the median price.


6/25

Farm and ranch prices in these twoareas show a general upward trend aswell. Figures 8 through 10 in theappendix present these price trendsgraphically. While month-to-monthprice statistics vary considerably, thereappears to be a slight upward trend inmedian price since 1998. The price-per-square-foot statistics for Austinarea farm and ranch land (not availablefor North Texas) indicates morestagnant prices, however.

While price data for tracts the sizetypically sold as exurban residential

subdivision lots are limited or nonexist-ent, prices for rural land and agricul-tural properties in the 1990s generallyincreased. In some locations, thepopularity of exurban residentialdevelopment was partially responsiblefor these increases.

Rural Home Prices

While data are also limited on ruralhousing price trends, a sample of MLSdata indicates a general price rise.Tables 3 and 4 show 2000 MLS data for

a sample of houses sold in rural areasnear Austin and the Dallas-Fort WorthMetroplex. A wider range of prices wasfound in North Texas, with medianprices from about $65,000 to $70,000in more remote subareas to more than$200,000 in the Melissa IndependentSchool District in northern CollinCounty. In the Austin area, medianprices ranged from about $85,000around Taylor to $224,000 in theDripping Springs area.

Table 3. North Texas MLS Single-family Home Sales, 2000

Percent Percent Percent PercentChange in Change in Change in Price Change inPrice From Average Price From Median Price From per Price From

Area Sales Year Ago Price Year Ago Price Year Ago Sq Ft Year Ago

Navarro County 259 14 77,196 2 67,250 3 42 2

Princeton ISD 78 3 99,124 3 90,250 6 64 9

Farmersville ISD 35 6 87,656 20 85,000 7 54 12

Prosper ISD 44 7 209,374 34 165,250 14 88 14

Celina ISD 49 36 221,736 30 180,000 20 87 9

Rains ISD 26 37 77,448 17 51,000 25 48 2

Van Alstyne ISD 40 -20 121,050 10 113,750 11 64 6

Anna ISD 37 12 148,395 17 115,000 1 74 13

Melissa ISD 38 19 195,216 9 205,500 47 80 6

Fannin County 106 12 81,565 10 75,500 12 46 8

Wise County 347 0 113,360 12 91,160 5 62 6

Hood County 643 5 133,720 8 120,000 9 70 5

Palo Pinto 89 147 195,467 44 159,000 78 114 38

Erath County 200 5 74,341 1 67,000 3 47 5

Weatherford NE 29 28 71,255 6 65,000 4 55 16

Weatherford SE 59 17 91,517 2 92,500 5 59 2Weatherford SW 66 20 105,925 33 89,950 13 61 13

Weatherford NW 44 16 65,494 3 62,750 0 48 5

Parker County* 35 17 137,144 8 128,500 4 68 6

Parker County 62 3 174,921 24 153,000 21 79 14

Parker County 96 3 154,144 8 148,000 11 73 7


7/25

Table 4. Austin MLS Single-family Home Sales, 2000

Percent Percent Percent PercentChange in Change in Change in Price Change in

Price From Average Price From Median Price From per Price FromArea Sales Year Ago Price Year Ago Price Year Ago Sq Ft Year AgoBastrop County 293 17 132,769 22 118,170 15 78 18

Burnet County 51 55 172,440 6 130,000 31 NA NA

Elgin 141 8 124,438 13 107,500 13 77 13

Dripping Springs ISD 244 6 253,729 13 224,000 16 119 13

Hays CSD 401 8 133,523 12 115,000 7 76 10

Hutto ISD 173 151 118,591 10 112,120 5 78 17

Wimberley ISD 145 23 165,562 8 143,000 5 97 13

Manor 55 29 131,016 6 135,000 9 71 -1

Taylor ISD/Coupland ISD 179 14 99,344 16 84,580 4 66 14

Prices per square foot also had awider range in North Texas, from a low

of $42 per square foot in NavarroCounty to a high of $114 per squarefoot in Palo Pinto County, where thepopular Possum Kingdom Lake islocated. In rural Austin, prices rangedfrom $66 per square foot in the Taylorarea to $119 per square foot in Drip-ping Springs.

These MLS statistics are based onresales of existing homes. The older

housing stock in some rural areas islikely the principal driver of thesestatistics. Many exurban residentialdevelopments, where buyers typicallybuild their own homes, are too new tohave a significant number of resales.Thus, many exurban residentialsubdivisions feature homes valuedmuch higher than the areas medianresale price.

Market Characteristics

Popular Regions for ExurbanDevelopment

While exurban residential subdivi-sions are occurring across the state,

t i ith tt ti t i d

In the 1990s, residential demandfrom commuters working in San

Antonio and Austin boomed. In areassuch as Bandera, Kendall, Blanco,Comal and Hays counties, where drivetimes to these cities are less than anhour, exurban developments areproliferating. Comal County is one ofthe states fastest-growing counties.According to Comal County officials,13,000 acres of farm and ranch landwent out of production between 1993

and 1997 (San Antonio Express-News,March 25, 2000). According to JayMillikin, a Comal County commis-sioner, 8,000 lots are under develop-ment in Comal County. In BlancoCounty, the county judges officereports that 475 subdivision lots havebeen platted since 1995.

