Recent numbers for the sale of single-family homes and new houses under construction remain strong locally, according to the first Cape Fear Area Housing Economic & Climate Report presented Monday.
But several factors could affect those statistics in the future, including housing inventory, the availability of lots for new homes and where new homes are located.
“What I would say today to y’all and I think you would probably agree with is: our market is back. Our real estate market is back; it’s very strong,” said Cameron Moore, executive officer of the Wilmington-Cape Fear Home Builders Association. “It has certainly got some challenges ahead.”
Moore spoke Monday morning at the presentation of the report, a collaborative effort between the homebuilders association and the Wilmington Regional Association of Realtors, in a session held at The Terraces at Sir Tyler. Woody Hall, professor emeritus of economics for the University of North Carolina Wilmington, and national experts contributed to the report’s production.
“Our intent, I believe is to see if the information we provide you is of value and if it is of value, are there any changes you might suggest of data we look at and collect and analyze,” Hall told a group of those who work in the industry who attended Monday's presentation.
In the area of single-family home sales, the region has seen continued growth since 2009, a trend reflected in March's housing statistics, which were also released Monday.
“If you look at the level in 2015 of 7,404 [total units sold] and compare it to the level in 2009 of about 4,360, you’ll see an increase of about 70 percent between 2009 and 2015,” Hall pointed out.
In March, the number of units sold in New Hanover, Pender and northern Brunswick counties increased from 583 in the same period last year to 712, a rise of about 22 percent. For the first quarter, total sales increased more than 15 percent and total dollars more than 17 percent over March 2015, WRAR statistics showed.
Thirty-year fixed mortgage rates are still below 4 percent, making the second quarter of 2016 “an extremely attractive time to purchase a home,” said Don Harris, WRAR president, referring to the association's latest figures.
Looking at last year's market statistics, Hall said assuming a 4 percent, 30-year mortgage interest rate, even with a down payment of only 5 percent, it would appear that those who make the median income for the Wilmington Metropolitan Statistical Area of $48,700 could afford a home of nearly $240,000. That was also assuming their utility costs aren’t more than $80 a month and using the widely accepted definition of housing being affordable if it doesn't cost more than 30 percent of a buyer's income.
But Hall said an important consideration that could be incorporated into next year’s report is how many homes are available for that price.
Dave Spetrino, president and CEO of Plantation Building Corp., said a bigger issue to include in a housing affordability discussion, though, is location.
“There’s plenty of houses for sale under $240, but are they where people want to live?” he asked.
Harris said, “The other ‘x’ factor in this is our inventory in affordable housing or housing affordability below the $250 level is slim, but when you factor in the potentiality of HOA dues, of any flood insurance policies, wind and hail – all those variables impact the ability of the buyer to afford a house in those ratios.”
Those who attended Monday’s presentation also asked that demographics be a consideration in future reports.
“Our data shows that 63 percent of our buyers are going to be 55-plus, active-adult,” said Livian Jones, referring to RiverLights, a community under construction on River Road in Wilmington.
At the same time, Jones, vice president of operations for RiverLights developer Newland Communities, said the RiverLights team is working on a school component for the community. Plans for RiverLights, a 1,400-acre master planned community, include an age-qualified 55-plus neighborhood as well as a conventional neighborhood.
“We have a 15-acre school site that we’re donating right now. We’re trying to figure out what that’s going to be with the school system, the county and the city,” Jones said Monday. “We’re going back and forth on that. If not, we also might be creating a private school option.”
Another factor expected to become more of a challenge to the construction industry is the cost of lots, labor and materials, which Jones said can be more expensive in the Wilmington area than in larger metropolitan communities.
“We’re already having lots of labor problems as we speak ... Lot prices are going up, and labor prices are going up weekly,” said Heath Clark, general manager of Bill Clark Homes. “In order to get your house built, you’re going to have to pay this because there’s no more labor willing to work at that rate.”
Toward the end of Monday's presentation, Spetrino said what he wants most out of the report as it becomes an annual fixture is to know “when I gotta get out. I want to know when I should be scared. ... From there, though, what I really want to know is where the opportunities are … where can I take this information and add more employees, grow my base, bring more people to our community and encourage that growth.”