Tuesday, November 29, 2022

Home builders: Affordable housing in Wilmington is complicated, costly, and in many backyards, unwanted

One of the main problems is that affordable housing means denser and often taller development -- but when projects like that are proposed, would-be neighbors turn out in opposition.

Talking about affordable housing is easy, making it happen is trickier (Port City Daily photo/Johanna Ferebee)
Talking about affordable housing is easy, making it happen is trickier. (Port City Daily photo/Johanna Ferebee)

WILMINGTON — It’s easy to blame developers for being greedy and governments for being ineffective when it comes to the lack of affordable housing in the area, but there is much more to it than that. In fact, according to some affordable housing is a paradoxical problem in Wilmington.

Catch up on the issue: Five-part series breaking down Wilmington’s affordable housing crisis

Residents are vocal on the need for affordable housing, but when developers propose high-density developments in an area, backlash from existing residents is inevitable. That’s just one of the issues Cameron Moore, the executive officer for the Wilmington-Cape Fear Home Builders Association, sees in the area.

Moore has a unique perspective on the topic — the perspective of the home builders —that is often overlooked when talking about affordable housing, or as he calls it, housing for all

“I look at not so much as affordable housing, I look at it as housing for everyone because housing to us and the association is the American dream and that is part of what we do,” he said.

A multi-faceted problem

Prior to the recession of 2008, the Cape Fear region’s housing situation was in a good place, homes were being built and labor was plentiful, Moore said. But that has changed.

“Before the recession, we had a first-time homebuyer market here. We had builders that were building in the $150s up to the $210s … we had that first-time homebuyer market — that market thrived pretty well for quite some time not only here but in Pender County and Brunswick County … and then the recession hit,” Moore said.

The recession impacted how builders and developers could get financing; gone were the days when they could walk into a bank and get a multi-million dollar loan to build a new neighborhood with ease.

But it wasn’t just financing that was hard to come by after the recession.

“The other thing that changed was our labor force, really to the detriment to our own industry. A lot of folks left our industry because their job vanished, they either got sideways with the market … lost money, lost business, or lost everything and so those folks left our industry, not just by the hundreds but by the thousands. Unfortunately, that is something that will never come back to our industry, we have not seen that labor force come back,” Moore said.

That lack of labor dramatically affects the amount of housing that is able to be constructed, according to Moore. A typical house takes 22-26 different tradespeople to touch it before a homeowner can move in, that means electricians, plumbers, roofers, and more. Thanks to a lack of labor, it typically took 4-6 months to construct a new house but is now taking 6-8 months, he said.

The cost of land

Land prices will always dictate the type of development builders choose for a location, the more expensive the property, the more money a developer has to make in order to make a profit, it’s basic economics.

In the Wilmington region, the desire to live here is high and with that comes a higher price tag for the property.

“New Hanover County, for all practical purposes, and folks seem to forget this, but it is a coastal market. It’s expensive to live here, we have high insurance rates — we actually have two insurance rates,” Moore said.

It’s also important to remember that with a desirable market like that in New Hanover County tax values do not always reflect what the market will bear. There is also a finite amount of land in New Hanover County and that number continues to decrease as more land is purchased.

“There’s not a lot of land in New Hanover County left and with that comes a saturation of the market in the sense that land prices are going up and people who are willing to pay those land prices have to then figure out ‘how can I get a return on the backside of my investment?’ If they are looking at a residential or multi-family [development], the numbers are the numbers … Folks hear that and say ‘the developer is making money hand-over-fist,’ I would absolutely disagree — they are not making the percentages that they were,” Moore said.

At the end of the day, Moore said, developers have chosen a career that is building and developing land; just like any other business, they have to make money to survive.

Tariffs and materials

The state's top lobbyist for the home-building industry went to Raleigh to appeal a state decision requiring building frame inspections before further construction. (Port City Daily photo / File)
The cost of materials has to be taken into account when talking affordable housing, and prices have been on the rise (Port City Daily photo / File)

What goes into building a new house? Well, apart from the labor issues there are concerns with the cost of goods and materials thanks to tariffs.

“The other thing that folks do not even understand is the tariffs, people think that some of those federal policies have no bearing on little ole Wilmington but I am the first one to tell you that is absolutely false,” Moore said, adding that he’d seen a “30 percent almost 40 percent increase on lumber. Those 2x4s I have to build a house with, they went up 40 percent for almost six months.”

It wasn’t just lumber though, aluminum and steel prices also saw a sharp increase.

“That goes into the price of housing and those are things that are very difficult when folks come to us and say ‘you need to do affordable housing.’ Okay, but you don’t understand the cost of doing affordable housing, you want it but we can’t even get to that level,” he said.

NIMBY issues and density requirements

Residents were not happy with a developer's decision to build new homes at Echo Farms (Port City Daily/File)
Residents were not happy with a developer’s decision to build new homes at Echo Farms (Port City Daily/File)

There are of course potential solutions to the lack of housing stock in Wilmington, but not everyone will be excited to embrace them.

While some developers pursue taller, denser projects with “luxury” in mind, it’s also a part of affordable housing. Density and height limit restrictions are two things that Moore says the government could reconsider to help developers construct affordable housing while remaining profitable — but resistance to these suggestions is strong.

Resistance from residents plays a large role in where new developments happen. The idea of ‘not in my backyard’ or NIMBY can be seen throughout the Wilmington and Cape Fear region. Many people want affordable housing options, but when it comes time to approve high-density developments, oftentimes residents who would be living near the proposed projects are the most vocally opposed to them.

Take for example the plans for the development of multi-family units at Echo Farms, marketed by the developer as “fairly priced.” Residents protested the move every step of the way, ultimately convincing the county and city to purchase a portion of the property to prevent its development.

“There are developers out there who would be willing to do $40,000 lots if they could get the right density,” Moore said, “but change to zoning regulations is slow. Right now the county is working with 30-year-old zoning ordinances which don’t lend themselves to favor dense developments.”

In New Hanover County, on average the density is around 3.2 units per acre — that is not very dense.

“So my question to the community is this. ‘We will do affordable housing or housing for everyone, but are you willing to let me go next to your house and do 10-20 units per acre?’ I know the answer to that. And also, are you willing to let me go up in height? I know the answer to that, it’s been the same answer that has been here for the last 20-something years,” Moore said.

The county is currently reworking its unified development ordinance which is how the government can help developers and encourage affordable housing developments. It is simply a question of whether or not they will.

All about jobs

The Cape Fear region as a whole for many years has catered towards and attracted retirees, according to Moore. These are generally people who move to the coast with money and can afford the housing.

The quality of life for those living in the area is high enough to make people willing to sacrifice some things like bigger homes.

“People are willing to sacrifice, in some respects, to live here,” Moore said.

But in order to thrive, a community needs a full range of residents, not just wealthy retirees and retail workers.

“I think as the population increases, I think that as a community we have to have some jobs really start to show up in this market. I don’t mean just a job [like retail], but careers. That needs to be well-paying jobs, career-based jobs … if you have those ingredients those folks will stay and they will also be able to afford the housing that is being built. Then I can scale up and down the market,” Moore said.

Ultimately, the problem is complex as are the possible solutions but as the area continues to see unprecedented growth there will be changes in how things are done.


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