Col. Lee Roy Roper, president ofRinco of Texas, has developed exurban

residential subdivisions for 20 years inthe Hill Country, mostly around thenorth shore of Canyon Lake. He hasnoticed a change in exurban develop-ment patterns in the Hill Country overthe past several years. Whereas manyHill Country developments used to be

demand. Another factor influencingthe market has been an influx of

Houston area residents seeking secondhomes or retirement homes.The Hill Country features large

exurban developments not typicallyfound in other areas of the state. Oneexample is the Mystic Shores project, arecently approved subdivision at thenorthwest end of Canyon Lake. The7,000-acre project, owned by devel-oper Blue Green of Boca Raton,

Florida, eventually will include about2,000 homes. A Dallas company,Tecon Corp., is proposing an 824-lotproject called Holiday Village ofMedina near Lake Medina. The 315-acre subdivision is planned to haveseven gated neighborhoods.The Hill Country region also has

many smaller subdivisions typical ofexurban residential projects elsewhere

in Texas. According to Roper, lot pricesin such developments run from$10,000 to close to $100,000, witheight- to ten-acre lots bringing as muchas $80,000. The Polo Club, an upscaledevelopment west of Austin nearDripping Springs, features extensive

Sources: Multiple Listing Service and Real Estate Center at Texas A&M University


8/25

regulations and infrastructure sectionsof this report.

North Central Texas.Two more hotspots of exurban residential develop-ment are the areas west and southwestof Fort Worth, which are characterizedby scenic hilly terrain. In Palo PintoCounty, upscale subdivisions aresprouting up around bluff-linedPossum Kingdom Lake. SomervellCounty, with its archaeologicalattractions and rocky hills of GlenRose, is the site of a number of newexurban subdivisions.

Donna Hutchinson of SomervellPartners, L.L.C. has been involved inseveral exurban projects in the GlenRose area. She comments that onlysince the late 1990s have residentiallots become widely available in thatarea, and now there are not enoughbuilders to meet demand. Land priceappreciation in rural parts of SomervellCounty has been strong with good

tracts selling for as much as $5,500 to$6,500 per acre. For platted lots in agated rural subdivision with under-ground utilities and curb and gutters,prices are typically $49,000 per acre.

North Texas.The prairies north ofthe Metroplex also are attractingnumerous exurban subdivisions thatare popular with commuters. Suburbanemployment centers, such as Alliance

Airport outside Fort Worth and Legacyin Plano, have moved the commuteshed out into rural portions of Wise,Denton and Collin counties. Definingexurban residential projects becomesdifficult in this area, which is growingso rapidly that todays exurban projectsmay be considered suburban within acouple of years. Rural areas aroundParadise and Decatur in Wise County

and Prosper in Collin County nearcommuter highways feature new,large-lot, country-style exurbanresidential projects.

Jerry Campbell, developer of thegated residential community CanyonSprings Ranch outside Paradise, states

Prosper, has one-acre minimums forresidential lots and allows one horseper acre. Amberwood and otherProsper developments have benefitedfrom the high-tech employers andhigh-income employment growth inthe Plano and Richardson areas. The43-lot development, which opened in1998, has sold all but eight lots. Pricesfor three to six acres originally rangedfrom $80,000 to $90,000 but havejumped to $105,000 to $150,000reflecting the growing demand for thistype of residential lifestyle.

East Texas.The natural beauty of thewoodlands and abundant reservoirshave made the Piney Woods of EastTexas a popular second-home locationfor decades. Much of this area, such asRains, Wood and Henderson counties,has easy access to the Dallas area. Thelate 1990s brought a new round ofexurban subdivisions to the area, manyof them more upscale than older

projects. The Vista by CrestviewProperties, near the small town ofChandler between Tyler and Athens, isa gated, hilltop community of 38 lotswith extensive views. The first phase of14 lots, ranging from one-half to threeacres, sold out in eight months. Pricesrange from $29,000 to $59,000 for lotswith the best views. Lot sizes rangefrom one-half to one acre in the second

phase, which is now preselling.South Central Texas.The rolling

countryside of South Central Texasbetween Houston and Austin hasappealed to urban residents for manyyears. Much of the rural property in thisarea is owned by Houston residentswho escape to their farms and rancheson weekends. Recently, exurbanresidential subdivisions have begun to

sprout, especially in areas readilyaccessible to the two major highways,Interstate 10 and U.S. 290. Exurbandevelopment has accelerated with thegrowth of Houstons economy and theincrease in high-paying jobs in thecitys western suburbs.

vacation distractions for potentialfamily homebuyers. Interest in thedevelopment has again picked up withthe construction of the first homes andwith improvements to U.S. 290 innorthwest Harris County, which enablecommuters to reach jobs in suburbannorthwest Houston in less than 45minutes.

