Making up for lost time, Atlanta homebuilders are busy breaking ground on properties in and around the Atlanta metropolitan area to meet the needs of its growing population and diverse demographics. From entry-level homebuyers, to move-up and active, older adult homebuyers aged 55 and up, a demographic with the loosest purse strings and the greatest desire for something new. The Great Recession put a halt on construction starts, resulting in low inventory that builders are working hard to replenish.
The industry saw new home starts increase by more than 17 percent last year and according to Eric Price, Atlanta Division President of David Weekley Homes, it should sustain that level of growth in 2018 and beyond. Some of the reasons behind new construction growth include, Price says, “super affordable interest rates,” an influx of homebuyers transferred to the area for jobs and baby boomers seeking a lifestyle change, as well as knowing that there will always be a segment of the population that always wants a new home.
Price says he is seeing prices for condos, townhomes and some single-family properties go up in the city, but there are new homes for all categories of buyers throughout the Atlanta metro area. But for the most part, single-family neighborhoods require large tracks of land available further out.
“Close-in land is more expensive and there’s less of it,” he said. “We’ve got several new locations where we are tearing down old office buildings to build a new neighborhood. You’re having to look and to be more creative to get the locations you need. In order to get more affordable housing, you have to push out further.”
Green construction, smart homes slowly enter the market
New construction offers homebuyers an opportunity to reduce their carbon footprint. By employing energy efficient innovations and smart technology in homes, builders are dramatically lowering heating and cooling bills for buyers, and allowing them to remotely check in at home, via a smartphone app, to see if the lights are off and the thermostat is at the proper setting.
How green a home is depends on what the buyer is willing to pay for, Price said. “For some people, it’s important. For others, it’s not a big requirement.”
Knowing buyers don’t want to be “nickeled and dimed anymore,” homebuilders are including former upgrades in base packages, such as granite countertops, hardwood floors, and stainless steel appliances, according to Rhonda Morgan, an associate broker at The Morgan Home Team, Keller Williams Realty Metro Atlanta. However, smart technology is still considered an upgrade, with the exception of custom builders who might include it in the package.
“As a builder, you have to appeal to the masses,” Morgan said. “Not everyone is interested in the house being tricked out with technology.”
Serving as a case study for the industry is “Altus at the Quarter,” a smart neighborhood on Atlanta’s upper west side. A partnership between Pulte Group and Georgia Power, the first 46 townhomes on the property will be equipped with energy efficient systems and smart technology. Traditional power in the homes will be supplemented by rooftop solar installations and backed up by a Mercedes Benz battery.
“Hopefully, in the long run, we’ll create best practices in the marketplace, provide feedback on how consumers use their homes and how different utility companies can present rebates and products that help drive a cleaner home,” said Jon Sapp, general sales manager, Georgia Division of Pulte Group.
High demand across all age groups
Contrary to popular belief, Morgan said, millennials are buying homes for the tax write-off and, in reaction to rising rents, the stability of a mortgage. She also said that people who were forced to sell homes, foreclose or have short sales during the recession are now re-entering the market as move-up buyers. Given resale inventory is low, new construction is trying to fill the gap, she said. But it needs to be built fast enough.
Morgan said that builders who were forced to leave subdivisions partially developed during the economic downturn, because of buyers losing jobs or not qualifying for loans, are now completing those neighborhoods.
“As you add new communities, you still want them to be in the right locations, that is the most important factor,” Price agreed. “You don’t want to just do a neighborhood anywhere. It needs to be where the customers want to live. It takes time to find a piece of land, close to a year.”
According to Carrie Roeger, chief operating officer of Windsong Properties, there is an upside to the low inventory problem. “When you have a supply shortage, it’s not hard to attract buyers because everyone is out there looking,” she said, noting Windsong is experiencing a growth spurt. “Our goal for 2018 is to build 100 homes a year,” she said. “We’re looking to grow year after year.”
Read more from our New Construction Issue
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- Residents strike a balance at cohousing developments
- Survey: Agents talk about selling new construction
- Agent Snapshot: Magda Gomez, Realtor, RE/MAX Center
Windsong’s segment of the market — communities for older, active adults aged 55 on up — has a high demand for new construction and maintenance-free living. She said they are willing to sacrifice square footage for sleek, modern finishes and all of the living taking place on the main floor. An added bonus is they have more in common with their neighbors, because everyone is in the same stage of life, she said.
Still, a lack of affordable housing continues to be an overall problem in the industry, Roeger said. “The real estate market in general needs to work together, builders, suppliers, to solve the affordable housing problem.” Luckily, there are more than 66 down payment assistant programs in Georgia, organizations such as Invest Atlanta and Atlanta Housing Authority that are really promoting home ownership, Morgan notes.
“Lease option programs like TRIO are helping people become homeowners by off-setting some of the costs and making it affordable,” Morgan said. “If you’re in certain areas, there are organizations offering grant money to help people move into neighborhoods that may have been less desirable in the past.”
Sapp notes that the market is “extremely bullish” for new construction in Atlanta.
“It continues to grow,” he said. “Unemployment levels are at all-time lows. There are 26 Fortune 500 companies headquartered here. We have the busiest airport in the world. All of those things combined make us excited about the opportunities building homes in Atlanta presents.”
“I think we need to be smart about the future of our industry,” Price added. “We need to continue to innovate, make sure we’re covering all the different segments for the different customers and what they’re looking for. You can’t get caught in the past. Not everybody wants a single-family house or townhome. You have to understand the market, the customers. It’s really about servicing the customers. It sounds almost like a cliché but it’s not. That’s how you build your business. That’s what we’ve always believed in and it’s paid big benefits for us.”