National downturn catches up to the Charlotte NC Real Estate as jobs vanish in the banking industry hits turbulence.
Charlotte builder Hayes Castleman has cut the price several times on this South Park-area house his company finished last year. An interested buyer couldn't close because he's unable to sell his house in New York. Charlotte NC Real Estate area home construction tumbled even harder last month than the grim drops reported Thursday for builders nationwide and finish 2008 at the lowest level in years. In Mecklenburg County NC Real Estate, builders bought permits for just 86 single-family houses last month, the second consecutive month of 70% decline from the same month a year earlier. That was well off the 500-plus December levels prior to this downturn, and the lowest of any since at least 1995, according to Observer analyst of county data. For the year, Mecklenburg County NC house permits were down 54% to 2,734, compared with 2007. For the eight-county area, all residential permits were down 63% in the fourth quarter compared with the last three months of 2007, according to Newton Graham Consultants, which uses public data compiled by a Rocky Mount firm.
Nationwide, residential builders bought 49% fewer permits last month, marking a record low. The pace of home-building nationwide fell to the lowest level since the government began compiling records in 1959. Home building, a key economic driver, has shriveled amid a deepening recession as anxiety rises over job losses, sinking stocks and falling home values. The Charlotte NC Real Estate market, which held up longer than many, has been further wounded by the sale of Wachovia and mounting problems at its behemoth bank, Bank of America. Both banks are slashing jobs. Housing is driven by growth in the economy, said Adam York, a Wachovia Economist. We expect the economy to be weak for some time locally and nationally, there is little incentive to start building. That's had homebuilders pushing Congress to help boost sales. But York said, the economy is in to bad of shape for a simple tax credit or lower mortgage rate to overcome all the downside were seeing in the economy. A decimated home building industry is bad news for jobs at many levels. Experts estimate that building 100 single-family homes puts 284 people to work, including carpenters, lawyers, appliance sales people, and convenience store employee selling soda and cigarettes to construction workers. Uptown commercial and condo building has so far offset many of the job losses and home instruction. For the Charlotte NC Real Estate area, construction employment was down 5% in November, the most recent number available, compared with a year earlier. Nationwide last year ended up with 8% fewer construction jobs than 2007. There's no way to track the loss of construction-dependent jobs. Charing Cross Partners, a small custom homebuilder in Charlotte, had four employees including a marketing person last year. They're all gone, said Hayes Castleman, one of the two partners in the firm. The company is sitting on lots for buildings in the primo South Park area, waiting for a market rebound. The partners have cut more than 20% off the price of a South Park area house that they finished months ago, and is still sitting. One would-be buyer can't seal the deal because he can't sell his house in New York. There’s still people interested but they're scared to pull the trigger, Castleman said. Builders are gripped in a downward spiral. Weak sales and rising foreclosures mean a lot of houses on the market. Tighter consumer lending means fewer people can buy. Those who have good credit are reluctant to buy because of job uncertainty and the potential for further home price declines. Lenders staggered by mounting real estate loan losses, are loathe to make construction loans. That means builders have to shell out more for interest rates and put more of their own money into projects. And buyers, knowing builders have houses to unload, want fire sale prices. A lot of buyers have turned into somewhat of a vulture, said Jake Kent president of K2C Real Estate Solutions in Charlotte. We've had houses where we've reduced 15% and we still don't get a buyer. One problem he and others are finding is that they can't get loans to build spec houses. But buyers, surrounded by choices, don't want to wait. Buyers want to come in, see it, love it, live in it, Kent said. Chris Corl Of Carolina Construction Group of Charlotte is hopeful that construction slowdown will give sales a chance to catch up with what's available. His inventory includes two huge, partially built South Park area houses priced at more than 2 million each. He started both early last year. I didn't think the market would go down any further, but I'm encouraged by the president, he said. Eventually the buyers and investors will come back. Until then, however, he said we aren't starting new stuff. No wonder, the national index of builder confidence is at a record single digit low this month. I think now, we just all try to get rid of all we have and wait, Castleman said.