Other Houston metro.Commuter-oriented exurban projects also havebecome popular in rural areas closer toHouston. In addition to the long-popular Lake Conroe area, a variety of

large-lot subdivisions have openedseveral miles from the existing subur-ban fringe, including the heavilywooded area of southwest Montgom-ery County. The FM 1488 corridor,which runs from Magnolia eastward toThe Woodlands, is lined with coun-try-style subdivisions featuring largelots and, in some projects, equestrianfacilities. Speculative homes by

production builders in these develop-ments typically cost from the upper$200,000s to $350,000.

Fort Bend County is another areaattracting similar developments. Large-lot developments have becomepopular along the Brazos River in thenorthern part of the county andsoutheast of Rosenberg in the centralpart of the county. These exurban

subdivisions may be consideredsuburban within a few years asHoustons fast-paced growth contin-ues.

Other areas.Along the westernportion of Copano Bay, north ofCorpus Christi, an old exurban projectis being redone as a large-lot subdivi-sion. The development, Copano BayRetreat, is sparking some interest from

the Victoria area, but much of thedemand for lots is coming from the SanAntonio and Austin areas, which areseveral hours away. Copano BayRetreat is one of the few exurbanprojects along the coast. Most residen-tial projects in the area are within


9/25

sold. Buyers are coming both fromlocal towns and the states majormetropolitan areas. The long-distancebuyers are attracted by the cooler, drierclimate and mountain views.

Common Features of NewExurban Communities

While exurban residential develop-ments show some variation in style andfeatured amenities from region toregion, usually in response to naturalfeatures such as terrain, vegetation andbodies of water, several characteristics

are generally common to the projects.Large lots, low density.Because a

major selling point of exurban residen-tial projects is elbow room, theyalmost always feature lots that arelarger than a typical suburban lot. Ingeneral, exurban lots range from one-half to 20 acres. The lot sizes of anexurban project vary with severalfactors:

desired market price and imagepositioning;

county regulations regardingminimum lot sizes for varioustypes of water sources and sewagedisposal;

existing roads and the financiallysupportable amount of new roadconstruction within the project;

and natural terrain that may dictate lot

sizes to take advantage of views orwork around floodplains or otherfeatures that may influence lot sizeand layout.

Some developments have higherdensities, particularly resort-orientedprojects for which market differentia-tion comes from recreational amenitiessuch as golf courses or lakes asopposed to a country-style atmo-sphere.

Appealing natural features, sur-roundings.As might be expected,tracts with interesting terrain, extensiveviews attractivetreesandother

niche. Common installed amenities inTexas exurban developments include:

entrance gates and perimeterfencing,

lakes, equestrian facilities and

greenbelts and natural restorationareas.

Deed restrictions, architecturalcontrols. In ironic contrast to the imageof rural living as the epitome ofproperty-use freedom, deed restrictionsand development controls are nearlyuniversal features of exurban residen-

tial projects in Texas today. Pastexurban projects often had fewrestrictions. Buyers generally couldhave site-built or manufactured homes,build immediately or hold the propertyvacant for years, add outbuildings andraise animals. Today, with manybuyers of exurban lots coming fromheavily restricted suburban environ-ments, extensive deed restrictions havebecome the norm.

Deed restrictions in these projectsaddress several topics to varyingdegrees.

Site-built vs. manufacturedhomes.For most projects, acovenant preventing the installa-tion of a manufactured or mobilehome is necessary to assure

prospective lot buyers of futurevalue protection.

Minimum home size, exteriormaterials and other architecturalfeatures.Most projects surveyedhave a minimum required homesize that varies from 1,200 tonearly 3,000 square feet, depend-ing on the market positioning ofthe development. Many develop-ments also specify a minimumcoverage of exterior facades bycertain materials, such as brick orstone. The most vague of thesecontrols is the architecturalreview through which home plansmustbeapprovedbyareview

located on a site, what types offencing and landscaping may beused, whether outbuildings suchas shops or barns are allowed andif so, how many outbuildings.

Maximum lot holding periodwithout home construction.Toprevent long-term neglect of lotsand give a comforting physicalimage to prospective buyers,many subdivisions require thathome construction begin within aprescribed time period afterclosing.

Property uses and agricultural(farm animal) controls. Commer-cial uses and certain farm animalsare typically restricted. Often, aspecific number of eligibleanimals are allowed per acre.

Generally, the more upscale thedevelopment, the stricter the controls.Some controls, such as those onconstruction materials and home size,diminish as lot prices increase. This isbecause buyers in more upscalesubdivisions are making a greaterinvestment and are more likely to buildhomes that will maintain and enhancethe value of the property.

Market Demographics

Demand for exurban residential

housing is coming from more and moresegments of the population, includingretirees and pre-retirees, second homebuyers, relocating local buyers andnonlocal working families.

Retirees and preretirees.The mosttraditional source of demand forexurban residential projects is retireesand those nearing retirement. Exurbanresidential developers around the state

report continued demand from thisgroup. In some projects, such as TheVista in Henderson County, out-of-state retirees have made up a signifi-cant percentage of buyers. Manybuyers were raised in rural areas andwant to retire away from the hustle and


10/25

will use their exurban property as asecond home prior to retirement.

Relocating local buyers.Existingarea residents seeking to move up inhome quality or downsize from farms

or ranches create another source ofdemand for exurban residentialproperties. Many of these buyers are ofworking age and hold salaried posi-tions in local government, schools,hospitals or industry. Housing qualityand value protection are key features ofexurban projects targeting this segmentof the market.

