Local home builders face supply-and-demand challenges
Posted April 11, 2013
Raleigh, N.C. — Signs of progress for home buyers and builders in the Triangle is welcomed news for a lot of people.
According to a report out Thursday from real estate firm Triangle Multiple Listing Services, the Triangle market saw 2,200 closed sales in March, a 25 percent increase from the same time last year.
It's one more indicator that the housing market is seeing a boost it hasn’t seen for years.
For those wanting to build a home, however, experts say sooner is better than later because of the demand in the Triangle's housing market.
"It's straightforward economics," said Rich Van Tassel, president of Raleigh-based Royal Oaks Homes. "If it's a low supply, and it is, and demand is coming back, which it has, then you start seeing an appreciating market."
For homebuilders, it's meant more work and more money. Now, however, the rising demand for new homes is presenting another situation for the builder.
They're worried about keeping up.
"Now it's supply side. Can we get it built?" Van Tassel said. "Subcontractors and vendors – they're getting taxed. We're not really seeing a labor shortage yet, but we're a little bit concerned about what might happen this summer. There is certainly a lot shortage."
The Home Builders Association of Raleigh-Wake County says that in March, building permits were up 70 percent from last year.
But according to Wake County, major developers haven't really come around since the recession hit in 2008, although the county can't attribute it to one particular reason.
But Van Tassel said he believes it's because there's no commercial lending for builders to develop lots.
"The commercial lenders won't lend on it," he said. "So, there has been no really new projects."
This is a market with a high demand but a low supply – a seller's market they call it. But it’s changing month to month.
The Homebuilders Association says another challenge for builders is the time it takes to get new subdivisions approved before they can create lots.