Home developers worried that new construction isn't keeping up with population growth

Michael Perchick Image
Wednesday, January 27, 2021
Home developers worried that new construction isn't keeping up with population growth
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Home developers worried that new construction isn't keeping up with population growth

RALEIGH, N.C. (WTVD) -- Home developers said they believe new construction is not keeping up with population increases in the Triangle.

"The demand is there, no question. The money is there, no question. Our builders desperately want to meet that demand head on. It's labor, it's access to materials, it's lot availability," said Paul Kane, the Executive Vice President and CEO of the Home Builders Association of Raleigh-Wake County.

Through November, single-family permitted homes were slightly up compared to 2019 (7,629 vs. 7,585), though multi-family units nearly doubled (4,020 vs. 2,166). Still, those numbers were fairly in line with 2018 totals (7,947 single-family units and 4,717 multi-family units respectively), despite the influx of people moving into the area.

"North Carolina and the Triangle don't have a rich history of density. We've got a beautiful area where you've got elbow room and you can enjoy that. But it comes at a premium. And now as we're starting to see a huge inflow of population, we're going to have to start getting used to the concept of density and embrace it," Kane said.

The lack of enough new construction, coupled with limited inventory, has driven prices up. According to the Triangle MLS, the average sales price in December was $350,280, up 9.8% compared to December 2019.

"It's a function of just getting more homes in general out there. The more you can increase your supply side, it brings the prices down for everyone. So multi-family is needed, single-family is needed, certainly more affordable homes (are needed)," Kane said.

Another statistic to highlight the current situation: Despite new listings being nearly flat in 2020 (.1% drop), closes sales jumped by 9%. On average, homes were on the market for 26 days, a six-day drop compared to 2019.

"Most times you want a three-month supply of houses, meaning if you stopped building today, it takes 3 months to absorb what's out there. Right now, that inventory is at 1.2 months," Kane explained.

"As a Realtor you kind of keep up on planning and zoning for areas. So, there's a bunch of houses approved for Wake Forest, there's a bunch approved for Rolesville. They just can't build them fast enough," said Brad Walker, a Realtor and construction management student at Wake Tech.

The Home Builders Association of Raleigh-Wake County is working with Wake Tech, Vernon Malone College & Career Academy, and Wake Forest High School to encourage students to pursue a career in the construction industry.

"Take a look at the number of jobs they have out there for construction management people at Wake Tech," Walker said. "There's an actual job board and it has 40-50 jobs available on it. So, there's a huge amount of jobs available for this degree program. And they're constantly sending e-mails everyday that some (company) is offering an internship while (we're still in school."

Though new construction hasn't taken off, Kane said remodels are a different story.

"Our remodelers are telling us that their business is just booming," he said. "And it's people fixing up the house to sell, it's people fixing up their house to stay. We've got people working from home like never before, and while they're working at home with their cup of coffee they're looking up at cracks in the wall, and they go 'I need to fix this place up.'"

That is also creating a competition of supplies and available labor.

"In the construction industry, everything is labor. It's all dependent on labor. Your house isn't going to get built without somebody building it," said Walker, who encouraged school counselors to review careers in the trades industry with younger students.