Nonlocal working families.The keysource of demand for exurban residen-tial properties in many regions of Texasis the nonlocal, working-age buyer.Typically, these buyers live and workin the suburbs, though they may havebeen raised in rural areas or smalltowns. They seek to make lifestylechanges and, finding the suburbs to betoo high density, desire greater

distance from their neighbors. Many ofthese buyers have children and schoolquality is an important consideration.

This group typically has decided onan acceptable commuting drive time totheir existing job. Anecdotal evidencefrom marketers of exurban projectssuggests that acceptable drive timesand distances are increasing. They alsoexpect a level of security and local

services similar to what they had in thesuburbs. Thus, gated entrances and theresponse times of local emergencyservices are relevant subdivisionfeatures. Many also demand a level ofdeed restrictions and property controlssimilar to those in the suburbs toensure long-term value retention.

Employment patterns.While manyexurban subdivisions are within

tolerable daily commuting distance toemployment centers, others are suitedto less traditional employment pat-terns. Projects in Somervell County arepopular with firefighters, airline pilotsand others in the Fort Worth-Arlingtonarea who work multiday shifts and

ers report that this group is generallyseeking a lifestyle change. They aredisenchanted with the suburbs, whichthey feel are too dense and cookiecutter, with congested roads, danger-

ous schools and a too-complex qualityof life. They want the country atmo-sphere and more space betweenhomes. Many are looking for a homewhere they can have a horse on or nearthe property.

Development Considerations

A number of market and regulatory

factors affect the attractiveness ofsubdivision development to a rurallandowner. They also affect thedensity, layout, timing and marketingof the project.

Selecting Property

A rural tracts potential as an exurbanresidential development is influencedby a variety of physical and locational

factors.Location.If the target market for

residential buyers will be employeescommuting daily to a metropolitanarea, the property must be locatedclose enough to have a tolerablecommute time. While there is nostandard for drive time, a 45-minutedrive is considered to be near the limitsof tolerance. A strategic perspective for

developers is to look for plannedhighway expansions or extensions thatwill decrease drive times to majoremployment centers and select tractsthat are too distant now but will bebrought within the tolerable commuteshed as highway improvements aremade.

Physical assets.Homebuyers are

attracted to properties with undulatingor hilly terrain, trees and water featuressuch as creeks or lakes. Developers canget premium prices for lots by takingadvantage of these features, especiallywhen the terrain has good views or lotfrontage on water features.

Sometimesphysical deficienciescan

sites. If views are a primary marketingpoint for the development, the subdivi-sion planner will be restricted by theneed to offer views from as many lotsas possible and minimize potential

view interference from future homeswithin the project.

Road frontage.Because roadconstruction is perhaps the greatestsingle infrastructure cost to a developerin most exurban residential projects,the presence of existing roads within oradjacent to the property can make asubstantial difference in the projects

investment potential. In many coun-ties, access to platted lots must be fromroads that are built to existing countystandards, so existing roads may beattractive only if they will not requireupgrading. Lesser-used farm-to-marketroads and well maintained countyroads provide ideal road frontage.Heavily traveled roads such as U.S. orstate highways may actually detract

from property value because of trafficnoise.Adjacent properties and property

shape.Obviously, undesirable uses onadjacent properties will negativelyaffect the residential value of a ruralland tract. Because exurban residentialsubdivisions are typically located inunincorporated areas administered bycounties, which do not have zoning

powers, there is also little assurancethat adjacent external properties couldnot harbor undesirable uses in thefuture. Therefore, properties whoseshapes minimize frontage withadjacent private property and provide alarge number of interior lots may bemore desirable. Frontage on nonprivateuses, such as bodies of water, alsohelps to minimize this risk. Developers

should conduct research on adjacentproperties to determine the risk ofundesirable land uses on adjacenttracts.

Environmental concerns.Propertieswith underlying geology that ensureslong-term availability and safety of


11/25

habitat designation on their properties.Developers may be liable for habitatdamage, even if the habitat was notpreviously mapped.

Local services.Most exurban

homebuyers in Texas are coming frommajor metropolitan areas and areaccustomed to the level of private andpublic services available in a typicalmiddle- or upper-income suburb.Exurban developers report that buyersare concerned about security, access toemergency services and prestige. Manyexurban developments have gatedentrances, which address both securityconcerns and the desire for prestige(see Amenities section). Many otheraspects of local services are out of thedevelopers control, but site selectioncriteria can include good emergencyservice response times, high-quality,nearby medical facilities, a reputablelaw enforcement organization, highlyregarded school districts and at least a

moderate level of community retailservices.

Government Regulations

The regulatory body Texas exurbanresidential developers deal with most isthe county government, specificallythe commissioners court. Becausecounties do not have zoning powers inTexas, they exert their greatest devel-

opmental control in subdivisionordinances. The exception occurs inunincorporated areas within theextraterritorial jurisdiction of anincorporated city, usually one-halfmile to several miles from the citylimits. Developments in these areasmust conform to the citys subdivisionregulations and plans must be submit-ted to the citys development reviewagency for approval.

