Olde Park is more than just a wonderful new community in the Forest Acres area. It’s also a strong indication of a positive outlook in the housing market. And while housing is still a struggling industry, things are starting to look up. It’s something for builders and homeowners to hold on to, providing a hope for better things to come.
According to Earl McLeod, executive director of the Home Builders Association of Greater Columbia, the hope is there. “We are looking at a 30 to 40 percent increase over last year,” he says. “Obviously that is an increase over one of the worst years on record; nonetheless, it’s an increase and things are looking better.” Still, the lending environment is very strict. Acquisition, development and construction loans are extremely restrictive, meaning there is very little lending for small local builders for speculative building, i.e., building a home without a ready buyer. “These days, you have to have a contract in hand to be able to get financing,” says Earl. “Four or five years ago, there was more speculative building. That is not a viable business plan for many businesses any longer.”
The lack of speculative building has been detrimental to some smaller local builders, sending many out of business. But larger local builders and national builders have been able to find sources of capital other than the typical bank, including the developers of Olde Park, who leveraged the attractiveness of the neighborhood to get financing to build homes before buyers were secured. “There are very few undeveloped lots left within Forest Acres,” says Earl, “so it is a choice location in a very desirable area.” What’s more, in many cases, homes with higher purchase prices sell better than starter homes because established buyers with good credit scores are able to obtain loans.
So while banks are hesitant to grant loans to businesses, they are still eager to make loans to borrowers with good credit. “People who have money are spending it,” says Cole Thompson, a partner in Columbia Development, developer of Olde Park.
It doesn’t hurt that interest rates are at an all-time low, enabling buyers to purchase much more house for the money. “Buyers can afford a lot more house than they could four or five years ago,” says Cole. Buyers also still understand the importance of investing in a home. While the market remains down, over the long term, home prices still appreciate more than the stock market.
And the availability is there. A lot of homes are just waiting for new owners. Turn down any street in any neighborhood and there is likely to be at least one home for sale. With such a great selection available, a buyer can be picky and wait to find the home that has just the right features and location.
For homeowners who have no desire to move but are looking for a new kitchen or master bath, remodeling is still an extremely viable option. “Financing is more readily available for homeowners who need improvement loans if they have equity in their homes,” says Earl. “There is definitely an uptick in remodeling in the Columbia area.” And it’s easier on the pocketbook. According to the American Homeowner Foundation, the process of selling, including moving expenses, closing costs and commissions, typically equals eight to 10 percent of the value of the home.
Remodelers should be sure not to price their homes out of their neighborhoods. According to the National Association of Home Builders, a remodel should not increase the value of a home more than 10 to 15 percent above the median sales price in the neighborhood.
Whether in a remodel or a new home, several home design trends are resonating with homeowners and buyers, many of which were apparent after Earl and his team heard from some of the industry’s leading builders and architects at the International Builders’ Show earlier in the year. Builders are seeing an increased interest in reworking spaces. Instead of the formal den or office, homes are being designed to allow for added family space in high-traffic, more popular rooms, such as the kitchen. Small areas devoted to home management, also known as “pocket offices,” are being included in large pantries or spaces near kitchens or family rooms, reducing clutter. Window seats and alcoves provide ample seating without taking up much space. Builders are also adding laundry facilities onto the master bedroom’s walk-in closet. It’s all about efficiency and convenience.
The design of the home is also changing. Rectangular home designs are often more cost effective, so some new homes no longer have multiple roof lines and the unnecessary interior volumes those roof lines create. New home designs include innovative modifications that are still visually appealing, such as two windows in a corner with mitered glass to allow unobstructed views and maximum light. A mix of materials in the home’s façade is also becoming more popular, including metal, wood and stone, giving the home a more modern look and feel. Energy efficiency remains a popular trend.
But above all the trends and new home designs, buyers need to ensure they can afford to buy or remodel and they must look for a respected, quality builder. The Home Builders Association of Greater Columbia recommends looking for several qualities in prospective builders:
» They believe that homes should be well-designed, well-constructed and well-located in attractive communities with accessible educational, recreational, religious and shopping facilities.
» They have a strong responsibility to their customers and their community.
» They are guided by honesty in their business policies, and they believe in dealing fairly with their customers, employees, subcontractors and suppliers.
» They try to build a high standard of health, safety and sanitation into every home.
On the most basic level, Cole believes the best way to find a good builder is through word of mouth. “Talk to a friend who not only purchased a home but also lived in it and had a relationship with the builder, not just the builder’s agent,” he recommends. “We have gotten away from human touch because of the Internet, but the experience and honesty of a builder is still so important.”
Overall, buying or remodeling a home is an extremely exciting prospect for any homeowner. With thoughtful attention to detail – related to the home, the financing and the builder – now is a great time for homeowners and buyers to make a lot their own or a house their home.