Brunswick County Real Estate market trending in positive direction

By Sam Hickman
Brunswick Beacon
Tuesday, January 27, 2015 at 3:45 pm

BOLIVIA — As numbers from last year’s trickled in at the beginning of the year, local real estate brokers had plenty of reason to be enthused about the market again.

Annual sales numbers obtained by the Beacon last week show that Brunswick County had a 7 percent increase from 2013 to 2014 in total sales revenue, which mostly include the housing market, according to figures from the Brunswick County Association of Realtors.

Leland is not included in the data provided by the Brunswick County Association of Realtors because is part of the Wilmington area multiple listing services when data is compiled, Carolina Plantations owner and broker-in-charge Doug Terhune said.

Date show 3,232 total sales transactions in 2013 while 100-plus more sales were made in 2014 — a 3-percent increase.

Brunswick County Association of Realtors CEO Steve Candler and administrative assistant Cynthia Cumbee attribute to the rise of total sales revenue and transactions to an improving economy.

“We’re encouraged by these recent trends,” Candler said. “These numbers are reflected by the fact that membership has increased in the association in the last couple years. The economy is improving enough to bring these folks back in the fold.”

When the economy began to plummet in the mid- to late 2000s, the housing market was no longer one that benefitted sellers, association member and Realtor Bruce Williams said.

“I’ve never seen it in the industry drop so dramatically,” Williams said. “To see it move and turn in the right direction, like it’s doing now, is certainly heartwarming. When the economy began to struggle, it was as if everything was just going downhill. Buyers, sellers, Realtors, moving companies, plumbers, electricians, roofers, the economy affects all of those individuals.”

“Those were lean and scary times for Brunswick County,” Terhune said. “There were several factors that fueled the downturn.

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The leading edges of the baby boomers were starting to retire. Developers and builders in this region couldn’t cut down trees and put four stakes in the ground fast enough.

“Back then, we were really selling virtual communities. When the economy halted, many developers were so leveraged that when they didn’t have a revenue stream, they couldn’t continue to stay open. Within years, thousands of people who bought home sites in these virtual communities had to decide whether to pay mortgage on their home in Maryland or pay the mortgage on their home site in Ocean Isle Beach. The value of land precipitously dropped to, in some cases, as much as 5 to 10 percent of the prices paid by this group of baby boomers.”

Terhune credits the upward trends, in part, to much better interest rates.
“The interest rates have been huge,” he said. “People back in the 1980s, in that market they paid 11 to 16 percent interest in a home at one point. Four percent interest rates, that’s like free money.”

Carolina Plantations conducted market research that showed almost 10,000 to 15,000 baby boomers were retiring per day, Terhune said.

“If those people have the means, they want to leave high taxes,” he said. “They want to leave the cold weather. They want to leave the congestion. They want to leave the bad traffic. They want to go someplace warmer and affordable.”

When the economy took a downturn, the baby boomers no longer had the resources to leave their permanent homes in the northeast region of the United States.

Terhune said those with the resources to move are starting to buy homes in Brunswick County again for several reasons. Prospective buyers always look at what he calls “the stuff.”

“They don’t want to live in the big city,” he said. “They want to be near the beach in a warm climate in an area with great medical services, shopping, dining, entertainment and airport accessibility. That’s what they’re looking for. Those folks don’t want to be isolated.”

When Terhune analyzes the east coast between Richmond, Va., and the Georgia-Florida boundary, he knows why Brunswick County has been so successful in landing retirees.
“The only other area that has what Brunswick County has is perhaps Wilmington, and the Hilton Head (S.C.) areas,” he said. “But even with Wilmington, people want to move away from that congestion.”

Terhune pointed out places like the Outer Banks, which is too isolated, Charleston, S.C., which has a big-city feel, and Savannah, Ga., as areas where retirees don’t want to settle when moving from a populous area in the north.

