Signs of the greater Wilmington area’s real estate resurgence are everywhere, from a recent spike in luxury home sales to continued construction of lifestyle communities. The coastal climate, cultural scene and Southern charm – coupled with comparably low interest rates and prices – mean a strong and steady demand for homes. But that demand also brings some challenges, including a shortage of inventory. We asked local experts in the field to share their thoughts and advice on the residential real estate market’s growth and the growing pains that come with it.
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What stands out to you most in the current real estate market?
What stands out in the current real estate market are how fast homes are selling and how many homes are selling.
In April, Coldwell Banker Sea Coast Advantage closed 727 properties valued at more than $169.4 million. These sales are up 21 percent in units and 24 percent in volume over April 2017.
There are several factors contributing to the current market, but what we are seeing across North Carolina is low inventory and multiple offers.
Interest rates are increasing, so if people have been on the fence about purchasing, this has spurred them to go ahead and buy now.
Location, location, location still reigns king when it comes to the local real estate market. When you look at what is selling quickly, much of it is due to its location within the area.
Sellers who understand their product and likely buyer – coupled with buyers who understand their own needs and have done their research – are efficiently finding one another. Access to information, either through real estate professionals or internet-based applications, further support the overall buying process.
We have also seen buyers being more patient when entering into the market. More buyers have done their homework, know exactly what they want and are willing to wait for that perfect house and perfect location. This may change once prices or interest rates rise.
Low appraisals. Appraisers derive a home’s value by examining comparable sales that take place within any given market over the prior six months. Because we’re in a rapidly rising market, past comparable sales aren’t keeping up with rising prices, which results in appraisals coming in lower than the accepted offers.
Buyers and sellers need to understand that this is a natural phenomenon and the sign of a healthy real estate market. REALTORS® and loan officers need to educate buyers and sellers about this phenomenon, so they don’t panic if the appraisals come back low.
Lenders and realtors alike have an immediate need to educate their buyers that a low appraisal is to be expected in a healthy real estate economy. If we set the correct expectations, we are all better prepared to positively handle the renegotiation process that may ensue from a low appraisal.
If you look at national and local trends, it’s shortage of inventory, especially in the lower- to mid-price points. We would designate it being a seller’s market in most of those price points in New Hanover, Pender and Brunswick counties. When you’re below $350,000 or $300,000, you’re seeing as little as two to three months of inventory.
That is a great thing because the demand is there. The challenge is the inventory has not kept pace, which is challenging for agents. It’s challenging for sellers who want to sell their home to buy another home. And it is challenging for buyers, as well.
This is happening nationally but the awesome thing for this market is we’re in a place where people really want to move. We’re seeing more industry, jobs and people relocating here. We’re talking now to a couple of international businesses that plan to relocate their corporate headquarters in the Wilmington area.
So, we’re in an area that is desirable and where people choose to live. When you factor that in, it’s an amazing time to help people buy and sell real estate in southeastern North Carolina.
How does today’s homebuyer differ from recent years past?
Without a doubt, our buyers are more informed than ever. They’ve done their research, explored various options, and have sought third-party reviews or opinions before venturing out to begin the physical exploration of their potential new home.
Further, our current generation of buyers is looking at longer-term ownership. Their new home isn’t someplace they may live for a few years, sell and “step up;” they are looking for something that meets their needs now and well into the future.
The immediacy of technology is driving significant changes in our industry. For instance, today’s homebuyers are tech-savvy and expect communication in real time. As loan officers, we need to be immediately responsive to these inquiries to secure their business.
Buyers also rate-shop on the internet and, while online lenders can offer convenience, they often don’t have the same ability we do to close on time, and they typically have higher fees. Rate should not be the only decisive factor in choosing a lender. Closing costs and the ability to close is equally important.
At Alpha Mortgage, meeting the closing date for our clients is non-negotiable. We close on time every time. And if a buyer is involved in a bidding war, buyers can strengthen their offer by working with a local firm like Alpha Mortgage.
In terms of the inventory shortage, the experience of today’s homebuyer is a little different because motivated homebuyers need to be prepared to act quickly to secure the home they want.
In terms of the actual homebuyer, we live in a much more transparent world, where service and experience to the customer in real estate – just like in every industry – has to be at a really high level. People don’t want to work with an agent that is just average or just OK. People want to work with agents that are very confident in what they do, that are experts and trustworthy.
