Real Estate Q&A with Steve Swain President, Wilmington Cape Fear Home Builders Association
Meet Steve Swain, President, Wilmington Cape Fear Home Builders Association, who says being a member of this association, you are viewed as our extended family.
How did 2021 compare to 2020?
From an HBA perspective, as we headed into 2021 we eventually started to see a light at the end of the tunnel with many of the government restrictions lifted on gathering and social distancing requirements. This meant that we finally started to see some type of normalcy return as we were able to start holding in-person events again. For an association that is focused on providing our members with strategic value-driven programs and events, 2021 was somewhat a breath of fresh air as opposed to 2020.
From a market perspective, all three counties (Brunswick, Pender and New Hanover) showed exponential growth in 2021. Overall, the number of permits jumped considerably, especially in Brunswick County and Pender County. This is not surprising though, as much of the demand and market share has continued to thrive in those two counties for quite some time.
Many of the same persistent headwinds that plagued the industry in 2020 carried over into 2021, and very well are going to carry over into 2022. The market needs more housing, but chronic production bottlenecks, building materials cost increases, labor shortages and just overall volatility in the market have created significant housing delivery delays and harmed housing affordability overall. Based upon the NAHB/Wells Fargo Index Survey, 96% of builders in 2021 and 91% of the builders in 2022 expect pricing on building materials to be a significant challenge.
What do you foresee for 2022?
From a market perspective, as we head into 2022 we are going to continue to see much of the same that we saw in 2021, particularly in the first two quarters of the year. Low existing home inventory and strong buyer demand will keep housing moving forward in 2022. This is a positive thing, as the Wilmington region continues to be an attractive place for people to move to and live. Based upon economic reports by the group CoreLogic, the states that registered the highest net population growth between 2020 and 2021 were Texas, Florida, North Carolina, Arizona and Georgia.
However, at the same time, our builder members will also continue to grapple with ongoing building material production bottlenecks and labor shortages that will limit the pace of construction, thus keeping upward pressure on home prices.
At this point, building material costs are up 21% compared to a year ago. Their price and availability, along with persistent supply chain bottlenecks, will remain the most urgent challenge for builders as they seek to boost production to meet rising demand.
Our builders are also still contending with persistent labor shortages. Looking at estimates from NAHB, the residential construction sector will need to add 740,000 workers a year just to keep pace with the industry’s growth, retirements and departures.
On the interest rate front, inflation is running well above the Federal Reserve’s 2% target rate, and the Fed has signaled it will begin tightening monetary policy in March, generating upward pressure on mortgage rates. We are anticipating that the Fed will conduct four 25-basis point federal funds rate increases in 2022 and that the average 30-year fixed-rate mortgage will top 4% by the end of 2022.
Meanwhile, residential remodeling activity is expected to increase 6% in 2022, following a growth rate of 10% in 2021 as people continue to use their homes for more purposes such as offices, schools and gyms. The surge in home equity has enabled more homeowners to finance remodeling projects that meet their needs.
How many members are part of your organization? Has your organization seen growth this past year?
Chartered in 1965 and representing more than 1,400 member firms, WCFHBA is the largest trade association in coastal North Carolina, the second-largest Home Builders Association in the state and the fifth largest Home Builders Association in the nation. Over the last five years, WCFHBA has consistently ranked in the top five HBAs in the state and nation. During this period, we have also seen a great deal of growth in our overall membership.
As a member of this association, you are viewed as our extended family. A family of suppliers, finance professionals, tradesmen, builders, real estate professionals and many others who work together to keep our region strong. Nearly every home built in the Wilmington region is built or touched in some manner by a member of this association.
What are the benefits of being a part of your organization in your opinion?
WCFHBA represents an industry that contributes billions of dollars to the economy of southeastern North Carolina and supports thousands of jobs in the greater Wilmington area. For more than 57 years, it has been the voice of the building industry, working to support not only our members involved in the home building industry but also be an influential force for responsible growth by protecting property rights and the privilege of homeownership.
When you join WCFHBA, you automatically become a member of the North Carolina Home Builders Association (NCHBA) and the National Association of Home Builders (NAHB) with full access to all state and national benefits. As a member, your benefits are vast and tangible. They range from business-building resources to money-saving discounts to an effective grassroots network that helps shape the views of our elected officials and lawmakers. Our 3-in-1 membership provides every member with a strong foundation to be noticed, connected and heard across many different spectrums. We position ourselves to be included in the decision-making process on legislation, regulation, and other issues that affect your bottom line.
How has COVID affected business this year?
So far it has not affected us in 2022. We have a full slate of events scheduled for the year including The Parade of Homes and expect it to be a great year for our association, members and the industry as a whole.
Photography by Bill Ritenour