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While the nation's housing market cools, Fayetteville's market burns
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By NC Property at 2007-03-09 12:00
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Room to grow
Author: Al Greenwood
Article Text:
By Al Greenwood
Staff writer
While the nation's housing market cools, Fayetteville's market burns. This year, the region's housing market is set to break another sales record, according to the Fayetteville Association of Realtors.
Meanwhile, the pace of new and existing house sales in the country continues to drop from last year's levels. The National Association of Realtors has declared that the housing boom has ended. Existing-house sales are projected to drop 6.8 percent to 6.6 million this year, according to the national association. New-house sales should drop 13.4 percent to 1.11 million. Fayetteville is avoiding the decline because of the military, said Ralph Huff, president of H&H Constructors. The military kept the local market from overheating by controlling prices and discouraging risky loans. Also, Fort Bragg is growing, bringing more house buyers to the region. The good times show no signs of slowing down. The military plans to move the U.S. Forces and Reserve Commands to Fort Bragg from Fort McPherson, following the recommendations made by the Base Closure and Realignment Commission.
The moves will provide enough fuel to keep house sales going through 2011, Huff said. The differences between Fayetteville and the rest of the country are striking. Huff belongs to a Builder 20 club, a group sponsored by the National Association of Home Builders. The clubs are made up of 20 builders from different housing markets who give each other tips and advice. Huff said he is the only member of the group whose business is growing. The military has always made Fayetteville's economy different from the rest of the country, said Larry Strother, president of HPS Real Estate. The company owns Coldwell Banker United Realty and ERA Pennink & Strother.
Unlike most of the country, many houses in Fayetteville are bought by loans guaranteed by the U.S. Department of Veterans Affairs. The VA loans also discourage rapid price appreciation. The price control discourages the housing bubbles that are now starting to pop in other markets, said Judy Russell, president of the Fayetteville Association of Realtors. Other housing markets are tottering because so many people bought houses with interest-only loans and mortgages with adjustable rates. Some house owners cannot afford their payments because interest rates are rising. Those loans are not a large factor in Fayetteville because the VA does not guarantee them.
Meanwhile, the military continues to bring new buyers into Fayetteville's market, Huff said. The Army is transferring soldiers to Fayetteville from posts in Europe and the rest of the country. Soldiers returning from the Middle East are spending their extra pay on houses. “They get off the plane, and they are literally with us the next day,” Russell said. In fact, some soldiers have already sold the houses they bought after their first deployments. They are moving into larger houses bought from money they earned from subsequent deployments. “As long as we are sending people to the Middle East, they are going to buy houses,” Huff said.
Fayetteville's house market still has room to grow.
In Cumberland County, more than 40 percent of the population rents, said Bob Measamer, president of McLean Real Estate. In other counties, that number is in the mid 30s. Cumberland County still has a lot of renters who can one day become house owners, Measamer said. BRAC will bring more buyers to Fayetteville, Huff said. Many of these newcomers are officers whose salaries exceed the county's average income. “We are on the verge of going to a different level all across the board,” Huff said. His companies are already preparing for BRAC by adding more expensive features to their houses, such as 9-foot ceilings and solid-surface counter tops.
Military contractors are shopping for houses in anticipation of BRAC, Russell said. In fact, Fayetteville could attract outside regional builders, Huff said. Already, Bill Clark Homes of Greenville is building in Fayetteville. “We are getting ready to get on some people's radar.” Measamer said investors from as far as California are inquiring about apartments in Fayetteville. Some large deals have been made partly because of BRAC. MacFarlan Capital Partners of Dallas bought the former Western Publishing Co. plant for nearly $25 million, in part, because BRAC could provide the company with a backup tenant.
The Carroll Companies of Greensboro is building a 300-unit apartment complex on Cliffdale Road because of the potential for future tenants. In both cases, however, BRAC was a secondary reason for investing in Fayetteville. The house market has had some slow patches. During some months, existing house sales have dropped because the region ran out of supplies, Russell said. “We just didn't have enough to sell.” While the market has a shortage of existing houses, it has a glut of expensive new houses, according to statistics from the Fayetteville Association of Realtors.
For houses priced above $200,000, the market has supplies that exceed eight months. A market is in equilibrium when it has a six-month supply of homes. Overall, the market for expensive houses has been weak in Fayetteville because many house buyers can't afford the homes. Demand for houses spikes once prices drop below $175,000. “It's just a great market, and our builders are doing all they can to keep up with supply and demand,” Russell said.
Source: The Fayetteville (N.C.) Observer
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