By Alfred King
Due to low interest rates, prospective Raleigh-area homebuyers can now purchase a home priced $48,000 higher than a year ago and still pay the same amount in mortgage principal and interest, according to national real estate data analytics firm Black Knight.
That increased buying power may provide a modicum of relief for homebuyers trying to navigate the rapidly increasing home prices in the Raleigh market.
Local experts say Raleigh area homebuyers have high expectations and a good sense of what they want in a home purchase. Raleigh builders offer a wide range of homes with features that appeal to borrowers who are in different life stages. But experts say there are steps that even experienced buyers should keep in mind before they begin their spring home tour.
A local real estate professional who is well-versed in identifying home features that meet the needs of borrowers at different life stages is Laurie Evans of the Jim Allen Group of Coldwell Banker Howard Perry and Walston. Evans has been a real estate agent for about 13 years. She specializes in selling newly built homes, educating buyers about what’s possible in their home search, and helping builders stay on top of the latest home buying trends.
She also has been the real estate consultant for HGTV’s popular, long-running “Love It or List It” home renovation program for five consecutive seasons. The show films its episodes in the Triangle, and Evans helps identify homes featured in the program.
“Things are going great here (in the Triangle),” Evans said. “We are having a lot of people, especially millennials, saving to buy bigger homes earlier.” She said many first-time homebuyers now begin their single-family home search with properties priced closer to $400,000, rather than the once-customary $200,000. “Townhomes have come in and kind of replaced that detached single-family home for first-time buyers at the $250,000 to $325,000 price point.”
She added that, thanks to home renovation shows on television and social media sites like Pinterest and Houzz, buyers want more high-end features like floating shelves, barn doors and better lighting fixtures, even at lower price points.
Evans said that open floor plans and outdoor living areas remain important for move-up buyers. She said buyers also want large mudroom areas for organization and storage, and places to prep and store messy kitchen items. “Having space on the first floor for in-laws or visiting parents is important, and buyers want lower-maintenance options like luxury vinyl plank flooring. And I’ve seen more people wanting outdoor pools than ever before,” she added.
Regina Tobin, a sales consultant with Dan Ryan Homes in the Wendell Falls community, said that home inventory is low across the region, especially for entry-level homes. “It’s more of a seller’s market out there. Anything priced under $300,000 is gobbled up quickly,” said Tobin. The strong demand at lower price levels causes many first-time buyers to now choose townhomes, which can range from $220,000 to $240,000 at Wendell Falls. She said it’s important for first-time buyers to educate themselves about the home buying process before they start their home search, so their expectations are aligned with reality.
Make Sure You’re Mortgage-Ready
In today’s competitive market, where many homes in desirable communities attract multiple offers, a potential home buyer can put themselves a step ahead of the game by having mortgage details worked out before they even begin shopping.
Rob Howell, vice president and area sales manager for Fifth Third Bank, which has five branches in the Triangle with more set to open this year, said borrowers should meet with a mortgage loan officer before they begin house hunting. “Everything changes so quickly now, staying up-to-date on the process is critical.”
Howell said his firm is excited about what the spring housing market will look like. “The housing industry has enjoyed relatively low interest rates for the past 18-24 months, so down payment requirements are less stringent than in previous periods,” he said. But it’s still important for a customer to have a down payment, or some “skin in the game,” to demonstrate their commitment to the responsibility of homeownership and paying a mortgage, he added.
Howell said a traditional 30-year, fixed-rate mortgage may not be the best option for residents who know they may stay in the Triangle for less than seven years. A 15-year mortgage could be an attractive option that allows a borrower to build equity more rapidly, assuming they can afford the higher monthly mortgage payments that come with the loan type.
He said borrowers can increase their leverage with home sellers if they meet with a lender to obtain prequalification or preapproval for a mortgage before they begin shopping. Prequalification is an initial look at a potential buyer’s finances to determine the size of mortgage they can obtain at current rates, and thus the cost of a home they can afford. A lender usually can determine a loan prequalification amount by examining the borrower’s current pay stub, bank statement and W-2 tax form.
