Builders flock to scarf up Triangle land for homes
Triangle Business Journal - by Amanda Jones Hoyle
Builders are looking to put up new homes and townhomes at prices below $300,000.
RALEIGH – Believe it or not, competition is heating up for available home lots throughout the Triangle as home builders from across the nation recognize the Triangle as among the healthiest housing markets in the country.
In fact, one well-known industry report soon to be released ranks the Raleigh-Cary metro area the No. 1 “healthiest” housing market in the country for 2010. The report was developed by Hanley Wood Market Intelligence, a subsidiary of the same company that owns Builder magazine.
The Durham-Chapel Hill metro area ranks No. 6 in the report, the full results of which will be released in the upcoming issue of Builder.
Home prices in the Triangle are expected to further decline, by 3.2 percent in Raleigh and 2.2 percent in Durham in 2010, says Jonathan Smoke, a senior vice president at Hanley Wood. But he says the region’s growing employment levels and median income levels are expected to be among the strongest in the nation this year.
As a result, home builders have started ramping up construction of new homes – albeit at a much slower rate than in 2006 when the market peaked at 16,354 new homes sold.
The builders are aiming primarily at building homes and townhomes that sell for $300,000 or less.
Most of the lots being sold are for homes that will be priced under $300,000 – the price range that most buyers are comfortable with in the current economy. “That seems to be the sweet spot,” says Citizens Homes’ Tom Sewitsky.
Out-of-state builders “see an opportunity,” says Jim Anderson, president of the Home Builders Association of Durham, Orange & Chatham Counties and president of Fuller Land & Development of Cary. “A lot of builders have Raleigh on their radar, for sure, and they see the door is opening right now.”
The number of building permits for residential units issued in the Triangle during the fourth quarter of 2009 was up by 45 percent from the same period in 2008, according to Market Opportunity Research Enterprises data.
The number of residential lots sold during the same period increased by 35 percent.
“Comparatively, Raleigh is still a strong market,” says Craig Smith, division president for Dan Ryan Builders of Frederick, Md. Smith is actively looking for lots to buy for the company’s new home building division office in Raleigh. He currently has about 250 lots in Wake and Durham counties under contract.
The company is among several regional and national home builder groups that have decided to expand operations into the Triangle for the first time over the past few months.
Citizens Homes, a new home-building company based in Charlotte, hired Sewitsky, a former local Beazer Homes executive, as its division president for the Triangle.
Executives of Eastwood Homes of Charlotte also have toured the market with plans to expand the company’s footprint with a new division in the Triangle in 2010.
National home builder Ryan Homes of Reston, Va., made its first big push in the Triangle in August when it took on a 113-lot townhouse neighborhood within the Stonewater master-planned community in Cary. Ryan Homes is aggressively competing to buy more lots around the Triangle, sources say.
“Competition has definitely increased,” says Mark Ward, a partner with Raleigh-based ForeverHome LLC, which has started construction on homes in five communities since the company was launched in 2007. “We’re trying to gobble up as many lots as we can find.”
However, most of the most-desirable home lots that are ready for construction in the Triangle have either been sold or are already under contract to a builder, Anderson says.
That’s a big change from two years ago when many developers of home lots were left holding the bag when builders canceled contracts and stopped buying lots. Some community developers, such as MacGregor Development of Cary, were forced to file for bankruptcy. Other developers deeded the lots to their banking partners when the money ran out.
