Print
Real Estate - Residential

Builders: Vibrant Local Housing Market Could Face Struggles

By Cece Nunn, posted Dec 15, 2017
Builders who work in the Wilmington area discussed the local market at an event Thursday at The Terraces on Sir Tyler. (Photo by Cece Nunn)
The Wilmington area's new home market is sailing at a healthy clip, but some headwinds could be on the horizon, builders said at an event Thursday.

"We build in Raleigh, Charlotte, Wilmington, Fayetteville, Southern Pines, Pinehurst, Myrtle Beach and Charleston, and of all of our markets, we are above-plan in Wilmington better than any other market," said Ralph Huff, head of H&H Homes. "So this is a very, very vibrant community here."

Pat McKee, president of McKee Homes, said local and national inventory levels are low, and new homebuilders would like to fill that void, "but there's a lot of headwinds," including lot availability and an increase in costs.

Huff and McKee were speaking Thursday morning at the Builder Panel Breakfast at the Terraces on Sir Tyler, presented by the Cape Fear New Home Sales & Marketing Council of the Wilmington-Cape Fear Home Builders Association. The panel also included Mark Batson of Tongue & Groove, Shawn Horton of Trusst Builder Group, Craig Johnson of Herrington Classic Homes and Burrows Smith of River Bluffs. 

In response to a question about the cost of building materials, Huff said, "Everything's up. We're in a real dilemma I think in terms of the fact that prices are going up and the labor -- there's a definite shortage," he said. "It's a real crisis. Nobody raises prices because they're greedy; we're raising prices to try to protect our margins."

Using an example, he said the cost of the baseball stadium that is under construction in Fayetteville has risen from about $33 million to $40 million, and the cost of the parking deck there has jumped from about $6 million to $12 million.

In another example, McKee said, "Lumber spiked a couple weeks ago, and it was driven by a number of things -- tariffs from Canada and then the hurricanes that we had -- and we've seen an average of $2,000 to $4,000 increase in home costs just from lumber alone."

Though the lumber increase has eased a bit recently, other material costs could rise more as supply decreases, builders said.

"I think we're still in uncharted territory as far as the impact nationally the hurricanes and the damage from the hurricanes will have on the materials market ... I think it's going to drive our material costs considerably higher over the coming years," McKee said.

To address the labor shortage, builders said getting younger people interested in pursuing careers in skilled trades, including carpentry, plumbing and heating and air conditioning installation, will be critical to keeping up with the demand for new homes in the future.

In the Wilmington-area market, that demand is still being driven by retirees and consumer confidence, builders said.

As markets in the Northeastern U.S. remain busy, "people can sell their house rather easily now and come on down," Horton said.

Discussing the topic of housing affordability in the Wilmington area, Horton said "We need job growth, and we need pay growth."

At the same time, those who can afford luxury homes are spending more on custom dwellings, said Batson, whose company specializes in high-end houses on lots that people already own, mainly in Wrightsville Beach and Landfall and on Figure Eight Island.

"Overall the trend is that people's budgets are becoming less restrictive in our market," Batson said.

Johnson said in 2006, builders were delivering about 1.4 million new homes in a year, a number that has come down to 670,000.

"To get to that 2006 level is almost unheard of. In my opinion, I don't want to see it that busy because it was a false market at the time," he said. "So we're feeling good about what is going on right now." 
Ico insights

INSIGHTS

SPONSORS' CONTENT
Jessiepowellheadshot webversion

5 Reasons to Build Custom Franchise Software

Jessie Powell - Wide Open Tech
Jasonpathfinder3

What You Need to Know About SECURE 2.0 and Its Effect on Retirement Plans

Jason Wheeler - Pathfinder Wealth Consulting
Untitleddesign2 4523114356

Cybersecurity and Productivity: Striking the Perfect Balance for Business Success

Barrett Earney - EarneyIT

Trending News

Conservation Group Signs $8M Deal To Buy The Point On Topsail Island

Audrey Elsberry - Mar 26, 2024

National Organization Bestows Top Award On Cape Fear Professional Women In Building

Staff Reports - Mar 26, 2024

Engineering Firm Hires Four Employees

Staff Reports - Mar 26, 2024

N.C. Ports Officials React To Baltimore Bridge Collapse

Audrey Elsberry - Mar 26, 2024

NCino's Fourth-quarter Earnings Signal Rebound From Liquidity Crisis

Audrey Elsberry - Mar 27, 2024

In The Current Issue

Berries, A Battlefield And More In Pender

The N.C. Blueberry Festival, founded in 2003, is one of several events in Pender County that have drawn more attention over the years....


MADE: Polyhose Inc.

Polyhose manufactures and fabricates hose protection, paint hose assemblies and rubber hydraulic assemblies from its Pender County facility....


Hacking Cyberdefense Shortage

A shortage of cybersecurity professionals influenced professor Ulku Clark and her team to slowly evolve UNCW’s offerings to now include eigh...

Book On Business

The 2024 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2023 Power Breakfast: Major Developments