Posted in National Housing Market, Raleigh - Durham Market | Posted on 06-26-2014 | Written by J.W. Colvin IV
“Unless you want to compare notes about nepotism in real estate, or hear my life story, please skip to the 2:50 point in the video! What I was trying to lead up to was that North Carolina, and Raleigh/Durham (the Triangle to us “Locals”) in general is a great place to live, work and more importantly build and own homes. The local chamber has stated that much in just about every marketing publication and website for the last decade. Apparently, those efforts have paid off. Not only has the region rebounded from the Great Recession, but surpassed it, at least from an employment and population standpoint.
The new home market, has been a little more challenging. The positives that have driven people to the Triangle, have also attracted home builders. Lots and lots of homebuilders. The Triangle is one of the most competitive homebuilding markets in the country. The top 25 builders, only capture 62% of the demand. That Top 25 list is not just made up of the largest national home builders (13 of the largest market cap builders traded on the NYSE are here), but also by very large and competitive local and regional homebuilders.
Something that hasn’t been attracted to the market has been land developers, or at least in the traditional sense of the term, as most new development is either builder self-developed or fee-based development. There are very few retail/market lot developers in the region, meaning that the market is only replacing – or attempting to replace – what is already in short supply. Vacant Developed Lot supply is critically low in the region, and new lot development is not keeping pace with demand. This is in turn driving up prices on land and in turn homes, which is causing some prospective home buyers to remain on the side lines. The demand is here, and plenty of it. The supply, and the ability to increase supply, is not. This is the biggest challenge facing the Triangle’s and, in my opinion, the nation’s near-term future where housing is concerned.”
Raleigh is catching up to its pre-crash norms with just 25% of lot supply meeting housing demand this year. In this market overview from the 2014 Housing Leadership Summit, Metrostudy’s Jay Colvin explains that although this North Carolina market felt a similar downturn to the rest of the county with 65-70% decrease in volume, it has regained all jobs lost since the recession.