Economic growth is stabilizing, unemployment rates are low, and the tri-county region is continuing to see a demand for homes as the Wilmington area home market paces faster than the nation. Affordable housing, however, still remains a big topic.

That's according to the latest Cape Fear Area Housing Economic Climate Report, a collaborative effort between the Cape Fear Realtors (CFR) and the Wilmington-Cape Fear Home Builders Association (WCFHBA), presented Wednesday morning at The Terraces on Sir Tyler. 

Woody Hall, chief economist for Cape Fear Realtors, said the sales of existing single-family homes in New Hanover, Brunswick and Pender counties increased in 2017 over the previous year. 

Brunswick and New Hanover County have seen sustained increases in single-family home sales since 2014, Hall said. Brunswick County hit a new high of 4,647 homes in 2017, an increase of 21 percent from 2016. And New Hanover County sales were at 5,218 in 2017, which is 5 percent above the previous year's sales.

While sales there slightly increased 3 percent in 2017 from the previous year, Pender County remained behind New Hanover and Brunswick in existing home sales, at 1,394 in 2017.

"We've also got some information for first quarter 2018," Hall said. "Let me tell you that sales actually declined slightly, between fourth quarter 2017 and first quarter 2018, but they are still above first quarter of 2017."

Economic growth of the Wilmington MSA, which includes New Hanover and Pender, has been stabilizing, he said. The growth trend was volatile from 2014 to 2016, he said.

The Wilmington MSA economy grew 4.2 percent over 2014, 3.8 percent over 2015 and 3.2 percent over 2016.

"It looks like the local economy grew about 3.8 percent in 2017, and I, me alone, am forecasting that the growth rate for 2018 will be around 4 percent. So ... it's stabilized compared to what it was before," Hall said.

Hall also noted that unemployment in April also dropped for the Wilmington MSA to 3.5 percent. 

"So for all intensive purposes, we are at full employment," Hall said.

Average sales prices are also on the rise and have been "continuously" from 2014 to 2017, Hall said.

"In 2017, the average sales price in existing single-family residence in Brunswick County, $263,000," he said. "That's 80 percent of the 2012 peak. New Hanover County, it was $303,500; that's 98 percent of the 2012 peak. Pender County it was $272,000; that's 5 percent above the 2012 peak."

Data for the first quarter of 2018 showed that the average sales prices declined from the fourth quarter of 2017, he added.

But the "measure of the strength" of the local real estate market is the average days on the market, Hall said. Those numbers have declined continuously since 2014. In 2017, Pender County was at an average of 50 days, Brunswick was at 58 and New Hanover was at 26 days on the market.

"To give you a feel of what they were the first quarter of 2018, 82 days on average in Brunswick County, 78 days on average in New Hanover County, 91 days on average in Pender County," Hall said.

CFR 2018 President Fred Gainey also weighed in on the interest rate outlook. Taken from the Economic Group of Wells Fargo Securities, Gainey said the numbers showed that in 2017 rates were at 3.99 percent and will hover around 4.55 percent in 2018.

In 2019 it will be 4.9 percent, "which is still a good rate if you look back at 2007, when we were still at 6.34," he said.

"So we anticipate ... that rates are going to tick up. But we believe it's going to be slow. We still have some outstanding rates here," Gainey said.

The big topic, not only for the local area but the nation, is affordable housing, Gainey siad.

The U.S. Department of Housing and Urban Development (HUD) bases its definition of affordable housing on monthly payments to amortize debt and pay utility costs, which do not exceed 30 percent of the gross monthly income.

In 2017, in New Hanover County the average price of an existing home was $303,445.

Based on this cost and the average area rental costs, 29 percent of homeowners and 51 percent of renters exceed the 30 percent gross income. An average income of a registered nurse in the Wilmington MSA is $56,800 a year, and by this definition could afford a home purchase price of $197,652, according to the report.

"We know that we have a national conversation about affordable housing and at some point, in the future, we will probably have a symposium on that," Gainey said. "Those of us that are Realtors, builders, developers -- we are going to continue to strive to move forward to make things more affordable for folks here in the Wilmington area."

Meanwhile, regional home building may not be strong enough to keep up with growth.

Dave Spetrino, the 2018 WACFHBA president and founder of PPC Design + Build, said that nationally, home building permits were more than 800,000 at an increase of 9 percent above its level one year ago at over 750,000. 

The tri-county area locally grew 30 percent from last year in its 2017 permits to 4,899, according to the report. The Wilmington area is 212 percent higher than its 2010 recession-era permit bottom permit level of 1561 and is 36 percent below its peak permit level in 2005 of 7,685.

"We are still not building in the number that we need to accommodate the organic growth that occurs with home building," Spetrino said of the trends. 

Brunswick County was ahead of both New Hanover and Pender counties in the number of building permits in 2017.  The county had 2,491 permits in 2017, and when looking at municipalities in the county, the bulk of those were issued in Leland.

"That's pretty impressive. A lot of that is because ... it's pretty easy to build in Brunswick County; there's water, there's sewer, there's land, there's a machine of communities that market and bring people to our area," Spetrino said. "And most of that growth is stemmed from predominantly end migration from out of market, as well as people who really would like to be in New Hanover County, can't afford New Hanover County. So their driving until they qualify and Brunswick County is the easy place for them to get to."

Pender County had 499 permits, down 5 percent from 2016. 

"Pender County is kind of a strange thing to look at ... I think its a blip, mainly, but I think it's also because not a lot of home sites, not a lot of water, not a lot of sewer and not a lot of growth like you've had, the easy growth that's relative that existing infrastructure isn't as prevalent in Pender County," Spetrino said.

In 2017 and moving in 2018, Spetrino said there are a number of developments, like the planned 1,300-acre project called Blake Farm and other developments in the Sidbury Road area, that could boost those numbers as they come in.

New Hanover County had 1,909 permits for houses issued in 2017, up 10 percent from 2016, according to the report. 

"That 10 percent in New Hanover County, that would not be as high had River Lights not come on board. So River Lights is part of that growth and I think with River Lights, 2017 was the first full year of construction. So you can't not acknowledge that we would see higher growth, if we had more available home sites. With the home sites in River Lights, that's bringing that up."