Last summer, Katie Salisbury, 29, and her husband, Michael, 33, found their dream home in Raleigh. The new, 2,800-square-foot house on Blueberry Drive had big closets, beautiful light fixtures and glass knobs on the bathroom cabinet doors, which Katie loved, and a spacious, open kitchen and screened-in porch in the backyard that swayed Michael.
The trouble was, when they showed up with their realtor to see it, they learned that the home was already under contract.
“I still wanted to see the house, and Michael pouted, because he didn’t want to get his hopes up,” says Katie.
“It was frustrating,” Michael says, “because Katie had seen probably 40 homes up to this point, and there hadn’t been anything as nice as this one for the price, which was still over our budget.”
Fast forward two weeks, and the couple’s agent texted to let them know that the home’s seller was seeking out interested buyers again. Following their evening shifts—Michael works as an ER doctor at Wake Med hospital locations around Raleigh, and Katie is a nurse practitioner at Rex—they took another, early morning tour of the home. That afternoon, they submitted an offer to the seller, and it was accepted.
The Salisburys’ experience is what local realtors describe as fairly typical for first time homebuyers in Raleigh, a process that requires patience, compromises and a willingness to realign budget expectations with inventory that’s actually available inside city limits.
Generally, millennials are waiting longer to buy their first homes, renting long-term and, often, skipping out on
buying that starter home—one listed at around $350,000 and below—altogether. But, with more than 90 percent of home sales in the first quarter of last year going to buyers under the age of 44 nationally, there’s a good chance that, when a house is sold in any given market, it’s a pair of millennials doing the buying.
“Roughly 40 percent of first-time home buyers were willing to buy homes needing minor to medium renovations, or fixer-uppers,” says Andrew Ervin, a realtor at Raleigh’s DeRonja Real Estate. “The rest were buying more expensive homes. There are statistics showing that the age of the first-time home buyer has drifted from around 24 to 28, 29 years old. Instead of buying starter homes, they are purchasing homes at $400,000 and higher. In the Raleigh market, first-time buyers are waiting a little longer, but spending more money.”
When the Salisburys first relocated to Raleigh from Nashville, where they met on a blind date six years ago, they rented a house in North Hills for about $1,500 a month. Located on half an acre with a fenced-in yard, it was perfect for the couple and their beloved hunting dog, Allie Mae. After about a year of renting, the couple put in an offer on a home but withdrew it when the home inspection revealed issues with the foundation. It took another year for them to start house hunting seriously again.
“Our starting price range was $300-$400,000, but we didn’t understand the Raleigh market then,” Michael says. “After that first experience fell through, we were feeling a little gun shy.”
Katie worked with a broker, DeRonja Real Estate’s John Butler, who helped her get a feel for the market and taught her about the home buying process. Katie saw as many as 10 homes a day over the course of two months before they found the house on Blueberry Drive. The Salisburys had some firm requirements for their future home, but also found that they would need to compromise. While they were able to find a newly constructed home that required minimal upkeep, was close to both Rex hospital and the highway, that had three bedrooms and two bathrooms, they had to give up on their dream of having a big yard for Allie Mae to run around in.
“It has everything we wanted except for a big hunk of land,” Michael says. “It’s on less than half an acre, a quarter acre. But it’s close enough to Umstead Park and the greenways where we could compromise.”
At a price point of more than $550,000, they had to compromise on the budget, too. But as anyone familiar with Raleigh’s real estate market will tell you, there’s very little available within the city for less than $300,000, and housing stock isn’t keeping pace with the number of people who need housing and want to buy in the city.
“First-time buyers in Raleigh as a whole are not going for $350,000 and less,” says Ervin. “To find something in that range, $300 to $350 [thousand], you have to go outside of Raleigh, which people are doing, to Holly Springs, Clayton, Wendell. If you’re looking in the $250-$325,000 range, you’re in the same ball park as a very large chunk of people. When you start surpassing the half-million mark, you weed out some of those people a little, but there’s still a good amount of potential buyers. It’s very competitive.”
In buyers’ favor recently have been record low mortgage rates, so buyers haven’t felt as much pressure to put down 20 percent of the cost of the home to begin with. Less financing means homeowners can put money towards more house, or renovations. In general, 2018 was a hot year for national home sales, though the market slowed towards the end of the year and is expected to cool off through 2019.
In Raleigh, we can expect the market to remain hot for quite a while, however, with rising home prices and low rates of foreclosure. That’s great news for homeowners, like the Salisburys, who will be able to enjoy steadily rising home values.
“It’s perfect,” Katie says of her new house. “We worked really hard to get here and it’s really rewarding to have a beautiful home. It’s cool.”
“We’ll be staying here a long time,” Michael adds. “Not having a ton of land has been very easy to work around and the house is just beautiful.”