Understanding the Trends in New Construction
We sat down with Nest Broker Greg Slater to get a better grasp of the current real estate market, and the new construction home market specifically. Greg has worked with new construction home buyers and builders for 21 years and has a strong understanding of the new home market.
Nest Realty: Greg, thank you for taking the time to speak with us. This year, you’ve created an analysis of new construction home sales, comparing 2015 new home sales to 2016 new home sales. How have you curated your data?
Greg Slater: My pleasure. I look at the new home contracts reported to the Charlottesville Area Association of REALTORS® MLS, by contract date. I tabulate the data on a monthly basis, and then create a final tally to compare the year-over-year growth or decline.
NR: Why do you look at contract dates, instead of closing dates?
GS: We are most interested in tracking buyer demand—when home buyers are making their purchasing decisions. In a resale, or purchase of an existing home, when you buy a home you close typically within 45-60 days. When it comes to new construction, there is a longer lead time—it may take 6-12 months for a home to be completed, and a closing to occur. So in the interest of tracking the most relevant and timely data, we look at the contract date instead of the closing date.
NR: That makes sense, thank you. So what were your overall findings for the year?
GS: Total number of sales were up 22% and total volume was up 22%, year-over-year. This was heavily weighted to the attached side with attached sales up 41% and attached volume up 49%. On the detached side, sales were up 16% and volume up 17%.
NR: Can you explain what attached homes are?
GS: Attached homes encompass all vertical construction—townhomes and villas that share a wall with another property, as well as shared land. As opposed to detached homes which are single family homes on their own lot.
NR: Okay, we’ve all heard of townhomes, but what are villas?
GS: Villas are attached homes that have a first-floor master. This is a new category of home that builders have created in response to the demand from buyers—empty nesters or right-size home buyers who prefer the ease of first-floor living.
NR: Getting back to the numbers, what do you think the reason was for the 41% increase in attached sales, and 49% increase in volume?
GS: In my opinion, this is due to the increase in villa product offerings in the market and many of the townhome offerings in the market now breaking the $400k threshold. Overall, first-floor master bedroom plans represent 40% of new homes sales this year and last.
NR: Looking city by city, what were your findings?
GS: The City of Charlottesville saw a decrease in new homes sales of 20%, while Albemarle saw an increase of 28%. This is generally driven by new developments and where they occur, geographically. There are fewer opportunities to build within the City limits.
NR: Do you see this trend continuing in 2017?
GS: With Phase 2 of Lochlyn Hill, which is served by Greenbrier Elementary, 2017 holds the opportunity for those seeking new construction within the City.
NR: What were some of your other findings?
GS: We also continue to see increased activity among smaller builders and the introduction of new builders to the area with the market share of the top 4 builders in this market declining year-over-year.
NR: Who are some of these smaller custom builders that are seeing a surge in new home sales?
NR: What were some of the trends you saw in 2016?
GS: Looking at Albemarle County sales more closely, it is interesting to note that the new homes sales in 2016 were essentially divided equally across the three High School Districts: Albemarle High School, Western Albemarle High School, and Monticello High School. Each district had at least 10 communities achieving sales. Developers have caught up and there are now more opportunities than we’ve had since the 2008/2009 recession. Overall, Old Trail was far and away the community leader in sales at 57 contracts in 2016. Five other communities achieved 20 or more sales and another 7 communities had 10 or more.
NR: What were some of the new communities established in 2016?
GS: New communities in Albemarle with opening sales in 2016 include Cascadia, Oak Hill Farm, Chesterfield Landing, Westlake at Foothill Crossing, Hollymead Walk, The Villas at Belvedere, and the Towns at Stonefield (shown below).
NR: Were there any changes in the type of new homes that people were seeking?
GS: Yes, there was a significant demand for half acre or larger lots. Several new communities answered this demand, offering homes on larger lots, including Whittington (17 new home sales), Hyland Ridge (16), Westlake at Foothill Crossing (15), Foothill Crossing (12), Chesterfield Landing (7), and Oak Hill Farm (4), which just launched in the fourth quarter.
NR: Moving into the new year, what do you see on the horizon?
GS: In 2017 we are faced with some of the lowest inventory levels we have seen in years. Many looking to buy in 2017 will have to consider building due to this lack of inventory. We happen to live in an area where the building community has embraced more energy efficient building practices. This will lead to additional new construction sales.
NR: Any last words of advice for those looking to buy or build a new home?
GS: My advice is to work with a Nest Realty agent that can help you understand the value of purchasing new versus resale and the pros and cons of those options. If you are considering new construction, you should probably look into it immediately. The builders are getting busier and busier and this could lead to longer lead times for home deliveries. Understanding your new home options will help with your overall decision making process.
Greg Slater is an Associate Broker at Nest Realty. With his real estate career beginning in 1996, Greg is now the Realtor representative for Bramante Homes Inc. He has extensive experience in most segments of the residential market and is known as one of the area’s foremost new construction experts. Learn more about Greg on his website, GregSlaterAgent.Com.