“Brunswick County has the stuff these individuals are looking for,” he said. “Right now, we’re in a rooftop economy. Brunswick County is building lots of rooftops.”

Terhune said Ocean Ridge has more than 30 homes under construction; St. James, 100; Compass Pointe near Leland, more than 40; and Brunswick Forest, more than 90.

“Just with those communities, that’s more than 300 homes currently under construction in this area,” he said. “We’re in a rooftop economy. That’s a lot of rooftops.”

When the economy is strong, Candler added, it naturally increases the tax base.

“There’s an increase in the tax base through natural inflation or the services the county can provide the citizens,” he said.

Candler, Williams and Cumbee said they realized the economy would rebound from the worst recession the country has seen in several years.

“Our chief economist (with the National Association of Realtors), Lawrence Yun, said it’d be a 10-year cycle,” Williams said. “Everything we’ve heard from him since has been much of the same.”

While Candler is excited about the trends in Brunswick County, he doesn’t want prices on homes to skyrocket as a result.

“I think for the benefit of the county, the slow, steady increase in price of the units sold, it’d be best if they’d continue to increase by 4 to 7 percent,” he said. “An increase of that amount each year would be more manageable than the ups and downs of a roller coaster. A manageable market is better for buyers and sellers.”

“That’s right,” Cumbee said. “When you have big ups, that means the big downs are coming.”

Candler said, “For every mountain, there’s a valley. That’s what you have to be mindful of.”

Additionally, real estate brokers are seeing less and less distressed properties through Brunswick County. Distressed properties include foreclosures, short sales and bank-owned homes, among other properties.

In recent years, federal legislation had quite an impact on the local housing market, especially after the Biggert-Waters Act of 2012 was passed.

The act, which would have caused a dramatic increase in flood insurance rates for homeowners, especially in the coastal region, was eventually repealed, but still created ripple effects throughout the local real estate industry, Candler said.

“It affected people in several ways,” he said. “People wanted to see if federal insurance was available, first of all. People wanted to see if they could sell their homes because of the rate increases.”

Legislation has since been passed that repealed the provisions of the Biggert-Waters Act, restoring confidence in those deciding whether to sell or buy their secondary homes on the coast.

“I anticipate when the flood maps are redrawn and approved, several homes will move from the VE zone to the AE zones, which is much more affordable when it comes to flood insurance,” Candler said. “This will once again increase home ownership in Brunswick County.”

The real estate industry is vital to Brunswick County, Candler said.

“It really is. We just don’t have the other types of industries the places like Raleigh have,” he said. “The pendulum swings better when the housing market is doing well. The sales taxes are better, more people are employed and individuals are spending the money they’re making back into the local economy. It certainly helps.”

Terhune is confident in Brunswick County’s real estate market moving forward.

“Remember the numbers,” he said. “There are 10,000 to 15,000 retirees a day. They all want to get the heck out (of the north). Brunswick County will grow. Think about it: This week, they’re getting ready for this colossal snowstorm. When they retire, they want out.

“Can you imagine how many people up there are on the Internet this week looking for places to retire? That’s where Brunswick County will benefit. Southern Realtors love snow. We love lots of snow as long as it falls up north. That serves as the catalyst for people making the decision to move.”

The economic downturn served as a learning tool for lots of people in Brunswick County, Terhune said.

“I’m glad we’re getting back to those times when the economy is trending in the right direction,” he said. “American learned a lesson. We removed the word ‘risk’ from real estate. We want stable, financially sound communities. Thank goodness they exist in Brunswick County today.”

Sam Hickman is a staff writer for the Beacon. Reach him at 754-6890 or shickman@brunswickbeacon.com.

What is the Cost of Risk?

Risk

Can you buy risk? No, not the old board game, but rather the intangible that has brought down mega conglomerates, countries and the one that has humbled millions of people. Does Walmart, Best Buy, Target, Niemen Marcus or Amazon carry it in their inventories? Chances are that if your retirement is on your horizon, you are going to be fairly risk aversive compared to the days of your youth, correct?

