Perspectives: Challenges

( ) during lockdown now reporting that they regret making such a significant purchase during a time of great upheaval, it remains to be seen whether there will be a selling spree around the corner, although most market insiders believe residential will remain tight, with a continued shortage of housing for at least the next year and half. “I think we will experience a housing shortage in the Triangle for the next 18 months,” agreed Steve Kenney, owner and founder of The Kenney Companies, who spoke with Invest:. “There were about 8,000 homes for sale about a year ago and now there are only 2,000. Dozens of people are bidding on the same house. This housing shortage bleeds over into the apartment industry and means there is large demand for our units. I do not see that changing anytime soon for two reasons. Firstly, we still have exponential job growth and secondly, the slowdown in the approval process will make the timeline much longer for bringing new inventory online. COVID affected the permitting process and it is now so backlogged that it will be impossible for developers to produce the housing needed to meet demand.”

Affordable housing Another pitfall of the hot real estate market is ensuring property remains affordable for everyone. First-time homebuyers are being priced out of home purchases and instead are moving back toward the rental market and lifelong residents within the Triangle are finding they can no longer afford to live there. According to NerdWallet, homes across the country were listed at 5.5 times the median first-time homebuyer’s income in the second quarter of 2021. This is up from 5.2 times a year earlier and far exceeds the three-times threshold lenders use to calculate mortgage affordability. Existing homeowners also are in the position to make all-cash offers, which is hard to compete with as a first-time buyer. Many new homebuyers are having to compromise on certain aspects, such as closing dates and inspections, while offering tens of thousands over the asking price so they can be in with a chance of securing a home.

Authorities are now trying to incentivize the construction of affordable developments. In Fayetteville, there is a proposal to provide an annual $500,000 allocation and increase affordable housing subsidies by $5,000 per unit to create a further 100 affordable units. Durham’s Coalition of Affordable Housing and Transit has created 82 affordable units and plans to develop a further 377 units on East Main Street with county support. Under a 2019 housing bond, the city will build 1,600 affordable units, preserve 800 affordable rental units and provide 400 affordable ownership opportunities to first-time buyers.

Nicholas Donahue

CEO & Co-Founder – Atmos The biggest problem right now is land, so people are being more strategic about how they bring more lots onto the market. Small to midsize developers, which often have construction arms, are trying to figure out how to get into the development side because of the small supply. We’re just in a drought in every sense — from lots on the market, homes-to-market and the suppliers themselves. Prices are skyrocketing and everyone is just trying to keep up with demand, but not in a way that will overstretch them.