North Carolina Housing Market Tightens as Inventory Shrinks

The number of residential building permits taken out in an eight-county part of the Triad between January and May is down 22 percent from last year, a sure sign that builders have slowed their pace of putting up new houses.

That could bode well for existing homeowners in the Triad, North Carolina housing market experts say, as people will continue to move, but less new product will be available.

It also could bode well for new home builders coming into the market, such as Regent Homes of Charlotte and C.P. Morgan, an Indiana-based builder that recently opened a sales office in Kernersville, as their product could come online at a time when there is less new-home competition.

According to MarketGraphics Research Group Inc., a Tennessee firm that tracks the Triad housing market, 4,016 residential building permits were pulled in the eight counties of Guilford, Forsyth, Alamance, Davidson, Randolph, Caswell, Rockingham and Stokes between January and May.

That’s down from 5,180 permits during the same time period in 2006 and also down from 2005 and 2004 levels; figures that make sense when the slow home loan activity in the region is considered.

Much of that decline has taken place in Guilford County where, according to MarketGraphics’ numbers, builders took out 1,178 permits in the first five months of 2007, down nearly 50 percent from 2,267 a year ago.

In Forsyth County, by comparison, the number of permits taken out dropped only 2 percent to 1,134.

‘A needed correction’
“Is this a needed correction? Absolutely, I think it is,” said Kevin Green, a home mortgage broker and sales manager at Yost & Little in Greensboro and president of the Greensboro Regional Realtors Association. “I think the builders need to slow down a little bit. When new permits go down, I feel like it’s a better sign for existing homes to sell.”

And as the supply of new homes slows, the prices of existing homes, held in check throughout most of the Triad by the influx of new subdivisions built during the last four years, could go up.

Statistics from the Greensboro Realtors group appear to support that possibility. In May, both the median and average sale prices of homes sold in Greensboro increased from the same month last year, as did the number of single-family homes sold during the month.

In Forsyth County, though, the number of sales between January and May was down slightly according to statistics from the Winston-Salem Regional Association of Realtors, the average sales price was up to $165,411 from $163,261 for the first five months of 2006.

Mark Vitner, an economist with Wachovia Corp., said he doesn’t expect to see prices decline in the Triad or anywhere else in North Carolina.

“We missed the wild swings that much of the rest of the country had seen,” Vitner said.

Despite the number of new homes in the Triad increasing rapidly, the new product was mostly catering to increased supply as areas around the North Carolina mortgage market saw populations increase.

Going up?
As the market tightens, new builders are coming into the area, however, and the number of permits may soon increase, though it’s too early to tell if it will match previous-year figures.

Mitch Davis, vice president of land acquisition and market strategy for C.P. Morgan, which has six residential developments planned in the Triad, said he’s not surprised that early permit numbers from 2007 were down.

“They’re going to be down across the country some because of the fallout of the [bad credit mortgage] issue and the overall impact of the housing market slowdown,” Davis said. He said his company remains excited, however, about its move into the Triad market.

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