This moves into the realm of online reviews and social proof. People are doing background research on agents before they meet with them. So, certainly, they are more tech-savvy. They are more connected, and the experience they are looking for is different and more important than it was to homebuyers in years past.
Without a doubt, today’s homebuyer is much more savvy than prior generations. They utilize technology to not only identify a home that interests them, but also learn about the home-buying process.
By the time a buyer even hires an agent, that buyer already knows about the home features he or she is looking for or in-depth information about the school system, for example.
Today’s homebuyer is more educated, due to the internet and the wide availability of information online. And today’s more educated homebuyer demands a quicker response from REALTORS®. Also, many of today’s homebuyers are looking for less space in a home, while also looking for significantly more upgrades.
Which types of houses or plans are currently most popular in our region?
We are seeing more multigenerational families entering the market. Grandparents are moving in with their kids, so they can be close to grandchildren, or so they can “age in place.”
To that end, a master bedroom on the main level is a much-needed feature, and in-law suites and finished basement areas are sought-after, as well.
Because we are a coastal community, coastal design has always been popular, and I think it always will be. You see new construction, even in lower price points, using different elements of coastal design.
You don’t see as much traditional design these days. Stone was really in a few years ago; you’re seeing less stone on homes and more of the cleaner lines with hardiplank and shake, a lot of painted brick and other cottage coastal elements.
In terms of interior finishes, modern is back. If you look at homes that were built 10 years ago, they had darker countertops and cabinets. Now, we’re seeing more modern and clean things, with white or light-colored countertops and cabinets. The designs from 10 to 15 years ago are beginning to look much more dated now than they were just two years ago.
Less is more in 2018. Today’s homebuyers are often looking for less square footage but still want state-of-the-art appliances and top-of-the-line finishes.
Utility costs can be a major factor in purchasing a home, so today’s buyer is increasingly interested in energy-efficient homes with smart home technology. These technologies can add safety and convenience benefits but can also help homeowners save on their monthly utility bills.
Buyers are spending more on upgrades, and smaller homes are more of a trend now than in the past.
Retirees will continue to be those buyers will continue to abandon formal spaces while maintaining an open floor plan between the kitchen, living room and more casual eating areas. Today’s buyer is savvy and very critical in terms of a home’s layout and the use of space. They want to get the most out of the price of the home and are looking to utilize every nook and cranny, with minimal waste.
Buyers will also seek ways to keep their master bedroom downstairs. Even with our families, we see this as “future insurance,” either for our owner, or more likely, for resale.
When we step outside, we are seeing more emphasis put on the indoor/outdoor convergence. With the area’s mild climate, more homes are embracing the outdoor space as extra living space that can be used year-round. This trend is only going to become more pronounced, as many of the area’s new communities are building on smaller lots, which yields less yard. More buyers are embracing these smaller spaces and creating their own higher-quality, personalized uses.
What amenities are homebuyers seeking?
Starting with the house, they are looking for an open floor plan and outdoor living space. We are really seeing people focusing on outdoor living space as an amenity. The outdoors is an extension of the home.
We’ve seen plenty of people who aren’t looking for the 3,000 or 4,000 square foot house, who would prefer to live in something a little smaller and more manageable. And yet, the outdoor living and entertaining is really important, whether that’s a fire pit, an outdoor kitchen, a swimming pool, a hot tub – just a space in their yard that they use on a daily basis.
In terms of community, I think location is key because a lot of people want to be in an area where they’re excited to come home from work, whether that’s in some of our master-planned communities, like Landfall, RiverLights, River Bluffs, Brunswick Forest or Compass Pointe, where they have community and social events, sports and activities.
There has been a lot of discussion about the fact that millennials have not been purchasing homes as early as previous generations for different reasons, and now we’re seeing the millennials who haven’t been buying coming in droves. For them specifically, amenities are huge, especially walkability. What’s within walking distance? Are there restaurants? Places to meet people and socialize? Places to exercise?
Today’s homebuyers are very interested in walking trails, exercise rooms, pools, smart home technology and outdoor living spaces, both at their home and at the community center.
The number-one amenity that buyers with families are looking for is the best school district. Buyers are also looking for outdoor activities and a maintenance-free lifestyle.
When most people think of amenities, they think of golf courses, pools, tennis courts and clubhouses. These types of amenities will always be a traditional feature point, especially in the larger planned developments.
