In January, the Commerce Department announced that nationwide new-home sales had hit a 5 1/2-year high. In February, headlines proclaimed that builder sentiment had plunged.
That reflects the roller coaster ride that many builders across the country face as the industry struggles to rebound this year, says Bill Saint, the new president of the Home Builders Association of Charlotte.
Compared with topsy-turvy markets in places like Florida and California, he said, Charlotte builders and buyers will enjoy a Sunday drive. “It will be STEADY – and that’s steady in capital letters,” Saint said.
STEADY is good.
What’s ahead? At the moderate end of the market, we’ll see smaller neighborhoods with more architectural appeal. At the upper end, fewer huge, over-the-top expensive homes.
Across the market, the number of new homes for sale will continue to grow. “Inventory is still low,” Saint said, “but there are new homes to buy again. New homes are available to buy today, not just to build.”
Saint, president and CEO of Classica Homes, recently was named president of the association for 2014. He offers a few observations and predictions:• Permits in the eight-county metro area were up 27 percent last year, over 2012, but are still two-thirds of their peak. There’s still lots of room for growth.
• One fundamental change will reshape how the area grows. Before the downturn, developers put together huge tracts of land and sold hundreds of lots to builders. Those lots are largely gone – along with developers. Now, Saint said, creative builders are more likely to have to develop their own neighborhoods. Look for communities of 20, 30 or 40 homes – instead of 400.
• Because of that change, look for more varied and innovative architecture and fewer subdivisions of simple, identical houses.
• Builders also will be competing with amenity-packed rental properties, Saint said, and will have to offer value to get families to move.
• We won’t see many communities with $3 million-plus homes, and high-end buyers aren’t looking for 7,000 square feet. Wealthy buyers are spending less and are more willing to pay for design and location than extra space.
• Lending continues to improve. It went from very easy to very difficult but has since relaxed. “Two years ago, you almost had to have 20 percent down. Not today. … I don’t hear builders say they can’t sell houses because buyers can’t get loans,” Saint said. Of course, mortgage rates remain low.
• The Case-Schiller home price index for Charlotte rose 7.8 percent last year. While some builders here have raised prices, Saint said that most increases were about half of that. “Anecdotally, it has been 3 to 4 percent.”