Mortgage preapproval takes that process a step further. A lender provides a conditional commitment to provide a mortgage loan to a borrower after examining the potential buyer’s income, assets, debt, credit history and rental history (if applicable). Preapproval gives the potential buyer a clear idea of how much home they can afford, and gives the home seller a good indication that the buyer will be able to successfully complete the purchase. In most cases, a borrower’s mortgage can be approved within about 30 days of an application, according to Howell.
Move-Up Buyers Choose Features Over Square Footage
Existing homeowners who are returning to the market are well-versed in the home features and mortgage options that drive their purchase decisions, said Julia Reinert, director of marketing for Homes by Dickerson, which builds custom homes priced from $300,000 to $1.5 million. “Square footage is not king anymore,” Reinert said. “Buyers are not looking for these massive houses with nothing inside of them. They’re okay with less space, but they want the bells and whistles that make them feel at home.”
Reinert said luxurious freestanding tubs or spa-like showers with multiple heads and nozzles are still popular in master bathrooms. And everyone wants abundant storage space, including walk-in closets with wood shelving customized to their wardrobe and needs. “People that come to us really are looking to show off their personality, personal style and taste—whether it’s upgraded trim, shiplap, textured wallpaper or hand-stained French doors to a study,” said Reinert.
She said buyers still want open interiors, but they are asking builders to give more thought to things you can’t see, like “Where do you put the vacuum cleaner?” Reinert said today’s homebuyers also want space to entertain, which is why features like the butler’s pantry and wet bars are coming back. Buyers also want multifunctional rooms, so builders add features like window seating with storage or shelving underneath, and homework centers near the kitchen or near an upstairs play area.
Lisa Baldwin, regional sales manager for Epcon Communities, says activity remains strong for its Raleigh-area luxury ranch homes with integral side or rear courtyards targeted to buyers 55 and over. She said the communities’ six floor plans and endless customization options reflect extensive research and years of experience in building homes for its targeted market.
Baldwin noted that many buyers in Epcon Communities, like the Courtyards at Kildaire Farms in Cary, are downsizing from larger homes, and are beginning to think about aging in place. They also want room to accommodate visiting parents or even to take in aging parents. These buyers want options like sitting rooms, covered porches, and space to entertain and have family gatherings. “They want upgraded cabinets, counters and light fixtures. They want to personalize their home, so even though it may be smaller than the home they’re coming out of, it’s got what they want.”
At Epcon properties, the homeowners association fee covers exterior maintenance, creating a low-care lifestyle for buyers. “They want amenities that support their desire for an active lifestyle, and to be connected to family, friends and enriching amenities,” Baldwin said. “It’s not just the home; it’s the life you live, and the home is the platform for that lifestyle.”
Strong Market for Custom Homes
That lifestyle reaches its highest expression for purchasers of high-end custom homes. And many local observers say the market for high-end, custom-built homes is the best they’ve seen in their memory.
Paul Stern, president of Blue Heron Signature Homes, said the strength of the Raleigh market for high-end, custom-built homes demonstrates the maturity and overall health of the market. “Raleigh is becoming a more attractive city, attracting a more sophisticated resident. We continue to garner better, higher-paying jobs. That supports the higher end of the market.”
Blue Heron builds custom homes priced from $700,000 to more than $2 million. It is one of the top custom homebuilders in the Triangle, according to the Triangle Business Journal, and received the prestigious “Best of the Best” recognition for custom builders in the 2019 annual Triangle home-building industry awards competition.
Because the local housing market has been so strong, buyers who sell mid-market priced homes are gaining enough equity to consider moving up to these higher-priced custom homes. And Stern said the current low interest rate gives a buyer the ability to spend more on a custom home and still have a manageable monthly payment.
Of course, buyers who reach this stage aren’t too concerned with their mortgage payment, Stern said. “True custom is the only way to get exactly what you want. Our buyers don’t want to compromise. They want everything about the house to mirror their design sensitivities,” said Stern. “Buyers would expect components of their custom home to perform better than any home they’ve had before. They want a more comfortable, more pleasant and engaging space. They want architectural details that look like they came out of a magazine. Custom is the only way to get that.”