However, more smaller scale developments are using their location assets as their strength. Simple things – like tying into existing sidewalks-multiuse trails and creating small gathering areas within the development – are all working.
The other factor we are seeing in the purchase decision is buyers really want “convenience.” They want to be in or around easy-to-get-to neighborhood services, like restaurants, shopping or movies, or to just have convenient access to the places they spend the bulk of their time when not at home.
Buyers are looking for convenience and community. They want community pools, to be within walking distance of recreational areas, and access to high-speed internet.
As for the home itself, they prefer screened porches, large laundry rooms and an open concept.
What are the most interesting trends you have seen in our area’s submarkets?
The aging of the baby boomers is driving a lot of new trends, such as 55-plus communities and tiered communities in which different lifestyle choices are offered within one community for families, residents 55 and up, retirees and those who may require select assistance and services.
The lending community is responding to the needs of these retirees with an innovative product called the Home Equity Conversion Mortgage (HECM) for Purchase. The HECM for Purchase allows buyers age 62 and above to purchase a principal residence and obtain a reverse mortgage in one transaction and a single set of closing costs.
With the HECM for Purchase, the borrower provides a down payment using the sale of a previous home or other savings. The equity earned through the down payment and the new home’s value is then used to calculate the reverse mortgage loan amount. All or part of the reverse mortgage funds then cover the remaining cost of the home, just like a traditional mortgage.
Instead of paying the loan back every month like a traditional mortgage, repayment is deferred to when the loan matures. Borrowers only pay property taxes, insurance and maintenance.
Overall, the same general areas that were growing last year are still growing this year. The overall key is going to be infrastructure and the availability of water and sewer, as well as location to services.
In Pender County, most of the growth is occurring essentially anywhere along U.S. 17. We are starting to see more smaller pockets of development in and around the Burgaw and Rocky Point areas, as well. The key factor in Pender is water and sewer availability, as much of the area east of 17 has a predominant high-water table.
In Brunswick County, areas such as Southport, St. James, Leland and many of the beach communities are still the driving factors within the county. The Leland area and St. James continue to be major driving forces in the Brunswick County economy. We have also seen a renewed interest in the N.C. 211 corridor, but this does not come without caution.
In New Hanover County, we are seeing development all over the county. Areas like Monkey Junction, Ogden, Porters Neck, Castle Hayne and River Road are seeing the most activity. Other areas, or pockets of development, are happening around the Greenville Loop and Masonboro Sound areas, as well. One thing we have seen over the last year or so is more infill development along the Masonboro Sound and Myrtle Grove areas.
Younger buyers want to be very close to downtown Wilmington and they are very active in the historic neighborhoods with older homes. These younger buyers are interested in upgrading the older homes and putting their own stamp on them.
This question was answered by my colleague Tony Harrington, owner and broker in charge of The Property Shop of the Carolinas in Wilmington and chair of the N.C. Realtors Global Network.
Builders are building more one-level, luxury patio homes with all the upgrades more than anything else, catering to retirees moving into the area in large part from the northeast. A lot of what is selling is due to an out-of-state influx of people who are attracted to comprehensive recreational communities with open floor plans. Coastal chic is being built – not the traditional box-style homes – with open outdoor spaces. Retirees like these.
One of the biggest residential trends is new construction coming standard with amenities, add-ons and a more modern aesthetic.
Which state and/or federal legislative actions have the most impact or are most important to the local real estate industry?
On the national level, the housing industry is already reeling from sharp increases in prices resulting from tariffs averaging more than 20 percent that were imposed on Canadian softwood lumber shipments into the United States.
Just since 2017 alone, these increases have been enough to drive up the price of an average new single-family home by more than $6,000 and the market value of an average new multifamily housing unit by roughly $2,400. Now we are seeing more tariffs being invoked on steel and aluminum imports, which is certainly concerning, as all of these are a major commodity in the building process.
On the other shoe, Congress enacted a comprehensive overhaul of the Tax Code through the Tax Cuts and Jobs Act in December 2017. This act will significantly lower rates and the filing process will be simplified for many filers under the individual income tax. However, due to the act’s complexity, we are already seeing challenges, as the devil is in the details.
Immigration reform is also a huge issue. Given the chronic shortage of residential construction workers, there has never been a more critical time for Congress to enact effective reforms that include a new, market-based visa program that would fill labor gaps to ensure a strong workforce sufficient to meet its housing construction and restoration needs and provide a workable employment verification system.
