Market difficult for Iredell home builders
Like many home builders in the area, Danny Lippard knows firsthand what a tough market there is in Iredell County. In December and January, Lippard said, he and his crew only worked nine days.
"Houses are still not selling," he said. "At this point, there are no plans to build anymore houses until the market picks up. I'm estimating one house, but it is in Clemmons. Iredell County is just dead. It was just crazy when the market flopped." Many of the lots in the Castlegate subdivision are still filled with trees and brush, but recently Lippard's crew, with Danny M. Lippard Construction and Remodeling LLC, have completed a handful of spec houses there. Lippard's experience is far from unique. Many home builders said they don't have the financial resources to construct speculation homes these days, and are struggling to find work.
In 2010, 1,401 single family home permits were issued, a 26 percent drop from the 1,919 issued in 2008, according to the Iredell County Department of Inspections and Permitting. The home building market, like other parts of the ailing economy, has slowed down dramatically. Like most industries, the number of single family building permits can vary from month to month. In February, 86 permits were pulled compared to the 221 given out during the same month in 2010, according to the Iredell County Department of Inspections and Permitting. In January, 99 permits were created, which was a slight increase compared to the 93 pulled in January 2010.
"It's just pretty much like everything else in the country," said Iredell County Home Builders Association President Jeff Moore. "It's just slow." Home builders said there are a number of reasons why lots around Iredell County remain undeveloped. Foreclosures and other houses on the market are selling at prices builders can't compete with, they said, and banks aren't lending money for speculation housing.
Lippard said he hasn't had to look for work for years, and now he and other builders are in survival mode. Many of them are taking on jobs that they haven't done for years.
"I went for years (with a) 12- to 18-month backlog of work," he said. "I was so busy and had nothing to do. Halfway through last year, I was fortunate enough to have a backlog of houses. After that, it went to absolutely nothing." Iredell County Assistant Manager Ron Smith said there are no major subdivisions under review at this time. The number of major subdivisions in Iredell County fell from 22 in 2008 to six in 2010. In 2008, the subdivision proceedings created 904 lots. In 2010, 177 were created.
"There are still a ton of lots out there, just no houses being built," Smith said in an email to the R&L. "The number of developers has drastically changed, dropping significantly. There are also virtually no spec houses being built when you compare to three years ago." Smith said a number of the projects were started when land prices were high. Because of dropping prices, the land doesn't carry the same price tag and the developed lots are priced higher than they can be sold for, he said.
It isn't uncommon anymore to see subdivisions lay in wait for builders. For instance, Ashlynn, a townhouse subdivision on Charlotte Highway, has pipes and other pieces of infrastructure poking out of the ground just waiting for a buyer.
Charlotte-based SouthEast Commercial Real Estate Group Vice President Larry Core said timing on that subdivision was bad. A couple of weeks before the property was scheduled to close, the builder walked on the contract, he said. Now, Core said, his firm is selling the foreclosed property on behalf of the bank.
Core said the subdivision has garnered a bit of interest in the past couple of weeks.
"There is just no life in the townhouse markets," he said. "I think it (Ashlynn) is well located between two job generators -- Lowe's and (Lake Norman Regional Medical Center).
The housing market is still difficult to navigate because people are still scared about losing their jobs, and even people with good credit can't always get the money they need, said Dixieland Construction co-owner Ginger Dowdle.
"I've got lots up for sale," Dowdle said. "I don't get any calls." Moore said homebuyers have their choice of homes to pick and chose from, and it is hard for builders to compete with the banks' prices.
Dowdle said banks are selling foreclosures for less than what they are worth. Buyers are finding that they can buy a bigger house for less money.
"We can't build for less than what we are building for," she said. "We are kind of stuck between a rock and a hard place." Since banks aren't lending money to developers to build speculation houses, builders have to sell the lots. For those who have spec houses available, builders have to lease them with the option to buy, Dowdle said. But, this can create problems with the lenders because they don't want the houses rented or leased, she said.
This year will give developers and realtors an idea on how the market is turning, Core said. But the days of building big and selling big are gone, he said.
Moore said this is a year for the housing market to rebuild.
"I think it will be a long time before we see new construction come back the way it was," Lippard said.
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