Episode 29: Interview with Kaitlin Miller – Buying a New Home While it is Under Construction.

Scott Williams: Sweet home Santa Barbara, where the skies are so blue. Sweet Home, Santa Barbara, what’s worked for me can work for you.

Jonathan Robinson: Welcome back friends to Sweet Home Santa Barbara. I’m your co-host Jonathan Robinson. I’m with my friend and realtor.

Scott: Scott Williams,

Jonathan  Robinson: And we have a special guest today talking about new versus used condominiums. Scott, why don’t you introduce Kaitlin?

Scott Williams: Certainly. We are going to be exploring some of the options for buying home that’s brand new and we’ve reached out to Kaitlin Miller who is down in Ventura because in Santa Barbara we often don’t have such opportunities to buy new homes. There’s just a lot less opportunity here for that. So, Kaitlin Miller, with that, why don’t you tell us a little bit about yourself and, and also this project that you were representing.

Kaitlin: Sure, absolutely. Thanks, Scott. So again, my name’s Kaitlin Miller and I am a Realtor here in Ventura. I’ve been with Berkshire Hathaway about five years now and my partner Melody and I have been the sales representatives for a 40-unit condominium development in Oxnard. We’re in kind of the heart of Oxnard and these condos range in price from the upper 500s to the mid-600s, which really down here is entry level pricing, and we have 40 of them. We have sold the first phase, which is 12 units, and we have 2 more phases that we’re going to be selling over the next year or so.

Scott Williams: Okay, so the market is changing, obviously. When did you start the beginning of the sales?

Kaitlin: Yeah, so we started late last year. So late 2021, we hit the market around November and that was almost close to the peak nuttiness of the market down here. We could hardly answer the phone quick enough. They sold pretty much immediately, and I’d say from the second we moved people into contract, the timeline for completion just really seemed to grow and grow with all the supply chain issues, everything going on you know, that the builder couldn’t even control. So, there was many challenges, which I’m sure we’ll talk through. But talk about a market change from selling these second phases versus when we released the first. It’s very, very different now.

Scott Williams: Well, the supply chain issue, and this is certainly a very big difference between buying a resale home, that’s what we call a used home in the business because you have an escrow and 30 days later you move into it. But in this case, you’re buying the home and it’s not even built yet. Is that correct?

Kaitlin: Yes, correct. Yes. And that was1of our challenges early on is there was virtually nothing to look at. So, we did have renderings done and they were beautiful, but there was no physical product to see. We were selling these before the building had even been framed and honestly it didn’t matter because the demand was just so high and you know, historical highs at the time. And this pricing was just really strong for something new. And like you mentioned, Scott, we have such limited new construction. I know you have limited in Santa Barbara, but we also do I Ventura County mainly due to soar, which is an initiative that was passed in 1995 and it was recently renewed that really limits the development of agriculture land or open space. So, we have limited new construction too and anything we have just been selling really quickly.

Jonathan Robinson: Kaitlin, I’m wondering as a somebody that’s not in the real estate business, what are the advantages or disadvantages of getting a new versus an established used condo?

Kaitlin: Sure, yeah, great question. So, there’s a lot of advantages, some obvious, some not so obvious. Some of the obvious would be the ability to customize the home. So, we had a lot of buyers come through that were just so excited about that process, being able to choose the countertops and the back splash and knowing that you could choose all of that before you had even closed escrow. So, any finishes were done during the construction phase, so people got really excited about that not having to deal with remodeling once they moved in. There was, at the time, I mean we were locking buyers into an interest rate of the low 3%. So, everyone knew that interest rates were to be going up substantially and there was a lot of advantages to go ahead and lock your interest rate back in January for 6 months, which is what the lender we’re working with is able to do. So, I mean that’s one of the main reasons we didn’t lose a single buyer with this first phase because when we were closing these condos, the rates were virtually twice what they were when they locked. So that was there’s a lot of advantages there, being able to lock early.