On the state level, preserving the affordability of housing is our top priority. Since 25 percent of the current cost of a new home is due to government regulation at all levels, eliminating unnecessary existing regulation and opposing unwise new regulations translates into increased housing opportunities for more people.
As noted above, our industry already faces significant market headwinds due to increased material costs and labor shortages. Regulatory overreach only makes housing less affordable.
New Hanover County’s upcoming Unified Development Ordinance (UDO) will be critical to our local area.
Over the next year, planning staff and consultants will be working together to update our county’s zoning, subdivision and stormwater regulations into a new set of land use regulations.
We must get this correct. Too many regulations in the past have contributed to our current shortage of new home inventory.
At the federal level, earlier this year, Congress approved yet another short-term reauthorization of the National Flood Insurance Program until July 31, 2018.
Without a long-term reauthorization of the program, properties in 22,000 communities nationwide, including many throughout North Carolina, run the risk of being able to get new coverage or renew existing policies.
At the state level, private roads are an issue. In subdivisions across North Carolina, homeowners are unaware of who is responsible for the maintenance and repair of their streets. Especially in communities which were developed during the building boom, maintenance agreements were never executed between the developer and the state Department of Transportation.
This inaction has left many of these streets in significant disrepair and homeowners being held responsible for the cost.
House Bill 457 works to resolve some of the issues currently seen across the state, as well as develop a database for information-sharing about road maintenance responsibilities. The bill passed the House unanimously last year but is currently awaiting consideration in the Senate; it is currently stuck in the Senate Rules Committee.
How is the local residential real estate industry dealing with a shortage of inventory?
One big issue for our local builders is finding affordable lots. Land and material costs are rising.
Since we don’t have much control over these factors, what we can do as agents is focus on educating our buyers and sellers about personal finances, the forces shaping the local market, and the many reasons why this may be the very best time to sell your home.
There are still homes coming on market, just not as fast as many buyers would want, so patience is necessary. Agents need to prep their clients with the best information as quickly as possible, and prepare them for the fact that, in this market, even a good offer may not get picked by the seller. Unfortunately, this has led to frustration and disappointment for some buyers.
Many sellers are attempting to sell their homes themselves. Eventually, most find they are not realistic on their home’s value and seek a REALTOR® to list and market their home appropriately.
Over the last eight months, we have seen more projects approved by the TRC/Planning Commission within the City of Wilmington. This is positive, as it shows that the market is yielding to more investment within city limits. Within the county, we are starting to also see a more renewed interest in smaller-scale development projects, particularly in the northern section of the county.
In Pender County, many of the projects that were working through the planning and permitting stage last year have now moved to the installation of infrastructure and, in some cases, the construction of homes is underway. This is positive, as we did see the permit numbers dip a little from 2016 and 2017, but it was somewhat to be expected.
In Brunswick County, we are seeing the same general development pattern we saw last year. Many of the stable, financially secure developments are moving forward with additional phases of development to keep up with existing inventory levels.
As expected, with the finalization of the I-140 corridor, we have seen a lot of development interest in the northern section of Brunswick County. With its completion, this last leg of the bypass opened up approximately 3,000 acres of potential developable land. The X factor for much of this land will be hinged upon the availability of water and sewer to these areas. The positive news is that Brunswick County is now moving forward with a “full” expansion of its wastewater treatment facility that is strategically positioned to serve much of this area.
Another element affecting our inventory shortage is labor. While the demand for new homes has steadily increased, the growth in our construction labor force has not. Therefore, the [Wilmington- Cape Fear Home Builders Association] WCFHBA and Cape Fear Community College [CFCC] have created an initiative called CFCC Construction Institutes that aims to mitigate labor shortages within the construction industry in New Hanover and Pender counties.
This intensive two-week training program is aimed at helping satisfy local construction workforce needs. With input from the construction community, builders and subcontractors, CFCC and WCFHBA developed four courses designed to teach basic skills in the fields of masonry, plumbing, carpentry and HVAC.
Shortage of inventory is a real problem. Our agents have buyers who want to come to the Wilmington area who would like to buy now and they’re having a hard time finding what they want.