In the 1990s, differing interpretationsof state laws resulted in legal disputesover a countys right to require exurbanresidential developers to file subdivi-sion plats. After court rulings limitedcountiesauthority torequireplats the

law, its history and exceptions tocounty regulation, see Real EstateCenter Publication 1195, CountyRegulation of Rural Subdivisions.

Developers must obtain approval

from the county commissioners courtprior to filing the plat with the countyclerk. The courts approval is based onsatisfaction of county subdivisionregulations, which is usually confirmedduring a review by the county engi-neering office or an engineeringconsulting firm hired by the county.Regulations typically address threeareas: roads, sewage disposal andwater supply, although standards fordrainage, flood zones and otherenvironmental impacts may beincluded as well.

Roads.Most counties requiresubdivision developers who includepublic roads in projects to build thoseroads to county standards. For ex-ample, in Kendall County north of San

Antonio, new public roads in anexurban subdivision are required tohave a 60-foot right of way. In HaysCounty south of Austin, developersmust build roads to certain engineeringspecifications for the road base andpavement. These standards aredesigned to create roads that will lastfive years without significant mainte-nance. Some counties have drainage or

storm water regulations that must besatisfied as part of the subdivisionsroad plan.

Most of the counties contacted forthis report also require new privateroads within gated communities tosatisfy county public road standards,unless all lots are in excess of ten acres(per SB 710). The counties require thisbecause homeowner associations may

choose to publicly dedicate roads inthe future rather than pay the expenseof major maintenance, and thecounties do not want the addedexpense of the required upgrades if thatoccurs. At least one county, CollinCounty north of Dallas, requires all

ity. Some areas where groundwater is arelatively low-profile issue may notspecify a requirement. For example,Montgomery County, north of Hous-ton, requires only that lot sizes be

adequate to accommodate the size ofdrain field as necessary because of soiltype to effectively absorb the effluentwithout creating a health hazard ornuisance. The county requires that anengineering study be performed beforea subdivision is approved to verify thatuse of private septic systems will notcreate a health hazard.

In Somervell County, southwest ofFort Worth, an unsewered subdivi-sion lot may be as small as 20,000square feet (approximately one-halfacre). However, the subdivision coderequires the subdivider or owner toascertain and certify that an accept-able on-site sewage system can beinstalled on every unsewered lot.

Generally, areas of the state with

more sensitive groundwater concerns,such as the Hill Country, require largerlot sizes for conventional septicsystems, usually at least one acre.Hays, Kendall, and Comal counties allhave a minimum one-acre lot size forany subdivision using private, conven-tional septic systems. Smaller lot sizesmay be permitted in some counties ifalternatives to conventional private

septic systems are used. These alterna-tives include aerobic systems andcommunity package plants. Thepackage plants must obtain approvalfrom the Texas Natural ResourcesConservation Commission (TNRCC).

Water supply.The state legislature,in Senate Bill 1323 (1999), approvedthe use of groundwater availability as abasis for county subdivision regula-

tions. Thus, counties may now requiredevelopers to obtain approval fromTNRCC certifying that enough ground-water is available to serve the proposedproject, if the project will supply waterfrom wells, prior to the filing of a plat.

None of the counties contacted for


12/25

disposal. Subdivisions with privatehomeowner wells have a minimum lotsize of 5.01 acres.

In Kendall County, a minimum one-acre lot is required for projects with

either on-site sewage or private wellsand a minimum of three-acre lots forprojects with both features. HaysCounty provides a chart detailing lotsizes for various combinations of watersupply and sewage disposal options.Minimum lot sizes range from none forsubdivisions with public sewer serviceand surface or rainwater collection tofive acres for lots using conventionalseptic systems and private wells in theEdwards Aquifer Recharge Zone.

Some developers install a commu-nity water supply plant in their subdivi-sions. Examples of this include HillCountry projects by Rinco of Texas,such as Stallion Estates, Rancho delLago and The Summit. The Fulbrookproject by DHK Development near

Fulshear, west of Houston, also has itsown water plant. Counties with lotsizes based on water supply willusually allow higher densities forsubdivisions with centralized watersupply systems.

Other regulations.In addition to thesubdivision regulations previouslydescribed, exurban residential devel-opers may need to meet other govern-

mental requirements at the county andother levels. Examples include:

Drainage and storm water runoff.As mentioned previously, somecounties may require drainageimprovements as part of the roadplan submitted with the plat.Others may require a separatedrainage plan. MontgomeryCounty requires a separatedrainage plan prepared andsealed by a professional engineer.

Maintenance bonds.MontgomeryCounty also requires developersto purchase maintenance bondsto insure the quality of construc-tionon publiclydedicatedroads

Endangered species.Developersmay want to have a habitat fieldsurvey performed to conform tothe U.S. Department of Fish andWildlife requirements to deter-

mine whether the property to bedeveloped is a habitat for anendangered species. While thisexposes the developer to the riskof actually finding endangeredspecies on the property, it maysave money in the long runbecause developers are liable forharming habitat regardless ofwhether the existence of thehabitat was known prior todevelopment.

