Amid Rapid Growth, Developers Tell Montgomery County Officials 'Don't Screw It Up’

Montgomery County, Texas, has long benefited from its relative affordability and lax regulations, making it easier for developers to build and for people to move there.

While it may be losing some of that edge due to increased NIMBYism, regulations and expenses, developers are still eager to flock to the fast-growing area, at least for now, panelists said at Bisnow’s The State of Montgomery County event at The Woodlands Resort, Curio Collection by Hilton on Nov. 19.

In a comparison of two 200-lot sections in Oxland Group’s master-planned developments, co-President Tom Woliver found that building a house was $60K cheaper in Montgomery County than a county a few hours north.

“That’s one big reason why we’re here,” Woliver said.

Oxland Group developed the 2,000-acre Two Step Farm just north of The Woodlands. It put in $100M worth of infrastructure, a water plant, a sewer plant, roads, a coffee shop, a tap room, a farm and 20 model homes within 25 months of the land acquisition, Woliver said.

“I'd argue there's no better place in the country where you can do that,” he said.

But the NIMBYism happening throughout Montgomery County — and the Texas Legislature and the state as a whole — is very concerning, said Kirk Laguarta, Houston adviser for Land Advisors Organization. He cited an example of neighbors blocking a pest control provider from leaving while they waited for police because he was soliciting in their neighborhood. 

“This is a pro-growth area,” Laguarta said. “We’re almost California-ing our Texas by just this NIMBYism stuff.” 

Legislators this year passed a whittled-down version of Senate Bill 15, which allows developers to build homes on smaller lots, a factor proven to help unlock home affordability.

The bill bars cities from requiring homes in new subdivisions to be on lots larger than 3,000 SF, which was an increase from the original proposal of 1,400 SF. The law only applies to cities with at least 150,000 people in counties of at least 300,000 people. 

Other ideas to allow more homes, including a proposal making it easier to build accessory dwelling units, quietly died this session, according to the Texas Tribune.

Minimum lot size is directly correlated with affordability for Ellison Development, co-founder Colleen Ellison said. Ellison works with homebuilder D.R. Horton to develop communities like Castle’s Edge in Willis, which sells homes with prices starting in the $130Ks.

“We build charming communities that people of all ages want to live in,” Ellison said, adding the company has utilized 30-foot-wide lots.

On the same amount of land, Ellison Development can build eight to 10 homes using 30-foot lots, but only six to seven homes using 40-foot lots, she said. 

Most of the state’s largest cities require single-family homes on lots of 5,000 SF to 7,500 SF, according to a Texas Tribune analysis. The city of Conroe required 45-foot-wide lots with a 120-foot depth as of 2022, resulting in a minimum of 5,400 SF. 

The Montgomery City Council in May allowed a variance for 45-foot-wide, 4,950 SF lots, down from its usual 75-foot-wide, 9,000 SF standard. Neither Montgomery nor Conroe has a population large enough to be impacted by Senate Bill 15. 

“The dirt still costs the same, I’m just dividing it out with a whole lot less homes,” Ellison said. “That all gets passed on to the buyer through the builder.” 

Developers are best at deciding what size lot they can build on, Laguarta said, adding that it may be a townhome on a 30-foot lot.

“It's going to look good,” he said. “And it's going to be something that is going to sell and, consequently, going to help meet that affordability pressure that's out there. Obviously, government's very important … But let the pros do what they do.” 

Panelists said part of what makes Montgomery County great is the breadth of product, from affordable starter homes to luxury condos like the Ritz-Carlton Residences coming to The Woodlands. 

But there are challenges on the high end, too, as the cost of retail construction is pushing up rental rates required to get a return on investment, said Peter Barnhart, president of Caldwell Cos. A simple 20K SF to 30K SF retail center might require rents in the mid- to high $40s per SF to pencil, depending on the location. 

“We see these tenants' finances,” Barnhart said. “Even the guys that are doing really well, we're really stressing our tenants right now.”

Montgomery was one of the 10 fastest-growing counties in the country last year. 

With rapid population growth comes jobs, businesses, development and, typically, increased regulation, Woliver said. He warned against the latter, as regulations tend to increase costs and diminish quality.

“What we have going on in Montgomery County, don't screw it up,” he said.