One of the things we’re doing at Keller Williams is training and coaching our agents to, one, go after and find new listings that are not on the market. When we know someone wants to live in a certain area or zip code or wants certain amenities, and we know their price point and can sort of dive deep into what they want, we then help them find a home that is not available on the market.
Our agents have embraced that we’re going to have to work extra hard for our buyers. We’re going to have to help create inventory and approach people who aren’t on the market, to reach out and say, “We have a buyer who wants to buy in your specific neighborhood. There are only two homes in your neighborhood on the market, but they don’t fit the criteria. Do you know anyone in your neighborhood who is thinking of selling or have you thought of selling?”
Often, those conversations can really spark interest, and we think it is a great service for our buyers that we can help them find something that’s not on the market. It’s also a great service to our sellers because the homeowner who lists with us probably wants to purchase a new house.
To serve our clients at a higher level, I think it’s important to explain to them what the market looks like and that, with limited inventory, when well-priced homes in good condition and in desirable neighborhoods come on the market, many of them are selling very quickly. So, you want clients to know they should ensure they’re in a position where, if they see something that fits all their criteria, they may need to act quickly to secure the home.
It’s about providing higher-level fiduciary service to our clients to help them understand the market we’re in, so they can position themselves with an offer that a seller is more likely to accept.
At which price levels are you seeing a buyer’s market, a seller’s market or something in between?
Based upon the data we are evaluating, we are certainly in a seller’s market right now pretty much across the entire pricing spectrum.
The average home sales price for our area is coming in around $305,000. Anecdotally, anything within the price point of $250,000 to $450,000 is doing extremely well. Once you start to get above the $450,000 range and move into the upper $500,000 to $650,000, location becomes a major selling feature. Once you get over $800,000, you better have a compelling product or a compelling location.
In the higher-end markets, we are seeing sellers use their location attributes to market their homes to willing buyers.
In many cases, sellers are placing just as much emphasis on the lifestyle that surrounds the home as they are the home itself. The home is not being viewed or marketed as just a stand-alone item anymore. People want an experience, and we are seeing more real estate professionals take that in to account.
It’s a seller’s market all across the board. Homes priced at $300,000 and below is the hot price point right now, with multiple offers often coming in. And the lower the price point, the harder it is to find the inventory.
Speaking in a general sense about the greater Wilmington area, it is a seller’s market in most areas in the lower- to mid-price points. Certainly, it depends on the price range, zip code and other factors.
For example, in New Hanover County, there was an average 2.2 months of inventory between $200,000 to $225,000 and 3.2 months between $250,000 and $300,000. That’s a strong seller’s market.
While it obviously depends some on zip code and community, in general across the tri-county area, when you get to about $300,000, the months of inventory start creeping up. Between about $350,000 and $400,000 – and certainly by time you get to $500,000 – the market really swings, and it becomes more of a balanced market into a buyer’s market.
So, above $400,000, you’re looking at 6.5 months of inventory in New Hanover County, 6.1 in Pender County and 8.4 in Brunswick County.
In our area, the buyer’s market is $600,000 and above. The sellers’ market is $300,000 and below. And from $300,000 to $600,000, there is a normal supply of inventory, so it is more balanced.
What are the potential impacts of rising home prices?
Ultimately, rising home prices – and rising interest rates – mean that less people can buy, and they will have a higher mortgage for less house than they could have gotten in the past.
Even with this information, buyers are aware that purchasing a home is a great way to build equity and long-term wealth.
Real estate, like any market, is driven at the most basic level by supply and demand. So, rising home prices, at some level, can affect demand. What we’ll balance that with here is that our inventory is so low, we are likely not going to have an over-supply anytime soon.
Even though our interest rates have risen a little bit, our rates are still historically very low. As interest rates rise, that affects the payment and it factors in with rising home prices. But drilling down to Wilmington, again, we’re in an area people choose to be. When you compare us to most parts of the country and other parts of the state, we’re still a really good deal here in Wilmington in most of our price points in terms of affordability.
Affordability of entry level homes is critical to the continued success of our region and local economy. We need more jobs in our area to help with this. Without good paying jobs, it will be increasingly difficult to meet the needs of first-time homebuyers.
Since we are in such a sellers’ market right now – and our overall market demand is so high – we are seeing prices creep up. In 2017, Wilmington’s average home sales price increased just eight percent over 2016. The good news is it is still much lower than its peak price of $297,000 in 2007.
Wilmington is still affordable to many that live and move here but its high-profile, unique location also presents living challenges. When we look at housing, we also must look at our area’s homeowners insurance rates – theft and fire and wind and hail. Both combined add quite a bit of extra expense to the areas housing.
At the same time, we also must consider the price of land. The days of $35,000 to $50,000 lots are almost nonexistent.
Other factors to consider are regulatory and/or policy burdens on housing. For quite some time, both the City of Wilmington and New Hanover County have used antiquated codes to deal with development projects that are far more sophisticated than what the codes allowed for. This has resulted in some lost opportunity for both the private- and public-sector sides.
The good news is that both entities are working through a major overhaul of their respective development ordinances, and we have already stressed that an increased height and density is key moving forward. Both ordinances also call for more mixed use and multi-modal functions. If done correctly with market-based solutions in place, we will find that denser projects can help alleviate some of the commuting and traffic concerns.
All these issues combined have presented challenges when it comes to pricing, which in return is why we have seen such an increased awareness in affordable housing.
The other good news is that our area’s unemployment rate has dropped significantly since 2015. At the end of 2017, we were sitting at 4.3 percent. The next phase of growth would be wage growth. Nationally speaking, in the first quarter of 2018, we did see some strong wage growth that more than offset an increase in mortgage interest rates, which helped to boost nationwide housing affordability.
Why do you think investment in the rental home market is on the rise?
There is a big appetite to invest in the rental market and it’s a great way to build an income-producing portfolio that has its basis in real estate.
Real estate has always been one of the top ways to build wealth. There’s research that shows the two main ways people build the most wealth: through owning their own business or owning real estate.
When you’ve got historically low interest rates and prices that are down comparable to other places, it just makes economic sense for investors from a wealth-building perspective.
At Keller Williams, we teach and train our agents to help clients understand that investing in real estate is something they may want to consider, and that we can provide them with full service by looking at potential investment opportunities for them.
Using downtown as an example, any time you have aging inventory, a lot of homes have to be renovated. There are a lot of homes in downtown Wilmington that have not been renovated in 50 years. The average homebuyer doesn’t have the upfront cash or expertise – or maybe just the desire – to do the renovations, but they may want to live down there. So, an investor also serves a purpose – they can come in and rehabilitate the home and either sell it or hold it as an investment.
On both a small and larger scale, the investor is using historically low interest rates to leverage the purchase of a rental property. At the same time, Wilmington continues to be a desirable – and reasonably affordable – place to live, especially when examined against other coastal markets.
Housing may have taken quite a beating in the recession, but homes were never worthless and many of them are starting to see their overall value and/or equity rise. This has led to speculative buyers looking to remodel and/or rehab older existing housing stock and, in return, add them to their real estate portfolio.
More importantly, housing is still one of the three basic needs; most every residential property could be rented at some rate initially and then easily raised upon an annual renewal as the market improved.
Historically, the value of real estate has typically gone up, making it a sound investment strategy. And everyone needs a roof over their heads.
The shortage of rental homes is driving demand and rents are increasing, which makes the rental home market a very attractive investment.
Many people who could not sell their homes during the “great recession” turned to renting their homes until the market improved. Those “accidental landlords” are now selling during this improved market.
Property investors are still purchasing anything under $100,000 – typically with cash – and that will still prove to be a good return on investment.
What reasons do you see for the 2017 spike in luxury home sales in the tri-county region?
Our luxury market has really started to come back in the last couple of years and we still have a higher inventory level in the higher price points and, certainly, in luxury home sales.
If you compare our region to other areas – even going inland to Raleigh and Charlotte – what people can buy down here in the luxury price point is still pretty incredible. We have homes on the water that people can get for prices they would pay for comparable property that’s off-water in another market.
To put it simply, we’re a desirable a location and the greater Wilmington area is still a great deal for a luxury buyer.
Because our inventory is still fairly strong, they can find what they want and get a good deal on it.
For the answer to this question, I turned to Tony Harrington – owner and broker in charge of The Property Shop of the Carolinas in Wilmington and chair of the N.C. Realtors Global Network – and Cape Fear REALTORS®.
Wilmington is the hub for different regions on the coast, and everyone wants to come to the coast. We’re seeing an influx of people moving from other locations, such as New Jersey, across the northeast, and California, due to Wilmington’s central location – halfway between New York and Florida. Sellers in those markets with rising housing prices and solid stock market are able to make their dollar go further in Wilmington.
