The Truth About Raleigh-Durham's New Construction Housing Inventory

In today's real estate landscape, the temperature of the market climate is a topic of keen interest for both potential homebuyers and curious onlookers. As the founder of the Tim M. Clarke Team, one of the top real estate teams in the Raleigh-Durham market, I'm here to shed light on the current state of affairs, particularly focusing on new construction homes.

The Current Market Climate

These days, due to the low resale inventory, many buyers have found it more challenging to secure their ideal next home. It's a common conundrum: sellers are hesitant to list their properties, asking themselves, "If I sell now, where am I going to move?" This hesitation perpetuates the inventory problem, creating a cycle that's tough to break.

Interestingly, the wholesale/discount market seems to have taken a backseat. It's as if distressed homes ceased to exist amid the pandemic. But let's not get sidetracked. The real story here is the growing number of new construction options for buyers to consider, given the unceasing inventory deficiency.

Ghost Listings: The New Normal

Many of the listings buyers see today are preconstruction "pre-sale" listings, or what we in the industry call "ghost listings". These are homes that aren't built yet but are already being marketed and sold. Most new construction options are contracted before the build is complete. They're listed and marketed in the Multiple Listing Service (MLS) just like any other existing home but are labeled as preconstruction or "pre-sales".

Presale homes are just one of many options for buying a newly constructed home. Each type of new construction home differs based on the builder and the level of personalization the buyer is allowed to contribute to the finished product.

Overview of New Construction Homes in Raleigh-Durham

The Raleigh-Durham area, known for its thriving economy and vibrant community, has become a hotspot for new construction homes. As the region continues to grow, many homebuyers are drawn to the allure of brand-new properties that promise modern amenities, energy efficiency, and the opportunity to customize their living spaces.

However, navigating the new construction market can be complex, with unique challenges and risks that buyers need to be aware of. That's where the expertise of the Tim M. Clarke Team comes in handy. We're here to guide you through the process and help you make informed decisions.

The Appeal of New Construction

The appeal of new construction homes is multifaceted. For many buyers, the idea of moving into a brand-new home, untouched by previous occupants, is incredibly enticing. New construction homes often come with the latest in design trends, energy-efficient appliances, and smart home technology. These features not only enhance the living experience but can also lead to long-term savings on utility bills and maintenance costs.

Furthermore, new construction homes offer the opportunity for customization. Buyers can often choose from a variety of floor plans, finishes, and upgrades, allowing them to create a home that truly reflects their personal style and needs. This level of personalization is rarely available in the resale market, making new construction an attractive option for many.

Understanding the Market Dynamics

The Raleigh-Durham real estate market has seen significant growth in recent years, driven by a strong local economy, a burgeoning tech industry, and a high quality of life. This growth has led to increased demand for housing, including new construction homes. Understanding the dynamics of this market is crucial for potential buyers.

As mentioned earlier, the low resale inventory has made it challenging for many buyers to secure their ideal next home. The common question most sellers in this market have asked is, "If I sell now, where am I going to move?" This perpetuates the inventory problem. You can read more about it in an article I was featured in on Realtor.com.

Additionally, the competition for new construction homes can be intense, especially in desirable neighborhoods. Buyers should be prepared to act quickly and make competitive offers to secure their desired property.

What is a "Ghost Listing"?

Let's dive deeper into the concept of ghost listings. These days, it can be hard to find a home to buy because there aren't a lot of homes for sale. This is called low inventory. Because of this, many buyers have a hard time finding their perfect home.

Sellers wonder, "If I sell my home now, where will I move?" This continues the inventory problem.

You don't hear much about discounted or distressed homes anymore. But there are more and more new construction options for buyers. Many listings you see now are for "pre-construction" or "pre-sale" homes. These are also called "ghost listings".

So, What Exactly is a Ghost Listing?

A ghost listing is for a home that will be built in the future. The home is listed in the MLS with pictures or drawings. But it hasn't been built yet. These homes go under contract early, sometimes before construction even starts. Buyers can pick the lot, floor plan, and finishing details.

There is less competition for pre-sale homes. After 2008, builders stopped listing finished new homes in the MLS. Instead, they pre-sell homes first, then start building.

The Process of Buying a New Construction Home

There are two main options for new construction:

1. A new home in a new neighborhood
2. A custom "spec" home in an existing neighborhood

New Home in a New Neighborhood

With this option, you buy a brand new house in a larger community. The builder owns the lots, which makes financing easier. These homes meet builder standards and often have warranties. But you have less control over customization. Financing is like buying a resale home.

Custom Spec Home

With a custom spec home, you work with the builder for a custom design. You pick finishes and layout. But you may not get amenities of a full neighborhood. If it's a one-off spec home, you'll likely buy the lot separately. Financing uses a "construction-to-permanent" loan.

What is a Construction-to-Permanent Loan?

