Is it possible to build a single-family home in New Hanover County that costs less than $200,000 anymore? Not really, industry insiders say.
 
“That’s almost impossible,” said Craig Stevens, owner of Stevens Fine Homes. “Affordable home sites that were available over the last eight, 10, 20 years are nonexistent, and the only home sites that are remaining are for the most part over $100,000 [just for the lot].
 
“I really don’t know of any sites that are really under $100,000. A few builders have a handful.”
 
Builders say there are some single- family home lots under $100,000 in New Hanover, but gone are the days, which were likely about 10 years ago, when there were lots that only cost $65,000 in the county.
 
One general rule of thumb for determining a home price is to multiply the lot’s cost by about 5, Stevens said, so an $80,000 lot could likely result in a home that costs close to $400,000.
 
Not only is it difficult to build a home with a price tag under $200,000, even the $300,000 price point for a single-family house is becoming a challenge, Stevens said.
 
“We’ve only got a few communities remaining in New Hanover County where we still got a small inventory of affordable home sites where we can build homes under $300,000. … I think that the homes that you’re seeing now under $300,000 and even under $400,000 are being built on home sites that were acquired several years ago when you could still buy a home site under $70,000.”
 
In New Hanover County, he said, “there’s just very little land left, and the land that’s remaining – it has become a huge premium.”
 
It took Craig Johnson, who owns Wilmington-based Herrington Classic Homes with his wife, Mary, two years to find a site in New Hanover where his company could create $200,000 to $250,000 homes.
 
For the past decade, Herrington Classic Homes has been known for mid- to higher-end homes, “but the lower-end product is going to give us an opportunity to get into a little more production-style building so we’re able to fulfill more areas of the market … As a homebuilder, it’s nice to be able to fulfill the needs of the community within reason.”
 
To that end, the Johnsons’ new neighborhood in the works called Cypress Village has 37 lots on just under 6 acres, a plan that required Craig Johnson to seek a special-use permit from county officials to be able to build at a higher density. Cypress Village will be located near the intersection of Myrtle Grove and Carolina Beach roads.
 
“I think there’s a need in the market for lower-priced single family homes, and it’s just very difficult to get those price points at that $200,000 to $250,000 level, especially for a single-family home here in New Hanover County,” Craig Johnson said.
 
Mark Johnson of Coldwell Banker Commercial Sun Coast Partners worked with Craig Johnson (no relation) in his search for the Cypress Village tract.
 
“It’s difficult to find land that landowners have been sitting on for a while at a price point that makes sense to do it. It’s a challenge,” Craig Johnson said. “Lot cost is by far the single largest expense on any home construction as a line item.”
 
Other costs factor into the equation, some more than others. The construction cost is a fixed number for most builders, said Heath Clark, division manager/partner for Bill Clark Homes.
 
“They’re relatively the same when it comes to sticks and bricks. One builder or another could have better costs, but the amount of significance is not enough to propel one to be able to do affordable housing. It all comes down to land and lots,” Clark said.
 
He said homebuilders’ horizontal costs – which can include site work, utilities, curb and asphalt, sewer improvements, traffic improvements and regulatory requirements – have increased significantly, along with the demand for contractors.
 
“Utilities contractors and/or general contractors that do the horizontal work have an opportunity to price what they want and choose which projects they want to do,” Clark said.
 
Across the region, average home prices have been on the rise in recent years. In July, the N.C. Regional Multiple Listing Service showed an average price increase of 10 percent from the same month the year before – jumping by nearly $30,000 to $327,496 – for homes sold in New Hanover, Brunswick and Pender counties, according to Cape Fear Realtors data. In July 2016, the average price in the tri-county area was a little over $284,000.
 
Checking the N.C. Regional MLS on Aug. 16, Clark said there was one home in the $180,000 to $200,000 price range available and five in the $240,000 to $260,000 range. For a potential homebuyer who wants to purchase a single-family dwelling in New Hanover County, the cost of a new home really begins now at more than $250,000 in most cases, he said.
 
What that means for high-volume builders who are considering what to do in the future is planning on creating more neighborhoods in surrounding areas.
 
“I usually keep half a dozen neighborhoods in New Hanover County under $300,000 or in the low $200,000s. That’s not the case anymore,” said Stevens, who started his company in 1993. “I would say historically, half of my business has been in New Hanover and half in Pender and Brunswick, but it’s going to move from 50-50 to 90-10 … The vast majority of homes will be in Pender and Brunswick counties [in the future].”
 
But despite the difficulties, the industry is better off now than it was during the Great Recession that started around December 2007, builders said.
 
“We’re all blessed, and we just have to work harder and work through it,” Clark said. “In every building cycle, there are challenges, and they’re all different.”