There are some higher-end luxury communities – private islands, even, such as Bald Head Island. Many communities don’t have that. These private communities have a diverse style of luxury housing.
The climate is also better in Wilmington than coastal South Carolina, which tends to get humid.
Banks are still offering affordable rates on jumbo home loans and the stock market has been very strong, which allows for more cash flow among high net-worth individuals. And many businesses and consumers are benefitting from the new tax laws.
All these factors combined are having a positive impact on the luxury home market in our area.
Much of this is a combination of pent-up demand from people who exercised caution before making a purchase decision, coupled with still very low interest rates and an informed, sophisticated buyer who sees a quality location or product at significantly lower prices than most any major metropolitan or comparable coastal location anywhere.
Wilmington had an overabundance of second home and speculative homes built during the mid-2000s. That hasn’t occurred during the current expansion… yet. Without that speculative inventory spilling into the market, the existing inventory will continue to be quickly absorbed, as wealth creators reward themselves with higher-quality locations and housing products.
Huge pent-up demand, coupled with the renewed availability of low-interest jumbo mortgages, is driving a significant bump in the luxury end of the market.
There is no secondary market for jumbo loans, which has helped to keep the interest rates low compared to the market for conventional mortgages.
How is technology changing the way homes are bought and sold?
The biggest impact technology is having on how homes are bought and sold is that buyers have unprecedented access to the home and everything in it prior to ever stepping foot in the home. Drones, 3D imaging, video tours, etc. provide a very intimate look at a home via the internet.
And technology is also demanding that REALTORS® respond immediately to inquiries in order to capture the business. But the expertise, market knowledge and customer service that a good realtor can provide buyers and sellers will never be replaced by technology.
Oh, wow! The world is so different through the internet.
By the time a buyer has called a real estate agent or visited a model home, they have spent hours – or days – doing their research, reading reviews and immersing themselves in all the different options that builder has to offer. First impressions are so important in our industry, and it will always drive that initial decision as to whether a client, instead of taking a virtual tour, will put down their laptop or iPad and take a real-life one.
We are also seeing more digital photography and drone video shoots to describe home features. It is now more about the experience. Creative marketing techniques with high-quality, engaging photos and videos are the new norm. We are seeing agents use these techniques to tell more of a story about the home. Buyers want to see why it is worth it.
Don’t show the front of a home taken from inside your car and expect it to be engaging.
Technology is very quickly changing our entire industry and will continue to change the industry at a much faster pace over the next couple of years.
The consumer experience typically starts with technology, and more often than not, the consumer is on a mobile device. They’re searching on a website. A lot of times they are requesting information somewhat anonymously without having phone conversations or relationships.
For millennials, technology is just a part of their lives. They don’t even see it as technology; it’s just ingrained in how they live.
So, it starts with the consumer experience. Then, because technology provides an access point for a buyer, it provides us an opportunity to collect data and, through that data, provide a better experience.
Firms that are investing in technology and really understand the technology revolution that is happening in all industries, but especially in real estate, are going to be able to see trends and advise their clients at a higher level.
Keller Williams has invested $100 million in the past two years and has pledged $1 billion. Our company and Keller Williams has reinvented itself as a technology company that happens to be in the real estate space. By doing that, we are staying on the forefront of technology, always focusing on what the consumer experience looks like. It also gives us data points, where we can see trends in the industry, give our clients an amazing experience, and really take that data and integrate it in a way to serve them at a higher level.
Technology has also increased the pace at which we do business. We have people who register online, so reaching out to them quickly to answer their questions and prove you can provide the service level they are looking for is crucial.
People are getting more access to the information they want, so they can do more research on their own. But we’re just beginning to see that and it’s going totally change the way we do business over the next few years.
From a brokerage standpoint, our focus is to provide technology and resources to serve the agents who serve the clients at the highest level. Because the consumer is already there; we’ve just got to keep up as an industry.
Buyers have more access to information than ever before. This goes back to the second question in this discussion.
Technology is driving tremendous changes, from DocuSign to loan apps to the ability to close loans digitally. Technology has made the loan process faster but also more complex.
Alpha Mortgage has always been an early adapter of technology and we offer our clients the latest tools to expedite the loan application process but have the added benefit of understanding the local market in a way that online lenders just can’t replicate.