During the middle 2000s I was in real estate and experienced firsthand the almost total abandonment of the fear of the word risk. Good, hardworking, smart and diligent couples and individuals invaded our sleepy coastline and bought everything and anything they could. And I am talking anything here, as much of what was purchased was merely speculative in nature. (It was eerily similar to the 90s when people purchased tech stocks without doing any research on the firms they were invested in.)

Several of the larger plantations here and across the USA simply couldn’t cut down trees and put up four stakes fast enough due to the voracious appetite of the consumer. To many, there was MORE RISK at NOT purchasing a third of an acre dream homesite or 1,000’ condo than staying home and minding their own business. There were even lotteries where perhaps 100 homesites were released on any given weekend in 2006 yet, the sales and marketing machines brought in 150 Buyers to gobble them up. Many of those that lost out on the lottery went home in tears. Lucky them though, right?

Fast forward to 2013 and the market is coming back. Even a few of the abandoned communities where people sank a good portion of their savings into are beginning to be resuscitated. So the question now that has to be answered is have Americans learned their lesson? Are we a more risk aversive society today than half a decade ago?

In years past, American Pioneers were often rewarded for their vision and bravery and while that is still not out of the realm today, most folks have learned from the failures of the last wave of unlucky risk takers. Yet as you peruse the landscape of retirement type communities up and down the east coast, there is still plenty of risk out there.

So with regards to retirement and real estate, what are the risks that one must be aware of as you search from east to west and north to south?

INVENTORY
Relax, there is plenty of inventory today in most areas
Years back, the lack thereof is what really drove the market. That and good sales hype!!
Brunswick County probably has 10+ years of inventory of developed homesites
Many homeowners are waiting for the market to turn before they put their homes on the market – so while the home inventory is good, there are many to yet be listed
There are a few exceptions today, and those are the few communities that are offering not only a good product (as in amenities, activities, homes, etc.), but a significant reduction of risk

INFRASTRUCTURE

  • If it isn’t there, can you afford to be there? 
  • The cost of installing roads, which includes water and sewer lines, sidewalks, curbs, storm water drains and landscaping is very costly – not to mention the engineering site plans and permits
  • For example, in 2004 the approximate fully burdened (above costs plus sales & marketing expenses) cost to improve a homesite was $25,000. Today the cost is over $40,000. 
  • Community infrastructure also includes on site drainage ponds, community entrances, gate houses, easements and much more

AMENITIES

  • Once again, if it is promised but not yet built, can you afford to wait? And what happens if the sales team winds up being wrong? What is your real estate worth then? What happens to your retirement lifestyle? What if? What if? What if?…
  • If the amenities that are not yet built are important to your lifestyle when you retire, is there really no other community that can provide you comfort? Examples would be golf courses, indoor or outdoor pools, walking trails, fitness center, tennis courts and more

DEVELOPER

  • With the abundant information available to everyone today via the internet, do yourself a favor and Google your clients name. Spend some time and go to the third or fourth page and if by then you don’t see any negative blogs, chances are you should be ok
  • You can also check in with the local town or county government office where the community is and ask local officials if there is anything you need to know about your possible developer
  • There are good developers and those that for one reason or another, are not solid enough to invest your entire future with. Do your research on not only your developer, but perhaps your builder as well, as last thing you want is to live in a home without a roof!

Cruise Ship

Recently 3,350 thrill seeking passengers set sail on the Carnival Triumph to Mexico. They were in the middle of the ocean when a fire broke out that crippled the ship. It was an unfortunate incident but cruising anywhere consists of risk – considerable risk when you think about it. If done properly, removing risk from retirement or anything else you partake in can lead to a more enjoyable life. So do your research and try not to purchase too much risk because at the end of the day, you might not be able to afford it!! 🙂