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 so 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. 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 homebuilders (13 of the largest market cap builders traded on the NYSE are here), but also by very large and competitive local and regional homebuilders.
Land developers have not been attracted to the market, 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 trying 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 are not. This is the biggest challenge in housing facing the Triangle’s and, in my opinion, the nation’s near-term future.
Watch Jay Colvin's first-quarter analysis of the booming Raleigh-Durham market from the 2014 Housing Leadership Summit here: