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Construction slowdown effects seen throughout county

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By Staff Brunswick Beacon

Not that long ago, Brunswick County residents couldn’t drive along N.C. 211 without seeing a new sign announcing a new development selling lots or “coming soon.”

In fact, the Brunswick County Planning Board approved 50 new major subdivisions, special exceptions and planned unit developments in 2006, up from 27 in 2005, a majority of them along the N.C. 211 corridor.

“We were booming. The market provided the opportunity to do that. The players—the financial institutions—allowed it,” Brunswick County Planning Director Leslie Bell said recently.

In 2007, the number dropped to 39, and so far this year, only 10 have been approved.

The market has changed in a big way, and revenue from new development “has not kept pace with what we were receiving in the last six years,” Bell said.

Although the glut of subprime mortgages—loans for those unable to obtain conventional bank loans—resulted in construction and real estate slowdowns in other parts of the state and nation, that wasn’t really the case in Brunswick County.

Bell said the local market was more speculative, with investors from across the country willing to buy lots and contractors taking the opportunity to expand into developing.

A major factor in the slowdown is that banks aren’t as quick to provide financing without much more information than they required before.

“They’re scrutinizing it more,” Bell said.

To keep up with the lack of revenue, county manager Marty Lawing eliminated a number of vacant county positions in the 2008-2009 budget, including an inspector in the building inspections department and a property development technician in the central permitting office.

And local builders, who reaped the rewards of the speculative market, are now feeling the crunch.

Jeff Sanderson, owner of Whitney Blair Inc. in Sunset Beach, says the past two years have been the slowest period he’s experienced in more than 25 years as a builder.

Sanderson builds homes in both Brunswick and New Hanover counties and says most of his customers these days are people who have bought lots in the past several years and are seeking custom-built homes. His company, however, is seeing next to no activity on its inventory of speculative homes.

“The market’s been flat in all of our markets the last couple of years, with the exception of custom homeowners. That’s because it’s a good time to build right now. Lumber and labor prices are down,” and people looking for custom homes are figuring that out.

As a result of the slowdown, Sanderson has seen a decrease in the cost of labor.

“We’ve had more phone calls from more subcontractors in the past year than we had in the past five years. We’ve also seen subcontractor pricing drop as a result of that. More subs are looking for less work. Labor prices have come down has a result of that.”

Mike McGinnis of Shallotte, who works for the Wallace-based Dixie General Contractors, said the commercial side of the industry is also facing difficulties due to the economic crunch. Commercial contractors are seeing more competition than ever now that residential contractors are trying to break into the market.

McGinnis said the rising prices of products involved in construction including petroleum, concrete, gypsum and diesel fuel “paint a very bleak picture for the future of construction.”

Although Eastern North Carolina, where Dixie General has done business since 1962, is faring better than other parts of the country, the influx of contractors in the commercial sector has been a challenge.

McGinnis said numerous public jobs are being bid weekly due to various bond money available to the state, counties and municipalities, and the number of general contractors showing up to bid on the work has nearly doubled in the course of a year.

McGinnis said 2007 and 2008 have remained steady for Dixie General, which is building the new Holden Beach Town Hall, but “we can see the available work is lessening with rising prices, and more general contractors are in the hunt for the same work.”

Although he went through recessions in the mid-1980s and early 1990s, Sanderson said this is the toughest market he’s ever experienced. He’s optimistic a turnaround will happen, most likely in 2009.

“With everything I read, it might be the second or third quarter of 2009,” he said.

Sanderson said election years are typically tough years for business, and he expects some relief once the election is over.

“I think we’ll survive. The pendulum doesn’t just swing in one direction and stay there.”

Bell also predicts a comeback in the market but says it will be a slow one.

“We’re a secondary market. Once the market picks up, we’ll be relying heavily on people wanting to sell their primary homes to buy in Brunswick County. It’s slow in coming.”

He doubts, however, the county will see a return of the development boom.

“Development will be more normalized. We have a lot of inventory, and the inventory will be marketed. The supply side is here. What’s existing will be absorbed.”

For the county planning department, the slowdown has a silver lining, Bell said.

Now that planning staffers aren’t as busy reviewing development proposals, they have more time to devote to other projects including the two parks planned for the northern part of the county, the Workforce Affordable Housing Program and a historical survey of the county, which county commissioners recently approved.

sarah shew wilson is a staff writer for the Beacon. Reach her at 754-6890 or swilson@brunswickbeacon.com.