At a breakfast organized by the Wilmington – Cape Fear Home Builders Association, a panel of five of the area’s top home building professionals offered insight into the current market conditions. Greater Wilmington Business Journal publisher Rob Kaiser served as moderator. All five panelists agreed that conditions are improving, but we’re still in a much different market than we were before the housing bubble crashed.
“The market is healthy,” said Shawn Horton of Trusst Builder Group. “It’s a good market for people buying second homes, empty-nesters, and retirees.” Robin Hackney of Horizon Homes agrees and says the market has shifted from a first time buyer and move-up buyer market, to one for active adults in the 50 to 65 year-old range.
“The challenge to first-time home buyers is financing,” she explained. “But retirees don’t need the mortgage and are taking out smaller mortgages or paying cash.” Hackney said the cold weather and high taxes of some of the northern states are bringing retirees to our market in droves. “The retiree market is gangbusters. They want out of high taxes and cold weather. The advantage in our market is our weather and our beach amenities. Other markets don’t necessarily have that advantage and may still be struggling.”
Randy Johnson of Builders First Source said there is actually a generational change in the way people view home ownership that is also affecting the industry and causing a shift away from first time home buyers. “The past generations saw home ownership as a goal, but the new generation coming up isn’t focused on home ownership,” he said. Howard Penton of Penton Development said he’s noticed a shift in the past few years in the growth of the single person household.
“You’re not getting the household formation you had in the past because people are waiting longer to get married, young people are saddled with school debt, and they are transient in nature,” Penton said. “We are dealing with a societal change.”
Another problem is that well-paying jobs are scarce. “I think the biggest problem is kids coming out of college today, they can’t find jobs,” said John Lancaster of Venture Homes. “They can’t find jobs that pay enough to enable them to go out and buy a home.”
Johnson said the industry needs to focus on the millennial generation and how to get them to buy. The panelists agreed that no one is mentioning marketing to appeal to this generation. Urban-focused mixed-use neighborhoods could be a solution to appeal to them, however affordability will still be a challenge.
Pricing for building materials is rising as well as the cost of labor. However, the panelists concur that rising costs are good. It means there is a demand and that is a good indication for the health of the industry in the near future.