While the housing market last year and in 2017 has been strong in the Wilmington area, industry leaders have some concerns about the future, including a lack of inventory and the affordability of homes.
The challenges were discussed Thursday morning as the Cape Fear Realtors and the Wilmington-Cape Fear Home Builders Association released the 2016 Cape Fear Area Housing Economic Climate Report
The total number of homes sold last year in New Hanover, Pender and Brunswick counties was 15 percent lower than the peak of the housing boom in 2005, but 104 percent higher than 2009, a rise from about 5,000 to more than 10,000, the report showed.
Explaining one of the challenges the local real estate industry could face soon, Neal Johnson, president of CFR, said nearly 50 percent of all the home sales in New Hanover County in May were priced under $250,000 and 71 percent were priced under $300,000.
As a result, Johnson said, “we need more inventory. We need people to put homes on the market because at some point, if there’s no inventory for people to buy, then we may have a little bit of concern there.”
Currently, based on numbers through May 31 this year, New Hanover County has a four-month
supply of homes with an average sale price of about $294,000. Brunswick County has a seven-month supply at the average price of about $263,000 and Pender a five-month supply at about $266,000. A supply of fewer than five months typically suggests a seller’s market.
By contrast, in 2009, New Hanover had 18 months of supply, nine months higher than the national supply; Pender had 20 months and Brunswick had 28 months.
The lower the price, the fewer homes available, which is one of the reasons affordable housing is an issue in the Wilmington area, said Jody Wainio, of Buyers Choice Realty. As of May this year in New Hanover County, the $100,000 to $200,000 price range was at a 1.5-month supply level.
“Over 60 percent of our area workers are low-income service workers. The sad thing is, they can’t afford to live here anymore," said Wainio, who has served on a city-county committee on affordable housing for the past nine months.
But even higher-income residents, including those at or near the Wilmington area's median income of $48,700, are struggling to pay for housing and spending more than 30 percent of what they make on their housing needs, the report pointed out.
The city-county affordable housing panel has made some recommendations, including density incentives for developers and the creation of a housing trust fund that could either help buyers or offset costs for developers to encourage them to build homes at lower prices.
“The main reason I’m talking about this is I hope that in the near future, we’re going to see some changes and some recommendations coming out of our City Council and our county commission as to what we’re going to do about people who work here who can’t afford to live here,” Wainio said to the group gathered Thursday morning at The Terraces at Sir Tyler, home of the offices of CFR and WCFHBA.
She later added, “It’s not a doom-and-gloom situation for our market in general, but it is an area that we’ve got to pay some attention to or it’s going to get worse and worse.”
Overall, the Wilmington Metropolitan Statistical Area, which is made up of New Hanover and Pender counties, is expected to grow, with a local gross domestic product increase anticipated at 2.4 percent this year, said Woody Hall, an economist who worked with CFR and WCFHBA on the report.
But what’s occurring now is an unusual economic expansion, Hall said.
“Probably to use the word unusual is an understatement in the sense that employment is not following, that closely, growth and total economic activity. The jobs that have been developed have been relatively low-skilled, relatively low-wage jobs compared to previous expansions,” he said.
In the realm of new home construction, the Wilmington-area permit total was more than 3,700 last year, a 5 percent decrease from the year before but a 131 percent increase from its 2010 recession-era low.
Factors affecting local and national homebuilders include the availability of labor, which is extending the timelines of some projects; the cost of lumber and other construction materials; and lot and land availability, said Cameron Moore, executive officer of WCFHBA.
“A lot of subdivisions in Pender County are going through the approval process now, and we’ll probably start to see those come to fruition as far as buildable lots probably about in the fourth quarter of this year,” he said.