By Daja Terry
Once a major driver of the local housing market, second homes and investment properties are now comprising a smaller part of the recent growth in the local housing market, the president of the Wilmington Cape Fear Home Builders Association told the audience at Cape Fear Realtors at a Wednesday event focused on the real estate economy.
At the release of the Cape Fear Area Housing Economic Report at the CFR offices, home builders association president Dave Spetrino said that fewer new home starts are for second homes, especially as short-term services like Airbnb provide more options for vacation rentals.
“In 2005, we built five homes in Wrightsville Beach. Four of them were either investor or second homes, while one was primary. In 2017, we built five more homes in Wrightsville beach. All of them were primary homes. People are renting out less and planning to live here more,” Spetrino said.
Lingering economic concerns are another reason second-home construction is down, with worries that in hard-hitting times, most will find it difficult to keep them.
“Most clients have their second homes built on the beach,” Spetrino said. “They plan to have their family come down frequently, but that activity often falls off after the first year. We’re seeing different clients look at living in these homes full-time.”
Joining Spetrino at the event were economist William “Woody” Hall and Cape Fear Realtors President Fred Gainey, who noted that while the economy is strong right now, and economic growth is stable, people are looking for more ways to be less risky in their decisions, especially with the rising cost of less-desirable homes. The audience of realtors and investors expressed their concerns about the low-cost homes ending up depreciating in value after multiple offers drive the price up too high. This, in turn, often causes the area to become rental-centralized.
With nationwide concerns over affordable housing, Hall said interest rates would become more important over the coming years.
“They are relatively low right now, but are projected to rise in the next few years,” he said. “This isn’t a bad thing. It’s a sign of growth.”
The increase in birth rate has pushed housing demand up, Hall said. He assured attendees that the cycle of low supply-high demand and high supply-low demand has been happening for the past 40 years, but the Cape Fear region will be working toward affordable housing.
Gainey emphasized that the average sale price for homes have increased since 2014. The amount of homes selling in both New Hanover and Brunswick Counties were between 4,000–5,000 in 2017, whereas Pender County saw about 1,000. Brunswick, which has more available land to build on, has had a higher number of residential building permits than either New Hanover or Pender combined.
“People are looking at different factors for finding a home,” Spetrino said. “Five years ago, a high priority was that they needed to be near a golf course. Now that’s been switched out for convenience and stability.”
Spetrino, founder of Plantation Building Corp, said that costs are rising, making it more difficult to budget for, and plan, construction projects.
“The cost of labor and materials has gone up, and that gets passed on to the clients,” he said. “I’m worried about appreciation. In 2003, I would predict what I might get for a home, and I could earn $100,000 more than that. Now, I get what I thought I would.”
Other concerns came up in discussion addressing infrastructure, schools, and signage around the Cape Fear region.
“To determine where there is growth, all you have to do is look at where there is water and sewers,” Spetrino said when asked where the most growth has happened in the Cape Fear region. “To decide where you want growth, you put water and sewers there.”