Lots On The Brunswick Market Indicate Stabilization Of Land Market

Mar 10, 2013

Story by: Wayne Faulkner, posted on StarNewsOnline.com

The N.C. 211 corridor in Brunswick County was arguably ground zero for the housing bust that ravaged the Wilmington area.

The 15-mile stretch from U.S. 17 to Southport is lined with zombie developments – partially finished subdivisions, some with large tracts of vacant lots or raw land.

No one is saying a building boom is coming back there any time soon, but a local commercial real estate firm has more than 1,600 lots under contract along the highway that may take a large chunk out of the N.C. 211 inventory and help stabilize the Brunswick County land market.

“It’s such a large portfolio of lots that we did see interest from large investment funds, national builders, regional builders and also saw a lot of interest from smaller private equity funds,” said Brian Eckel, principal at Cape Fear Commercial, who along with Paul Loukas and Hank Miller listed the bank-owned properties.

Off The Market
And even though sale of the land may not result in immediate construction, “any time lots are transferred away from a bank to an entity that has the ability and the specific business plan to hold the lots off the market until the market is ready to re-absorb them is extremely positive news for the entire real estate and construction industry,” Eckel said.

Six subdivisions are under contract along N.C. 211 – Richmond Hills, Old Georgetown, Mill Creek Cove, Brookstone, Rivergate and Sandstone.

Mill Creek Cove is complete with clubhouse and swimming pool, Eckel said. Some of the other subdivisions are partially completed, while others are merely lots, he said. Less inventory means that the market is stabilizing.

Northern Brunswick County, particularly the Leland market, has been attracting buyers willing to go into subdivisions and complete promised amenities such as clubhouses and pools, real estate experts said.

D.R. Horton, the nation’s largest home builder, recently bought the bankrupt Hawkeswater subdivision adjacent to Belville Elementary School for $5.5 million. Horton is said to be searching for others and has already purchased lots in subdivisions in New Hanover.

Pent-Up Demand
What’s helping the market for lots in the Wilmington area in general is “the pent-up demand for new construction housing here and across the country,” said Pete Frandano, a commercial real estate broker with Southport Realty and a former president of the Brunswick County Association of Realtors.

“It makes sense again to build because the costs of the lots have come down,” Frandano said.

Lots in the wooded section of Oak Island, for instance, were in the low $200,000s at the height of the real estate boom and now they are at $25,000 to $35,000, he said.

Still, Brunswick is awash in lots and vacant land purchased in the middle of the last decade for prices that even then were inflated.

Five Years’ Worth
In January 2012 there were 65 months of lot inventory in Brunswick County, said Steve Candler, CEO of the Brunswick Realtors.

In January 2013, it still was nearly five years’ worth. That means that it would take about five years to sell the lot inventory at the current sales pace.
And that’s just the number of lots on the multiple listing service.

Fandango ventured a guess that the number of bank-owned lots in Brunswick that are not being presented for sale are double those that are listed, though he added that “if you polled 10 commercial brokers you would get 10 fairly wide-ranging answers.”

“Some lots were priced at $60,000 and are going to be picked up in bulk transfers at $5,000 to $10,000,” said Hector Ingram, of Ingram & Co. appraisal firm in Wilmington.

Attracting Builders
Builders and developers are being drawn to land now because of the low lot prices they can build for the current market, Ingram said.

If you can sell only $250,000 houses, the maximum a builder should pay for a lot is $45,000. That means the profit is much bigger if the lots can be bought for less, Ingram said.

Interest from builders and investment funds is certainly not limited to Brunswick County. Pender and New Hanover counties also are participating and New Hanover is just about recovered from the land bust as developers are now buying vacant land not yet divided into lots, Eckel said.

“For all three counties, I’ve watched the market fall since September 2008 in lots and subdivisions,” he said. “Since September 2012, I can see that the market was stabilized and prices have started to slowly increase for the first time in four years.”

View the original story on the StarNews website.