Obviously, the environment’s changed a little bit. That was early on. And then there was also some other lending lender advantages when it comes to new construction, for example of VA or FHA loans. As I’m sure you’ve seen, Scott, when our market was as competitive as it has been as a realtor representing buyers with those types of loans, it can be very challenging to get an offer accepted when you’re up against cash or other multiple offers. And the VA and FAH, they’re great loan programs, but there are some stipulations when it comes to a VA appraisal versus a standard appraisal and that can really, sellers just don’t necessarily like that when you’re looking at cash versus VA or FHA. So, with new construction that is virtually a non-issue. So, we had a lot of VA we haven’t had many FHA, but we could, and we had a lot of where our project is located. We’re fairly close to the base, so we had a lot of veterans be able to take advantage of that loan program, which was great.

Scott Williams: Well, I can imagine, Kaitlin, that 6 months or more from the time that you make the offer, until you get to move into your place that things can go, you don’t know how they’re going to go. How was that for people?

Kaitlin: Yeah so, I would say one of our biggest challenges, which I mentioned earlier, was obviously the timing and supply chain issues. There was one particular part that the builder couldn’t get that basically is needed to bring electricity to the entire community. So, we had buyers that had given notice to their homes because they thought they would be moving in, and then that timeline just grew longer and longer, and we were in a unique position where the builder was just true to their word and really took care of every buyer. But we had people in hotels, we had storage units, they were helping cover moving costs. Just because the timeline, I mean, with any new home, it’s fluid right now, it was just extremely fluid because they could not get supplies that were needed to close. So we had everyone hang in there, which was a nail biter to say the least. But I think really the biggest thing was just, I mean, it’s a beautiful community at a great price. And also, like I mentioned before, these buyers have blocked almost 3% lower than the rate the interest rates today. So, if they were to walk away that rate would go away.

Scott Williams: Well, you’re now approaching a marketplace that is different and you’ve sold 12 of them, you’ve got 28 to go. How many are under a construction now?

Kaitlin: So, we’re currently the second phase is under construction, which is another 12 homes, condos, and we have one of those under contract. So, we have 11 more to sell right now. And yes, the environment has changed very much. The pricing has only gone up since our first release and we’ll have to see if that holds with the environment constantly changing. But we still, we’re working with 2 preferred lenders that have really strong lending programs, one being Citibank and the other is the Money Store. And so, with that, there’s still some advantages that we are seeing when moving forward with one of the condominiums versus our resale market, Scott. So, I think that will keep drawing people in.

Scott Williams: All right.

Jonathan Robinson: Well, that seems to be a lot of information. Any last questions you might have, Scott, or does that cover it?

Scott Williams: Well, I think most people get sort of hung up in the idea that they’re going to, they’re going to buy something that already exists. The whole idea of buying a brand-new home may not really even occur to people. Is that what you see as well, Kaitlin?

Kaitlin: Very much so. Yeah. We really had I would say the majority of our buyers had been only looking at resale homes and kind of stumbled upon our community and it was like a light bulb went off that, hey I don’t need something ready right now. When we were first moving these under contract, I’m okay to wait. I like the ability to customize, and I want to move into something that no one’s ever lived in. So, I agree with you, Scott. I don’t think it’s always you don’t always hear; I’m only looking for new homes. I’m always only looking for new homes. Our community goes into the MLS just like our resale market does. So, I think the majority have been people really stumbling upon our community and our job is just to make sure that people know about it and that it is a wonderful option for a home.

Jonathan Robinson: I’m wondering how people can contact you, Kaitlin.

\Kaitlin: Sure. So, we have a website that really is our best resource for everything about the community. It’s called magnolia court homes.com. And my contact information is on there, my partner’s contact information is on there. And if anyone’s interested, we’d love to chat more.

Jonathan Robinson: And then there’s people contacting you, Scott, how’d they do that.

Scott Williams: I’m scott@scottwilliams.com and I can pass you on to Kaitlin if you reach out to me.

Jonathan Robinson: Well, great. I appreciate all this great information. I’m learning a lot, and I hope our listeners are too. And keep tuning in to more episodes of Sweet Home Santa Barbara.

Scott Williams: Thank you for listening. Please subscribe to our podcast on your favorite app. If you know someone preparing to sell their home, please tell them about the podcast. Visit scottwilliams.com to contact me and download the 2 free e-booklets. Is my house saleable now and how not to buy a money pit? Thank you for listening.