Construction-to-permanent (or construction-to-perm) loans finance building a custom home. They combine the construction loan and mortgage into one. With traditional mortgages, you get the full loan amount upfront. Construction-to-perm loans give funds in stages during building.

There are two phases:

1. Construction phase - borrower gets funds to pay for building
2. Permanent phase - loan converts to traditional mortgage when home is done

Construction-to-perm loans give more flexibility and control over building. Borrowers can make changes as needed during construction.

Tips for Buying Pre-Sale in Raleigh-Durham

Pre-sale, or "ghost listings," are homes that are listed for sale before construction begins - sometimes even before the lot is purchased. You can recognize a pre-sale home in the MLS by looking for descriptions that say "to be built" or "proposed construction" and pictures that are renderings rather than actual photos.

As an experienced agent, I advise caution when buying pre-sale, as delays and changes are common. If you don't have a home to sell, be pre-qualified with a lender experienced in construction loans and ensure you can cover both housing payments during the 8-12 months it takes to build.

If you need to sell before buying pre-sale, list your home with plenty of time to find a new home if needed, and have a backup plan in case of delays. Carefully review the purchase agreement and only work with reputable builders. Pre-sale takes patience and flexibility.

The Tim M. Clarke Team can help guide you through the process, advocate on your behalf, coordinate timelines with your lender and agent, and provide expertise so you can buy smart.

The Importance of Working with a Knowledgeable Real Estate Agent

When navigating the new construction market in Raleigh-Durham, working with a knowledgeable real estate agent is crucial. At the Tim M. Clarke Team, we specialize in new construction and have extensive experience with custom home building. We understand the intricacies of the process and can help you avoid potential pitfalls.

Our team can provide valuable insights into different builders, neighborhoods, and the overall market conditions. We'll help you understand the pros and cons of various options and ensure that you're making an informed decision. Moreover, we can advocate on your behalf during negotiations with builders, potentially saving you money and securing better terms.

Understanding the Risks and Rewards of New Construction

While new construction homes offer many benefits, it's important to be aware of potential risks. Construction delays are common and can affect your timeline. There may also be unexpected costs or changes to the original plans. Working with a reputable builder and having a detailed contract can help mitigate these risks.

On the reward side, new construction homes often come with warranties, which can provide peace of mind. You'll also have the opportunity to customize your home to your liking and enjoy the latest in home technology and energy efficiency.

The Future of New Construction in Raleigh-Durham

The Raleigh-Durham area continues to grow, and with it, the demand for housing. New construction is likely to play a significant role in meeting this demand. As the market evolves, we may see changes in building trends, such as a focus on sustainable materials or smart home technology.

At the Tim M. Clarke Team, we stay on top of these trends and can help you navigate the changing landscape of new construction in our area.

Final Thoughts

Buying a new construction home in Raleigh-Durham can be an exciting and rewarding experience. Whether you're considering a pre-sale "ghost listing" or a custom spec home, it's important to understand the process and work with experienced professionals.

The Tim M. Clarke Team is here to guide you through every step of your new construction journey. We bring our expertise in the Raleigh-Durham market and our experience with custom home building to ensure that you make the best decision for your needs and budget.

Remember, in this competitive market, being well-informed and prepared is key. With the right guidance and a clear understanding of the new construction landscape, you can find the perfect new home in the thriving Raleigh-Durham area.

If you're ready to explore new construction options or have any questions about the process, don't hesitate to reach out to the Tim M. Clarke Team. We're here to help you navigate the exciting world of new construction homes in Raleigh-Durham.

Frequently Asked Questions about Buying Pre-Sale Homes

What is a pre-sale home?

A pre-sale home, also called a ghost listing, is a home that is listed for sale before construction begins. You buy based on plans and renderings.

How do I recognize a pre-sale listing?

Look for "to be built" or "proposed construction" in the description. Pictures will be renderings, not actual photos.

What are the risks of buying pre-sale?

Delays, design changes, and cost increases are common. Builders favor themselves in purchase agreements. Do thorough research.

How do I get financing for a pre-sale home?

You'll need a lender experienced in construction loans. They disburse payments at each stage.

When do I need to sell my current home if buying pre-sale?

List your home with ample time to find alternatives if needed. Pre-sales often take 6-12 months to build.

What costs are due upfront for a pre-sale?

You'll need to pay the lot deposit, permit fees, and design costs upfront, before construction loan disbursements.

Can I make changes to a pre-sale home?

Changes are very limited once the design is finalized. Expect to pay high change order fees.

How do I know if the builder is reputable?

Research online reviews thoroughly. Verify they have built the same style home before.

What happens if the home isn't done on time?

Have backup housing plans and review the purchase agreement terms carefully. Delays are common.

Who represents my interests in a pre-sale purchase?

Hire an agent experienced with new construction to represent you in the transaction.