Many Texas county governments,especially in the Hill Country, arefeeling enough pressure from exurbandevelopment to modify their subdivi-sion regulations. Some counties areseeking expanded regulatory authorityfrom the state legislature.

Infrastructure and Costs

Although exurban residentialsubdivisions by nature require fewerup-front improvements than suburbandevelopments, developers still mustaddress several significant infrastruc-ture factors and other costs whenevaluating an exurban project.

Roads. In many if not most exurban

residential projects, the most signifi-cant infrastructure investment is theinternal road system. Estimates of roadcosts from surveyed developers rangefrom $25 to $50 per linear foot for roadconstruction that meets typical countystandards. Construction costs varydepending on the terrain, drainageconsiderations and county standards.Road costs have a strong influence onlot platting. Construction costs some-times drive the layout of lots tominimize the number of roads needed.Sometimes this results in oddly shapedparcels with a finger of propertyextending to the road and higherdensities (smaller lots) toensure

depth. Roper estimates that a privatewell in the Hill Country costs thehomebuyer $5,000 to $6,000. He hasfound it more economical to buildcommunity water wells and plants at a

cost of $75,000 to $100,000 forhigher-density developments (one-halfto one-acre lots). The cost tohomeowners ends up at about $1,400to $1,500 per lot. The homeownerspay an assessment for the constructionof water lines six to seven months afterthey purchase their lots. In largeracreage projects, however, a centralwater plant may not be economicallyfeasible.

Another option in areas close to anavailable supply of surface water or apublic water supply system, such as areservoir, is to obtain rights to use thatsurface water. Developers may workwith a nearby municipality that has apublic water supply system to have thesubdivision fully annexed or to receive

contract services from the municipal-ity. Another option is to contract with awater supply corporation that hasaccess to a surface water supply. Manycounties allow higher density develop-ment if surface water, an installedcentral water system or a municipalwater supply is used.

Waste disposal.Exurban develop-ments usually require homeowners to

install their own on-site sewagefacilities (OSSF). A variety of OSSFoptions are available. Bruce Lesikar ofthe Department of AgriculturalEngineering at Texas A&M Universityprovided the summary of OSSF systemswith associated costs shown in Table 5.

Homeowners should select OSSFsystems based on topography, soiltype, budget, desired landscape

features and county regulations.Lesikar cautions that residents of theHill Country or areas with similar rockytopography can expect to pay $4,000to $5,000 or even more to install anOSSF system because of the rocky soil,a possible need to bring in topsoil and


13/25

engineering web site, http://ossf.tamu.edu.

More centralized yet economicallyfeasible disposal options also exist forhigher-density exurban developments.Traditional centralized systems usinglarge-diameter pipes are generally tooexpensive for a typical exurbansubdivision. In contrast, cluster

systems and small diameter gravitysewers (SDGS), which collect wastewa-ter from a subdivision and use acommon treatment and disposalfacility, have annualized costs that arein an acceptable financial range,according to Lesikar.

Treatment and disposal options forthese centralized systems include land-based systems and surface waterdischarge. Environmental conditionsaffect the cost-effectiveness of eachoption. Surface water discharge oftenrequires more extensive wastewatertreatment than do land-based systems.According to the Texas AgriculturalExtension Service, adapting from EPAestimates, the capital cost for a 135-home community on one-acre lots

would be $598,100 for a cluster oralternative SDGS system, with annualoperations and maintenance costs of$3,720 (in 1995 dollars).

Other.An exurban residentialsubdivision requires varying levels ofother capital expenditures or installa-tionandser iceagreementsfor items

Table 5. On-Site Sewage Facility Costs

Costs

System Type Up-front Annual Maintenance

Conventional septic $1,800 $3,500 $75

Aerobic with spray distribution 4,800 6,500 300 600

Aerobic with subsurface drip distribution 4,000 10,000 300 600

Low-pressure dosing 3,000 10,000 $125

Sand filter 6,000 9,000 As low as $0

Trickling filter 4,500 6,500 NA

Constructed wetlands $5,000 $9,000 NA

Source: Department of Agricultural Engineering at Texas A&M University

nearby towns and the target market forbuyers.Time is a significant investment that

may not seem obvious to developers atfirst, especially the time needed towork with county governments andother relevant regulatory bodies.Because many counties are modifyingtheir subdivision codes, primarily to

include greater restrictions and higherstandards, developers should antici-pate extra time for governmentalreview and approval. In addition,because many rural counties do nothave a full-time engineering staff,review of a proposed subdivision maybe performed by engineering consult-ants who may be working for multiplecounties. Exurban residential develop-ers would be wise to add contingencytime and associated costs during thereview process to their economicevaluation of a project.

Amenities

Exurban developers sometimes offerinstalled amenities in their projects toenhance differentiation, compete for a

particular buyer income level or appealto the interests of a specific marketsegment. Common amenities found inexurban residential projects include:

Entrance gates.By the late 1980s,gated entrances were becoming morepopular in upscale suburban subdivi-

become an essential element forattracting higher-income buyers.

