The economic downturn had a positive side for some segments of the property-buying public. Those with the financial resources or the qualifications to meet stricter lending laws found the market awash with amazing deals. Tony Floyd, chief marketing officer of Berkshire Hathaway Home Services Georgia Properties, even goes as far as to say there were “steals.”
“Just two or three years ago, the percentage of properties being acquired through shorts sales, foreclosures or some sort of financial distress meant they were steals,” he said.
Many of those deals were in the luxury market that most real estate experts define as between $500,000 and $2 million. That slice of the metro market is still going strong, and 2014 is shaping up to be exceptional.
“That luxury segment is up 16 percent – more than the rest of the market,” said Floyd. “If you compare the whole market across the metro area year-to-date, it’s either essentially flat or a few percentage points behind last year. But in the first six months of this year, we’ve seen a big change in the luxury market. The demand is back, and builders can’t meet it fast enough.”
But these luxury buyers aren’t the investors who snagged the steals of the last few years. Instead, they are people moving up, downsizing and spending their resources to get the house they want in a specific location.
“These buyers are all over the map,” said Floyd. “But the biggest buyer segment in metro Atlanta is still Baby Boomers and the top end of Gen X. That’s different from the last 40 years, when first-time buyers were the largest segment; that’s slowed down now as people rent longer and buy later. “
Luxury buyers want half-million and higher properties in Buckhead, Brookhaven, Dunwoody, Sandy Springs, East Cobb and Peachtree City, as well as the exclusive club communities such as Country Club of the South in North Fulton and Sugarloaf in Gwinnett. Currently, there aren’t enough properties in those areas to meet demand, said Floyd.
“Most luxury homes now are pre-sales in new communities or intown teardowns,” he said. “It’s still particularly hard to find these properties in areas like Senoia and the Southern crescent where the movie industry is moving. The inventory there is very low.”
Building from the ground up allows buyers to put personal touches on the final design. While most houses in this price range have the expected upgrades – a master on the main, hardwood floors throughout, at least three garages and granite counter tops – buyers are also adding outdoor living spaces, high-end and energy-efficient appliances and systems and glam touches such as home theaters and exercise rooms.
“There’s almost an expectation that a house in this price range will have the best in kitchens and bathrooms, as well as added comforts like heated floors and towel racks, the latest technology and great landscaping,” said Toni McGowan, a Berkshire Hathaway’s executive vice president who directs the company’s Luxury Collection, a program that launched in Atlanta last December. “Buyers are generally looking for something very specific – like a 4-car garage or a secluded property. And they’re very particular about location.”
The demand in the half-million-and-up market is so strong that some developers long associated with less expensive projects have expanded their efforts. One such company, Traton Homes, builds in a range of prices and now has its Nellie Post Custom Home division that specializes in high-end houses.
“We look at $400,000 to $600,000 as our bread and butter, but this new division was created because we received so many calls from people asking us to build on their lot,” said Josh Hilscher, Traton’s vice president of sales and marketing. “Now we’re looking for lots as well, and our biggest problem now is we can’t find enough land to build on.”
Traton tapped its expertise as a production builder to enhance the semi-custom process. “For instance, we use the same sets of plans, but we’re able to give a production price and schedule while still offering a lot of changes to our buyers,” said Hilscher. “If they want to repurpose a bedroom into a second home office, we’ll do that. The difference is, in a full custom build, the buyer will go and look at plumbing fixtures then go to the paint company and pick out colors. We have a design center so we can give them the ability to choose what they want in one location.”
The new division is building Greenwich Park, a gated community of 22 homes in Johns Creek where houses start in the $800,000s. Designs range from 4,000 to more than 8,000 square feet. At the Enclave at Dunwoody, six infill houses start in the same price range. Buyers will find a range of features, including floors from hand-scraped, wide planks or reclaimed wood.
“Buyers can choose the trim package, types of carpet, hardwoods and more,” said Hilscher. “A lot of times, they bring designers with them who work alongside ours to come up with exactly what they want. That’s a fairly new thing to us; it doesn’t happen at the $300,000 level.”
Another builder, best known for his active-adult houses, has also entered the high-end market. Jim Chapman, the developer behind several 55-plus communities in the metro area, now offers a fine homes branch that starts at $500,000. His upscale designs have been built in Buckhead and Vinings, and he’s currently working on One River Place adjacent to the Chattahoochee River where 16 units are priced from the low $700,000s.
The most surprising aspect of working in that price range has been the buyer, said Chapman.
“At One River Place, every single home has sold to someone older than 55,” he said. “They are downsizing out of very large homes, and they want what they want and they’re willing to pay for it. If they want a tile that takes six weeks to get, they’ll pay for it and wait.”
This market segment is also driven strongly by location, Chapman added. “A lot of it is happening inside I-285 because buyers want to be near a particular school, near a family member, near a job. People will pay more not to have to drive, while people who are downsizing usually want to stay in the general area.”
Empty-nesters are among the buyers moving into Lake Haven at Crabapple, a 60-home development by Edward Andrews Homes priced from the $700,000s. The community features 1-acre homesites, an 8.5-acre lake, nature trails and floor plans from 4,100 to 5,200 square feet.
“About a third of our buyers are relocating,” said agent Patti Yarbrough. “They love that they can customize to their hearts’ content. We’ll make structural changes, upgrade the appliances and lighting for sure and add a lot of designer features like tongue-and-groove ceilings or wood floors in the master bath. These buyers are also spending money outdoors, making the patio bigger, adding a covered porch and putting in fireplace or pool.”
Other new-home communities in this luxury segment are Ruth’s Farm in Alpharetta, where houses start at $600,000 with 3,400 to 5,292 square feet and options such as third-floor retreats, keeping rooms, media rooms, sunrooms, master suites with sitting rooms and master baths with two-sided fireplaces. Nearby, the Stuart Park development features 10-foot ceilings, 4-sides brick exteriors, 3-car garages and upgraded stainless steel appliances.
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