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Unlike in the past, Raleigh residents are buying bigger homes with higher price tags. Luxury home sales have seen a boom in the last year, with more and more residents looking for more space and custom touches.
But why the change?
There are certain economic trends that have benefited luxury housing. According to the Triangle Area Residential Realty Report, in the last decade, the Triangle’s employed workforce has increased 31 percent, while the unemployment rate decreased from 9 percent to 3 percent and the median family income increased 30 percent. Those numbers give potential buyers more security when they’re deciding to purchase a more expensive home.
In fact, the Triangle’s luxury housing market with a closed listing price of $1 million-plus was up 31 percent in 2019, a significant boost by anyone’s standards. Even though the market’s “sweet spot” still remains in the $200- to $400,000 range, that doesn’t mean other areas of the market aren’t seeing growth.
“It’s really about what’s happened with stock equities and what’s happened with house prices locally and nationally,” says Stacey Anfindsen, a residential real estate appraiser and market analyst, who edits the Residential Realty Report. “The Dow Jones over the last decade is up something like 171 percent. The point behind that is that money isn’t sitting in people’s bank accounts. They are cashing it out and putting it into their houses. Anyone who bought a house post-recession is up. Most people will take their home equity when they sell a house and put it into their new house.”
Often, luxury homes are a product of “moving up,” or upgrading current conditions.
“The higher price range is often connected to a move-up buy,” says Frank DeRonja, broker at Raleigh firm DeRonja Real Estate. “You are at a point in your life or your career when you might be moving on from a $500,000 house. You are comfortable with your financial situation and you go ahead and pull the trigger for that price range.”
With houses gaining equity and the national average for a 30-year fixed mortgage rate down from 5 percent to 3.7 percent, making the move no longer seems intimidating. There’s also the out-of-towner factor.
According to the U.S. Census Bureau, Wake County has received an influx of residents from areas around Seattle, San Francisco, Los Angeles, Phoenix, Boston, Chicago, New York and southern Florida, to name a few. Housing markets differ greatly from state to state and some residents may get more for their dollar here; perhaps, then, they’ll purchase a larger home with more bells and whistles or they’ll create one for themselves.
For Kimarie Ankenbrand, who moved here from Dallas on a whim following a job opportunity, custom building was the only way to go. Having previously renovated her two former homes in Dallas, Ankenbrand knew her style and what she wanted. She also had a neighborhood picked out here in Raleigh, but with low inventory and options that didn’t suit her, Ankenbrand decided custom building was better.
“After you’ve built a house once or twice and picked everything out yourself, it’s hard to go back,” says Ankenbrand, who currently is building in Country Club Hills inside the I-440 Beltline. “There were design elements we were seeing in Dallas that we weren’t seeing here. We were looking for something more modern and transitional instead of Southern and traditional.” With the planning process beginning in September of 2018 and on schedule to finish in May of this year, all in all it’s about an 18-month process.
Ankenbrand isn’t alone in her lean toward custom built houses. As the price point rises, more and more people want to pick the details, from layout to finishes to appliances.
“What I see is when folks custom build, you very often feel like this is your last time through,” says DeRonja. “You see people make decisions on things more expensive than if things were made for you. It’s amazing what is included in homes. Builders have gotten very smart with appliance packages, quality of materials and trim work. The details are where you see a lot of the differences.”
But custom homes aren’t the only homes in the luxury market. Some builders are going above and beyond to create spec homes (listings built without a buyer) at a much higher budget.
The most expensive finished spec home in Raleigh that sold in 2019 closed at a whopping $1.96 million. Created by Sam St. Clair in Villa Park, this sprawling property features everything from spray foam insulation to 7,000 square feet of pre-finished, engineered European oak flooring to fireplaces as tall at 16 feet covered in stone. Every bathroom even had custom tile designs taken all the way to the ceiling. In other words, the builder spared no expense.
“A spec house is very risky,” St. Clair says. “Most would think when building a spec, it’s important to find ways to save money so our invested costs aren’t as high. My view is completely opposite. I’d rather spend the extra money and make sure my house is everything the future owner could ever dream of. When designing the house especially in this price range, no detail can be overlooked. For example, how many people would notice a pot filler behind the range? I’m not sure, but I’d much rather buy an $800 pot filler and know that my house checks off that box.”
The couple that ultimately bought the house had been looking for something in the neighborhood that was modern and new and that they could grow into; it took them five years to find their home. The husband, a young professional who didn’t want his name used, says that buying such a large home wasn’t his initial intention, but when he looked at comps in the market, they weren’t half the cost for half the house.
“We didn’t necessarily need this much square footage, but price per square foot and the size of the lot was a big factor,” he says. “In the surrounding areas, the houses were just a little bit less expensive but half the size. As far as the quality of the construction, I tip my hat to the builder. The entire house is brick. The floors are wood panel, all the top level appliances. My intentions are to be here for a long time. We wanted a gym in the basement and we are going to turn some of the rooms into other uses like a home theater. When we have kids they’ll have plenty of space to roam around and do their own thing.”
St. Clair isn’t the only builder getting creative and taking chances. Luis Torres with Kendall Custom Homes, who won gold during the 2019 Parade of Homes, was recently in South America looking for inspiration for upcoming builds.
“It’s a little risky to change things up, but that’s what makes a custom home,” says Torres, who’s award-winning home featured custom-made floating stairs. “Every time you see new builders come out and say this is a custom home, but you go look at it and it’s the same house down the street and there’s nothing really custom about it. Custom has been forgotten, anything can be custom. Of course you only have a little bit of margin to do that because price has to be in the game. You can’t customize everything or it won’t be affordable at some point. I get the joy of building it, they get the joy of living in it.”
While large custom builds with custom cabinetry, dual master suites and thousands of square feet of living space are exciting to think about, they are not the new norm in the Raleigh market. Luxury housing has seen a large increase recently, with 2019 listings up 16 percent but it is still a niche market. The median average home listing price is still well below the luxury range at $340,000, according to Zillow. But in terms of custom homes, it has been harder and harder to find homes at the lower end of the spectrum. The rise in land value paired with the tearing down of cheaper homes has cut inventory severely inside the Beltline.
“So much ties back to inventory,” says DeRonja. “Building new construction closer to the city center, inevitably you might spend $400,000 on a house and lot to tear down, and that’s taking a $400,000 house out of the market for someone who wants to move into it. You may argue that a $400,000 house isn’t affordable, but you might also argue that in some parts of town that’s on the lower end.”
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