Statewide economist, local broker foresee competitive homebuilding market in Charleston area
By JIM PARKER
The Post and Courier
Although new homes are going up steadily in the Charleston area, the share of builders framing those dwellings is concentrated among fewer players.
But, it appears, not for long. Startup builders and first-time companies are jumping into a heady metro market just as the sales pace is likely to slow slightly, further ratcheting up competition.
Those are some of the observations from economist Joey Von Nessen and new-home broker Will Jenkinson, who both spoke at a June 18 luncheon sponsored by the Charleston Home Builders Association.
From 2007 to 2012, the number of homebuilders in the Charleston area dropped from 180 to 80, says Von Nessen, research economist with the Moore School of Business at the University of South Carolina and with RESH Marketing Inc. in Columbia.
“The top 10 builders comprise 70-80 percent of all new home sales,” he says. To compete, builders “have to be more aggressive for market share.”
At the same time, the state and region are reaching a mild plateau in manufacturing growth after a few strong years.
“We haven’t seen as many job announcements,” Von Nessen says, noting that plant disclosures seemed to be happening almost weekly for awhile. “They are still coming (but) not as fast.”
As manufacturing growth levels off, places such as metro Charleston and greater Greenville could experience a milder economy in 2014, he says.
Similarly, housing growth may not keep up the dizzying rate of this spring. In May, home sales leaped 28 percent from the year before and prices gained 6 percent.
“It’s finally fun again,” says Will Jenkinson, broker-in-charge of Carolina One New Homes.
Jenkinson, in his talk to a full house of homebuilders, mortgage brokers and related professionals at the Crowne Plaza Hotel in North Charleston, says the share of new-home sales is trending upward.
“You are seeing new builders,” he says.
Across the metro area, 30 percent of sales involve new homes compared with 70 percent existing properties, he says. Berkeley and Dorchester counties posted higher shares, with new-home sales accounting for 42 percent of all deals.
Meanwhile, Charleston County’s new-home sales rate was 22 percent but “has been going up. It was in the teens,” Jenkinson says. Hot spots include Johns Island, where more than half the closings were just-built houses.
Jenkinson provided further observations on the three local counties in terms of residential developments:
• Berkeley County. Anticipated growth includes a second phase of Cane Bay by the end of the year and the new Nexton community near Summerville in 2014 as well as Daniel Island and its real estate company’s Carnes Crossroads master community in Goose Creek. “I see a lot of activity,” he says.
• Dorchester County. The McKewn neighborhood off Ladson Road and Fieldview, a subdivision in lower Summerville revived by D.R. Horton and Eastwood Homes, are reporting the most new-home sales.
• Charleston County. “One area has seen a definite comeback — Mount Pleasant,” Jenkinson says. “In 2010, you could count the new communities on one hand. Now, it’s five hands.” New-home sales are down to a three months supply. “When a builder sees growth like this, they see an opportunity.” Up to 20 builders are involved in communities from 7 to 1,700 lots, he says. Jenkinson singled out the sales turnaround at The Tides luxury condos, which has almost sold out in 2013 in a project that was supposed to take two years; and Carolina Park near Wando High School, dormant for years until Ryland and David Weekley started building homes priced in the $300,000-$400,000 range last fall. Now, at least four more builders are breaking ground in the customized Riverside section.
In response to an audience question, Jenkinson says custom homebuilders will share in the expansion of planned communities. For instance, about 500 of the 1,700 residences at Carolina Park will be custom-designed.
Most of the lots are already bought up by tract-home builders, however. “A lot of finished lots are spoken for or gone,” he says. “There are not many finished lots out there, period.”
Jenkinson says the housing market isn’t going back to the pre-recession days of 2005-06 but is “finding a new norm, the new market from all different angles. The growth outlook is positive for the state and region.”
Reach Jim Parker at 937-5542 or firstname.lastname@example.org.