SLOWLY BUT SURELY

Local custom builders have bided their time for the better part of a year, but with new home inventory waning, demand is starting to increase.

By most accounts, local custom builders will be more than happy to see 2009 in the rearview mirror and may even shout “Good riddance!” when it’s finally gone.

“It was a very slow winter and spring; it was almost scary,” says Matt Gilliam, sales and product manager with Legacy Custom Homes in Raleigh, which is currently building in The Oaks at Fallon Park. “But it just seems like every day and every week is getting better and better. We’ve had a lot of pre-sale activity pop up as a result of people not being able to find what they want right now because there hasn’t been a lot of building in the last ten to twelve months.”

Indeed, as builders have slowed and in some cases stopped building due to the perfect storm of tight credit, record job losses and a struggling economy, the glut of inventory from 2007 and 2008 is slowly being bought. And that leads to only one thing: demand.

Custom vs. “Tract” Builders
A quick primer: Custom builders focus on building one house at a time, usually with a unique floor plan, high-end finishes and quality craftsmanship, including things like coffered ceilings, intricate stone and tile work, and customized touches like niches and built-in shelving.

Tract builders typically build a large number of homes at the same time, usually from a selection of three to four floor plans and the finishes and amenities are typically mid-level and similar in each home unless a buyer selects to upgrade.

The economy has been tough on both. Many tract builders have gone out of business or left the state because there simply isn’t the demand for large quantities of new housing now. Some are making the switch to remodeling; David Warren, president of Westpine Builders, Inc., is noticing the competition. A custom builder for eleven years, two-thirds of his business is complex home renovation. Currently, he’s working on four projects, down from his typical load of seven to eight.

“It’s less, but, overall, we seem to be busier than most.” To diversify, Warren recently partnered with Rigid Building Systems to build pre-engineered steel buildings for schools, churches and restaurants.

Better bargains
Every cloud has a silver lining and this economic slowdown is no exception. While demand may be increasing slowly, it’s not raging, and that means good deals for potential buyers, provided they’ve got good credit and money to put down.

Warren has a gem of a property for sale on Kenmore Drive in Raleigh listed at $799,000. The 4,000-square-foot home was appraised at $975,000 just last year. Warren remodeled the entire property, built in 1938, and added an additional two thousand square feet across the back and on the right side of the house. The home is made of five-inch, locally quarried stone.

Financing – a challenge
Once Warren sells the Kenmore house, he’s got two lots in Cary’s Preston subdivision on which he’d like to start homes, although he admits he will likely seek private investors. The lending side of things is still a challenge for several builders Midtown spoke with.

Shervin Tahssili, owner of Tuscany Construction Group, is currently working on three pre-sale homes in North Raleigh and hopes to sign three more in the coming weeks. Although busy, he’s still not convinced the worst is over. “It’s really hard to tell,” says Tahssili. “Until banking and financial institutions start working with builders and developers, I just don’t see how things are going to get any better.”

Tahssili's buyers are usually referred by word of mouth. They apprec-iate his Mediterranean architecture and high-quality finishes. In addition to residential construction, Tahssili also takes on commercial projects.

The history of fabulous features
You know what we’re talking about: the “wow” factor. Fabulous features change over time, no doubt about it. Otherwise, we’d still have avocado appliances. Custom builders are typically at the forefront when it comes to materials and technology. It’s these features that Matt Gilliam attributes to the increasing interest he’s seeing in Legacy’s homes at The Oaks at Fallon Park in Raleigh.

“For the most part, you’re getting a very high-end, million-dollar product, but it just doesn’t cost a million dollars,” says Gilliam, noting homes start at about $700,000. In addition to the wide-planked flooring, commercial appliances and granite you’d expect at this price range, buyers will also find custom mantle-work carved at different angles to frame fireplaces, and indoor overlooks and balconies with wrought-iron railings.

Randy Walker, president of Timberline Builders, is also building in The Oaks at Fallon Park as well as in other parts of Raleigh, Cary and Holly Springs. In business for seventeen years, he has a pretty good memory of how home features have changed over the years. “A good way to gauge it is to follow the evolution of cabinetry and countertops,” says Walker. “We were building in the early nineties and, even at the higher range, we were just starting to go from the oak cabinets to the white cabinets. That was the trend then; everything was all white.”

At that time, countertops were still laminate; a wood-edge surround signaled high quality. Gradually, solid surface countertops came into favor, but cabinets were still white. “Then the cabinets all became maple with solid surface countertops, and then you started to see a little bit of granite,” says Walker.

Appliances went from white to stainless steel and then, nearly overnight, the blackish-green Uba Tuba granite won out over solid surface countertops. “I haven’t seen it (solid surface) in five to six years. Everything is granite.” Today, there is a great variety of granite, quartz and marble surfaces for all areas of the home. Recycled glass and paper countertops are new options for green consumers.

Local custom builders say there are more hardwoods in today’s homes as well. No longer just in the foyer and dining room, hardwoods are now in the entire downstairs and often on the second floor of new custom homes. Homes are larger, too. Three bedrooms and two-and-a-half baths used to be the standard footprint. New homes today typically include four- to five-bedrooms and three-and-a-half baths.

And the biggest difference of all? The consumer. “Buyers are a lot more knowledgeable when they get to your house,” says Walker. “They’ve seen it on the Internet; they know the community. They’re very aware of what they’re going to find.” Or expect to find.

A hearty group
All in all, custom builders, it seems, are a pretty hearty group. They know how to roll with the punches – whether in diversifying, maintaining inventory, or getting creative with financing. Each builder we talked with felt the worst was over, although several were cautiously optimistic.

In the end, it may be that “location, location” will be the saving grace. After all, folks still want to live in the Triangle. And that’s a good thing. “There are still people moving here, and it’s one of the most popular places in the nation to be,” says David Warren of Westpine Builders. “Everybody has quit building for a year; if people keep coming, eventually someone is going to have to start building again.”

Text by Christa Gala

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