He said every Blue Heron Signature Home is a high-performance home, certified by independent third-party professionals to meet energy standards that are the most rigorous in the home building industry. These energy standards help the home last longer, function better and be more comfortable, said Stern.
“Our unique differentiator is that we’re a smaller, boutique, high-end custom builder,” said Stern. “Buyers interact with the principals of our company at every stage, from plan design to construction to post-occupancy. We don’t hand off any part of the process. That means a lot to our clients.” Unlike production builders, where cost can drive architecture and design choices, Stern said Blue Heron’s approach to custom home buildings is solely about pleasing the client. “We can make something that’s really magical—the manifestation of the client’s dreams.”
The Ultimate in Carefree Living for Seniors
For older buyers who want to experience totally carefree living, there are communities like The Reserve at Mills Farm, an independent living, assisted living, and memory care residence in Apex. In the community, set to open this spring, seniors can choose residences that offer a continuum of care in a high-quality, home-like environment, with no worries about landscape maintenance or repairs. The independent living program offers fine dining, guest lecturers, outings to the area’s best cultural attractions and in-house spa services.
“We are empowering residents to create what they want to see in their greater community, while staying connected to family and the outside world,” said Kellee Agee, chief operating officer with Raleigh-based Navion Senior Solutions. Residents can choose from several apartment-style floor plans ranging from about 588 square feet for a studio flat unit to about 1,358 square feet for a two-bedroom unit.
Agee said The Reserve at Mills Farm includes high-end finishes like granite countertops, in-unit washer/dryers, housekeeping and laundry service, weekly meal plans, and balconies or patios. Residents also get access to smart home features like voice-controlled automation to help them stay connected to family and take care of daily activities. The technology will let residents make phone calls, review and sign up for community activities, arrange transportation, submit maintenance requests and more, using just their voice or a computer tablet.
Other amenities include a cinema-style movie theater, fitness center, cybercafé with business services center, on-site pharmacy, dedicated art studio, on-site salon and spa, putting green, bocce ball court, dog park, walking path and direct access to the 160-acre Apex Community Park.
The community’s chef-led dining program includes restaurant-style dining with fresh, seasonal menus that include global cuisines and local favorite dishes, special events and theme dinners, snacks available throughout the day, and other meal options to meet any dietary need, prepared under the guidance of a certified dietician.
Buyers Need Patience and Expert Guidance
The Raleigh housing market continues to offer new home options for every need. Although house prices continue to rise, today’s current low interest rate environment makes this a great time to consider taking the plunge into homeownership, regardless of where a potential buyer is in their personal or professional journey. For those unfamiliar with the home buying process, it is important to have experienced real estate guidance to help them meet their needs and desires.
Molly Bonis, broker with the Bonis Realty Group, an affiliate of Fathom Realty, said that her firm’s buyers, on average, look at 15 to 20 houses before making a purchase. She said potential homebuyers who have not bought a home in several years may not know that the purchase process and mortgage contract documents have changed since their last foray into the market. In addition, according to Bonis, move-up buyers can find it challenging to buy and sell a home simultaneously, and retirees can face hurdles due to lower inventory and fewer options to meet their specific needs.
Bonis said patience often is the best tool for a new homebuyer in Raleigh’s competitive market. She said first-time buyers can get discouraged when houses attract multiple offers and they lose out on their first choice. “Sometimes it can take pursuing two or three houses before they are able to purchase the right home for them at the right time,” said Bonis. “They have to be patient and try not to get too emotionally attached. But most of the time, they find a house that’s better for them, and they like it more.”
Alfred King is owner of Motive Media LLC in Raleigh, which provides communications content and social media marketing services to help businesses grow (www.motivemediallc.com). He has written about commercial and residential real estate markets for daily newspapers and other publications in Atlanta, Dallas, the Twin Cities, Washington, DC and Raleigh.