Lakes.If the terrain and watershedsallow, some developers have addedsmall lakes within their projects.Lakefront lots can command a pricepremium. Lakes can also be usedwithin community open space so thatan amenity premium is spread commu-

nity-wide. For example, the ThousandOaks development along FM 1488north of Houston put in two lakes, onefor water skiing and one for personalwatercraft.

Equestrian facilities.An importantsegment of market demand is frombuyers who want to keep horses eitheron their own homesite or within thecommunity. Developers interested inappealing to this market segment caneither allow on-site horses throughdeed restrictions or provide commu-nity equestrian facilities. The 329-acreRoyal Lakes Estates development inFort Bend County, southwest ofHouston, includes an equestrian centerand riding trails. Thousand Oaks, alongFM 1488 north of Houston, includes an

equestrian center with a riding arena,bridle path, horse walker and high-quality stalls.

Community recreation, greenbelts,ecological preserves.Many exurbanprojects provide community recre-ational space similar to that found ins b rbancomm nities Theset pesof


14/25

central marketing focus is highlightingthe native flora of the area. Within thecommunity, conservation corridorsconnect the various residential areas.These corridors are designed to allow

reintroduction and nurturing of theareas native grasses and wildflowers.The developer, DHK Development,brought in a professor from the TexasA&M Rangeland Ecology and Manage-ment program to direct the manage-ment of this open space. Includingopen-space amenities such as theseobviously has a major effect on theland-planning orientation for thedevelopment.

Land Planning

An exurban developer must workwith topographical, financial andmarketing constraints to develop theoptimal land plan for a project.Topography is often the most obviousconstraint, because the propertys

terrain, soil and drainage characteris-tics may limit the number and place-ment of buildable home sites. How-ever, it is only the first consideration indeveloping a projects land plan. Thecosts of providing infrastructure, thepotential revenue per square foot andlot price premiums also play into landplan development. A sufficient numberof lots must be generated to allow the

developer a satisfactory return, butincreasing the number of lots can alsoincrease infrastructure costs, especiallyif additional roads are required.

Marketing considerations aresignificant factors in the land plan. Adeveloper must decide on a lot layoutthat aligns with the projects marketingstrategy. For example, if the subdivisionis marketed as having lake views and

frontage, the developer needs toprovide enough lots that followthrough on the promotional theme,even to the point of installing newlakes. If the project is promotedprimarily as having common-areaamenities such as greenbelt trails or

views of open space, then it is impor-tant to provide such views from asmany lots as possible and minimizeinterference from other home sites. Insummary, the projects land plan

options should be developed inconjunction with the marketingstrategy, and both should result frommarket research and selection of atargeted group of buyers.

One new approach to land planningtakes advantage of the environmentallyconscious segment of the exurbanhomebuyer market. This approach isinspired by the work of environmentalexperts and rural land planners such asRandall Arendt, whose book,Rural byDesign, outlines exurban land plan-ning alternatives that maximize openspace and preserve native habitats.DHK Development has prioritizedopen-space preservation in itsFulbrook development outsideHouston, and developers Doug and

Donna Hutchinson plan to createsimilar projects in the Glen Rose areaof North Central Texas.

Deed Restrictions andArchitectural Controls

One of the most significant trends inexurban development in Texas over thelast decade has been the inclusion ofmore stringent deed restrictions and

architectural controls. This trend hassprung from the suburban expectationsof most exurban homebuyers. Whileexurban homebuyers want a countryatmosphere, they also want propertyvalue protection not normally associ-ated with country living. They viewtheir property not only as a home witha specific set of services and amenitiesbut also as an investment, and theyrequire deed restrictions to minimizethe risk to that investment.

Deed restrictions and architecturalcontrols must be carefully matchedwith the projects target market and itsmarketing strategy. For example,restrictions against farmanimals on the

wanting smaller homes with lessmaintenance. Overly strict architec-tural controls will turn away buyerswhose dream home does not fit withinthe guidelines, or whose image of

country living centers around the ideaof increased freedom of property usage.

However, such controls may benecessary to ensure that property useand home appearance fit the projectsmarket image. For example, theFulbrook development west of Hous-ton intends to maximize value in theproject by creating a neighborhoodarchitecture that reinforces its ruralpreservation theme. All proposedhomes must be approved by a reviewboard and fit into an architecturaltheme based on the styles of traditionalfarmhouses. Upscale exurban projectssuch as Fulbrook often have a devel-oper-approved list of reputable homebuilders to ensure that every home is ofacceptable quality and architecture.

ConclusionAs long as the Texas and national

economies continue to prosper andhousing consumers seek more elbowroom and a rural atmosphere, demandfor exurban residential developments islikely to remain strong. Developers ofthese projects need to be mindful ofseveral factors that make exurban

residential projects unique.First, topography, regional location

and access to metropolitan areas areamong the key factors that meritspecial consideration in weighing theattractiveness of an exurban residentialproperty. Second, developers need tomaintain awareness of changes in legalregulatory powers and attitudes of ruralcounty governments. Finally, not all

exurban residential projects are alike,and great care must be taken tocoordinate a projects land plan, lotprices, deed restrictions and amenitieswith a chosen target market of consum-ers who are likely to be suburbanresidents.


