Busy Year for New Construction
This was a great year for new construction in Houston – Houston currently has the third largest residential construction number in the country and it is still growing. But how long will it continue to increase? We asked Linda Marshall, broker/owner of Linda Marshall, Realtors, Inc., what to expect out of the new construction market in 2014, and what qualities buyers are looking for in properties.
HA: What are you noticing about the new construction market this year? What do you predict will happen in 2014?
Linda Marshall (LM): I work in the Inner Loop, specifically The Heights. I work for three different builders almost exclusively, and then I do a lot of resale. The builders that I work for are in the more affordable price range – they’re under $500,000, which we used to say wasn’t affordable but for some homebuyers it is. Out of everything that’s being built, I sold most of it before it ever broke ground. Consequently, it’s been great to generate new buyer leads, but there’s no place to move them. It literally doesn’t exist because nobody else has any inventory.
There are some new properties that are sitting with the city, but they will not let me touch it (as far as putting it online) until they get ready to pour foundations on it, because they know I’ll sell it. And I think a lot of the reason is because they’re waiting to see what the pricing looks like.
As far as the new construction market goes, Houston is No. 3 in the country as far as the number of starts. Every lot out there is being developed, but they are not active on the market – they’re pocket listings. In my market, I see all of these properties hitting in the spring, which will historically be a high selling time. I have two buyer’s agents and they told me that they’re having 13 to 15 offers on some of the properties that come up in resale.
The new properties will be probably 50 percent completed at that point, which means they will be closing in June or July. I believe the market will be really strong as far as the pricing on that. A house will probably be increase by 10 percent or more from in the middle of this summer. The land itself is costing 30 to 40 percent more than it cost a year ago. If its newly acquired property, not being held in inventory, it necessitates building a much more expensive house. You won’t see anything in these affordable price points.
HA: How is demand trending?
LM: Typically, your first-time homebuyers always want a new house – they want to be the first one to customize it. Buyers in general want that, but particularly first-time homebuyers. Consequently, you have a lot of takers for new, reasonably priced construction.
Not everybody has the imagination to build something from the foundation up, but if you sell it in varying stages of construction, there is a huge demand for that. The more you actually build a house, the more people can visualize it. It’s very attractive for them to customize that house.
HA: What do new construction buyers want?
LM: In price point, we’re all looking for a deal. But for most buyers, it’s not as much about the price point as it is about the quality of the appointments in the house. Most of them stay to the middle as far as a clean, modern twist on a more traditional floor plan, using a lot of wood and warm colors on the interior and exterior. Most of them want a small yard because they’re great for pets and hosting barbecues, but they’re willing to give that up to have the interior of that house. Now of course, they also have to have a garage, but that’s a given inside of the Loop.