As the Real Estate Market Fluctuates, Buyers Seek Value Beyond the Home
Reacting to recent interest rate announcements the real estate market is bracing itself for changes stemming from a return to pre-recession economy.
As this affects the real estate market, potentially slowing it, experts are seeing buyers — particularly millennials, who are expected to account for more than 40 percent of sales this year — take a more holistic approach to home values when choosing to buy.
Larger community developments, in particular, stand to factor high in many buyers’ lists.
Developer David Waltemath said gradual rate hikes favor communities that offer amenities such as green spaces and community swimming pools.
Waltemath is the owner of Classic Properties, whose projects include a Good Growth Award-winner with the Santa Maria Golf Community near Baton Rouge in 2003, English Turn in Algiers, The Parks of Plaquemines in Belle Chasse, and more recently, 1,000 acres in Madisonville — Bedico Creek Preserve. “In 2017, Bedico Creek sold more than 90 homes ranging in price from the mid $250,000s to more than $1 million,” reports Waltemath, “ranking it at the top of St. Tammany home sales.”
Though implementation varies, master-planned communities typically involve larger tracts of land. The advantage for buyers is they get more than just a home on a typical sized lot.
Waltemath notes that Classic Properties doesn’t build homes, but rather develops the areas and subdivides it into lots, which are then sold to builders and future homeowners.
“We’re selling these lots for the same price as a developer down the street, who does not have the luxury that we have at Bedico Creek,” Waltemath said. “Home buyers are essentially getting (the amenities) for free.”
The Bedico Creek “luxury” Waltemath refers to includes two community pools with pavilions, a Rod & Paddle Club, playground, an engineered system of paved walking/biking trails, non-motorized boating/fishing, and more than 500 acres of greenspace, parks, lakes and nature preserves with rustic trails winding throughout.
Additionally, 200 acres at Bedico Creek that are technically open to lot development have been saved for future community upgrades. Waltemath said the available space allows the homeowners to continue to build value long after the roughly 900 lots are completed. As an example, he said, the current nine-hole disc golf course could be expanded to 18-holes if the Homeowners Association choses.
Another trend Waltemath said he and others are seeing is that new home buyers are securing lots long before they build. Buying the lot first allows buyers who might have less buying power to secure the ideal location first, and build their home later.
“Lots of people will buy a lot and say, ‘We wanted to buy now, because this lot won’t be here in three years,” Waltemath said. “That’s a great concept for young buyers or those planning retirement options.”
This trend is likely a response to a rising trend of home buyers staying in place. For the past decade, a limited supply of new construction has fueled sales of existing homes. But experts forecast a bullish year of new construction, which will mark a slowdown in the market for existing homes.
Though many buyers are rushing to secure low interest rates, Waltemath said there likely won’t be any sales disruption from the expected rising rates, as long as the increase is steady. Any market anxiety, he said, can be attributed to a generation of new buyers who see three and four percent interest rates as the norm, noting that few, if any, analysts see interest rates spiking to what they were before the recession.
“Interest rates will have an impact, of course, but most older people would say normal interest rates are between six and seven percent,” Waltemath said. “I don’t see anything that will cause the real estate market to freeze — there’s still a big demand out there.”