15/25

Appendix


16/25

13

Figure 1. Hill Country Median Rural Land Price per Acre

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Frio, Maverick , Medina, Uvalde, Zavala Burnet, Gilles pie, Llano, Mas on

Bandera, Blanco, Kendall, Kerr Atasc osa, Bexar, Comal, Guadalupe, Karnes, W ilson

Source: Rea l Estate Center a t Texa s A&M University


17/25

14

Figure 2. North Texas Median Rural Land Price per Acre

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Archer, Baylor, Clay, Foard, Hardeman, Haskell, Jack, Knox, Shackelford, Stephens, Throckmorton, Wichita, Wilbarger, Young

Cooke, Fannin, Grayson, Montague

Collin, Dallas, Denton, Ellis, Hunt, Kaufman, Rains, Rockwall, Van Zandt



18/25

15

Figure 3. North Central Texas Median Rural Land Price per Acre

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Brown, Callahan, Coleman, Comanche, Eastland, Erath

Hamilton, McCulloch, Mills, Lampasas, San SabaHood, Johnson, Palo Pinto, Parker, Somervell, Tarrant, Wise

Bell, Bosque, Coryell, Falls, Freestone, Hill, Limestone, McLennan, Navarro



19/25

16

Figure 4. South Central Texas Median Rural Land Price per Acre

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

19 80 19 81 1 98 2 1 98 3 1 98 4 1 98 5 1 98 6 1 98 7 1 98 8 1 98 9 1 99 0 1 991 1 99 2 1 993 1 994 1 995 1 996 1 99 7 1 998 1 999

Colorado, DeWitt, Fayette, Gonzales, Lavaca

Bastrop, Caldwell, Hays, Lee, Milam, Travis, Williamson

Brazos, Burleson, Grimes, Leon, Madison, Robertson, Washington



20/25

17

Figure 5. Southeast Texas Median Rural Land Price per Acre

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Austin, Brazoria, Chambers, Fort Bend, Galveston, Hardin, Harris, Jefferson, Liberty, Montgomery, Orange, San Jacinto, Walker, Waller



21/25

18

Figure 6. East Texas Median Rural Land Price per Acre

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Anderson, Cherokee, Gregg, Harrison, Henderson, Houston, Nacogdoches, Panola, Rusk, Shelby, Smith

Source: The Real Estate Center at Texas A&M University


22/25

19

Figure 7. West Texas Median Rural Land Price per Acre

$-

$50

$100

$150

$200

$250

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Brewster, Crane, Culberson, Hudspeth, Jeff Davis, Loving, Pecos, Presidio, Reeves, Terrell, Ward, Winkler

Source: Real Estate Center at Texas A&M University


23/25

20

Figure 8. North Texas Farm and Ranch Median Prices

January 1998 August 2000

$0

$50,000

$100,000

$150,000

$200,000

$250,000

Jan

1998

Feb

1998

Mar

1998

Apr 1

998

May

1998

Jun

1998

Jul 1

998

Aug

1998

Sep

1998

Oct 1

998

Nov 1

998

Dec 1

998

Jan

1999

Feb

1999

Mar

1999

Apr 1

999

May

1999

Jun

1999

Jul 1

999

Aug

1999

Sep

1999

Oct 1

999

Nov 1

999

Dec 1

999

Jan

2000

Feb

2000

Mar

2000

Apr 2

000

May

2000

Jun

2000

Jul 2

000

Aug

2000

Sep

2000

Oct 2

000

Nov 2

000

Dec 2

000

Source: Multiple Listing Services


24/25

21

Figure 9. Austin Farm and Ranch Median Price

January 1998 December 2000

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

Jan

1998

Feb

1998

Mar

1998

Apr 1

998

May 1

998

Jun

1998

Jul 1

998

Aug

1998

Sep 1

998

Oct 199

8

Nov 1

998

Dec 1

998

Jan

1999

Feb

1999

Mar

1999

Apr 1

999

May 1

999

Jun

1999

Jul 1

999

Aug1

999

Sep 1

999

Oct 1

999

Nov 1

999

Dec 1

999

Jan

2000

Feb

2000

Mar

2000

Apr 2

000

May 2

000

Jun

2000

Jul 2

000

Aug2

000

Sep 2

000

Oct 2

000

Nov 2

000

Dec 2

000



25/25

22

Figure 10. Austin Farm and Ranch Price per Square Foot

January 1998 December 2000

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Jan

1998

Feb

1998

Mar

1998

Apr 1

998

May 1

998

Jun

1998

Jul 1

998

Aug1

998

Sep 1

998

Oct 199

8

Nov 1

998

Dec 1

998

Jan

1999

Feb

1999

Mar

1999

Apr 1

999

May 1

999

Jun

1999

Jul 1

999

Aug1

999

Sep 1

999

Oct 199

9

Nov 1

999

Dec 1

999

Jan

2000

Feb

2000

Mar

2000

Apr 2

000

May 2

000

Jun

2000

Jul 2

000

Aug2

000

Sep 2

000

Oct 200

0

Nov 2

000

Dec 2

000


Documents

Exurban Development