The new home market is running strong and builders are expecting 2017 to be a good year.
There is not a single typical buyer looking for a specific set of features, several area homebuilders say, but there are enough people interested in new home construction that there’s a good market.
The reasons for buying a new house instead of an older house are many, but those advantages are often accompanied by higher costs.
So the sale of new homes is a sign that people have money and are willing to part with it. New home construction is considered a critical indicator of the national economy’s performance.
Here in the Capital Region, one of the healthiest economies and one of the strongest housing markets is in Saratoga County.
“We are seeing very, very energized activity in the new construction area right now,” said Barry Potoker, executive director of the Saratoga Builders Association. “Part of it is due to the lack of resale inventory,” he added, but much of it is just desire to live in Saratoga County.
“The demand is still very high in Saratoga County,” Potoker said.
The association’s 2016 Showcase of Homes last autumn featured 20 houses and was heavily attended, he said.
Continuing a recent trend, builders in Saratoga County are seeing a lot of older people interested in downsizing to new homes, he said. These can be no-maintenance, such as in condos or townhouses, or just lower maintenance, because repairs are less frequent in a new house.
Given the age demographic of this group of buyers, stairs and lawn-mowing are less popular.
“People are looking for first-floor master [suites],” Potoker said. “We are seeing that, and we are seeing interest in maintenance-free townhouses and condos.”
Heidi Harkins, vice president of The Michaels Group, said location as always influences price, but also affects demand. There’s not as much call for new houses in less-affluent communities.
“We expect 2017 to be a pretty good year,” Harkins said. “But it varies based on geographic location.”
Michaels Group builds 50-70 houses a year in the communities it is developing and on free-standing lots owned by the buyer.
If one were to generalize, she said, buyers want a larger lot but not a larger house on it.
“I don't think people necessarily want the biggest house in the neighborhood anymore.”
That calls for efficient use of the square footage and some nice features within it. It becomes a balancing act for the builder to offer an attractive set of options at a competitive price.
“It's tricky,” Harkins said, noting rising cost of materials. “Lumber’s going up, a lot of things are going up.”
Energy-efficient construction and components are also a popular selling point.
The Michaels Group expects the economy to remain strong enough to support the new housing market through 2017.
“Everyone knows the interest rates are going to tick up one or two times this year,” Harkins said, so it won’t be a surprise when that happens. Houses, both new and existing, remain affordable in the Capital Region, she added.
Jeffrey Chouinard, manager of the Realty USA Division Street Office in Saratoga Springs, has been in the housing industry for 39 years, first as a builder, then as a broker. He said he’s seen mortgage interest rates from 3 to 18 percent during that period, and they need to rise a bit now from the historic lows of recent years so that they can be lowered again during the next economic slowdown.
“If the housing market does well, the whole economy does well,” he said.
And a lot of things are going well now.
"The new construction market doing very well, we expect a robust year,” said Chouinard, whose business includes a large new-home component and is the sales representative of Heritage Custom Builders.
“Traffic has been at an unprecedented level at all of his sites,” he said, referring to Heritage owner Geoff Brooks.
One of the new home communities is Timber Creek in Ballston. It’s being built in the new urban style: Houses and townhouses clustered more tightly than traditional developments, with most of the land preserved as pastures and woods with walking trails, plus sidewalks and -- in the next phase -- retail space.
A walkable community attracts people across demographic boundaries, he said.
“Timber Creek is a unique animal,” Chouinard said.
“It's got a great cross-blend. We have single people, we have young families. Those [new urban] communities tend to blend groups together, which is healthy, too.”
Timber Creek also is drawing both downsizing baby boomers and millenials stepping up from rentals to their first homes once they’ve cleared their college debt.
Another housing industry veteran said he too sees more young buyers. Not a lot, but more.
“I think we're benefiting now from some of those college loans finally being paid off,” said Sam Palazzole. “The demographic could be a sleeping giant.”
Palazzole, co-owner with Dan Barber of Saratoga Builders, said a few buyer profiles pop up regularly: Those recruited to work in the area; those who realize a monthly mortgage payment is less than the monthly rent on a good apartment; and those downsizing after their children are grown.
Those relocating to the area to work at GlobalFoundries or elsewhere in the region’s tech industry typically have good incomes, Palazzole said.
“These people are typically earning a significant amount of money. They come into the area ready, willing and able to build the home they desire.”
Renters are often stuck renting because they lack the money for a down payment on a house, whether new or existing. When they do get the down payment together, they’re ready to go.
“Then you have that wonderful downsizing group -- they're the best,” said Palazzole, explaining that they know what they want, having owned homes for decades, and often don’t need a mortgage, if they can sell their previous house.
Like the other builders who spoke for The Gazette for this story, he said there is no single feature buyers are looking for, such as a bigger garage or bathtub.
However, a lot can be customized along the way, especially flooring or lighting.
“We give them a wide range of choices,” Palazzole said. “They literally have the entire catalog to chose from.”
But the question of why someone should build a house instead of buy an existing one is easier for him to answer.
“If you've got the money and the time, why buy someone else's dream?” he said.
Then he qualifies that question.
“IF you're with a reputable builder -- not all builders are the same. Not from any perspective.”
Palazzole suggests some basic research for anyone planning to have a house built: Check the builder’s past projects, references and warranty. Think as much as about the blueprint as about who’s going to build out the blueprint.
“If it's not executed properly, it doesn't matter how it started,” he said.