Local

From boom to bust on N.C.'s ‘inner coast'

Near the peak of the recent real estate boom along coastal North Carolina's rivers and sounds, William Highfill got an invitation for a gala three-day sales weekend at a new Brunswick County subdivision.

It was spring 2006 when Highfill, a retired federal government worker from Roanoke, Va., joined a group of enthusiastic buyers from as far away as California. Highfill and his son-in-law, Mason Cass, bought three lots, solely for investment. The entire 200-lot first phase of the project sold out in two days.

At the time, that weekend wasn't unusual for the scorching-hot real estate market along the more than 3,000 miles of North Carolina's “inner coast.” But today, the nation's housing bust is in full view in Brunswick County: Many of the sought-after lots are sprouting weeds.

Brunswick, the epicenter of the boom, shows little evidence that the dizzying sales will return soon; with prices down, recent home sales show a modest recovery. Single-lot sales, though, have fallen to less than a fifth of their peak in late 2005. And foreclosure notices this year are running about 50 percent higher than those in the rest of the state.

A News & Observer survey in mid-2006 found more than 34,000 new homes in developers' plans, half of them in Brunswick County. There was excitement about new jobs and revenue for some of the state's poorest counties. But there were also worries about whether the boom would overwhelm the environmentally and culturally sensitive region and curtail the public's access to waterways.

Subdivisions the size of towns were announced for huge tracts of farmland in the northeast, and condominiums that would sell for as much as $1.2 million were planned along the central coast. Weekly, plans were filed for projects that would bring hundreds of homes to Brunswick, with its strategic location between Wilmington and Myrtle Beach.

New phases of a subdivision were selling out in a day or two. Now, Highfill and Cass are among hundreds of investors along the inner coast who would like to sell. Their broker hasn't had a single nibble, though, since they listed the property in February.

“We're trying basically to get rid of one or two and hold on to the other in case they do grow in value,” Highfill said. “But it doesn't seem like anything is moving.”

The down market is bad news not just for investors but for local economies. Builders, many of whom run businesses out of their homes, have laid off workers and in some cases have gone bankrupt. Banks, real estate offices, restaurants, hardware and building supply stores are suffering.

Some developers have scaled back plans; others have sold tracts and walked away from projects. Those with solid financial backing are gritting their teeth and waiting, even as they pay carrying costs on their investments. All are waiting for strong sales to return and wondering when – and even if – that will happen.

“The places that were really hot are dead,” said New Bern attorney Ernest Richardson IV, who handles sales and foreclosures. “The ones that were just doing really well, like New Bern, are doing OK now, but speculative counties, like Pamlico and Brunswick, they're hurting.”

The promise of growth

The effects vary as much as the markets.

In the northeastern part of the state, where the boom arrived latest, it had been expected to have perhaps the greatest impact because there had been little industry or previous development. A handful of major projects was expected to double the tax base in Bertie, one of the state's poorest counties.

Local officials have heard little lately about one of the biggest projects, while another – which features a newly opened Arnold Palmer-designed golf course – has started to sell lots, though many in the area had expected it to be further along by now.

Foreclosures creep in

Two years ago, the southeastern corner of the state was the heart of the boom. But foreclosures in Brunswick County set a record last year, said Leslie Bell, the county planning director. He said many of them were on property bought by speculators attracted by soaring prices.

In the past year, several developers have requested extensions of their agreements with the county, typically seeking another year to 18 months to put in place infrastructure such as roads and sewer lines. In recent months, two have sought second extensions, he said.

Meanwhile, others are trying to jump-start sales with deals such as making the mortgage payments on a lot themselves for one or even two years, Bell said.

“I think the market needed to correct itself,” he said. “We had properties selling out of sight here. Unfortunately, when it hit, it hit hard.”

Everyone is asking when the real estate market will bounce back.

“A year ago, I would have said it would come back in a year and a half,” said Tim Smith, one of the partners in Preston Development Corp., which recently bought a tract in Beaufort to resell to developers. “If you ask me now when that's going to be, well, who in the heck knows?”

Some of the retirees expected to fuel the boom are showing up. They're not coming in the droves it would take to fill all those empty subdivisions, but there are enough new arrivals to keep the market alive.

Vinny Annecchiarico moved down from Egg Harbor, N.J., this winter to the Palmetto Creek subdivision, between Supply and Southport in Brunswick County.

On his block, 16 of the 17 homes have sold – including one he bought for his daughter – along with dozens of others in the immaculately groomed subdivision. The blocks of empty lots at both ends of his own don't worry him.

He talked to a man a couple of weeks ago whose family had just bought five of the lots. Meanwhile, why worry when the developer has already built the roads, the clubhouse and the pool?

“This place is about to boom,” he said. “The price is right. And if it takes a while, why should I care?” he said. “I have my pool, and nobody's in it but me.”

Near the peak of the recent real estate boom along coastal North Carolina's rivers and sounds, William Highfill got an invitation for a gala three-day sales weekend at a new Brunswick County subdivision.

It was spring 2006 when Highfill, a retired federal government worker from Roanoke, Va., joined a group of enthusiastic buyers from as far away as California. Highfill and his son-in-law, Mason Cass, bought three lots, solely for investment. The entire 200-lot first phase of the project sold out in two days.

At the time, that weekend wasn't unusual for the scorching-hot real estate market along the more than 3,000 miles of North Carolina's “inner coast.” But today, the nation's housing bust is in full view in Brunswick County: Many of the sought-after lots are sprouting weeds.

Brunswick, the epicenter of the boom, shows little evidence that the dizzying sales will return soon; with prices down, recent home sales show a modest recovery. Single-lot sales, though, have fallen to less than a fifth of their peak in late 2005. And foreclosure notices this year are running about 50 percent higher than those in the rest of the state.

A News & Observer survey in mid-2006 found more than 34,000 new homes in developers' plans, half of them in Brunswick County. There was excitement about new jobs and revenue for some of the state's poorest counties. But there were also worries about whether the boom would overwhelm the environmentally and culturally sensitive region and curtail the public's access to waterways.

Subdivisions the size of towns were announced for huge tracts of farmland in the northeast, and condominiums that would sell for as much as $1.2 million were planned along the central coast. Weekly, plans were filed for projects that would bring hundreds of homes to Brunswick, with its strategic location between Wilmington and Myrtle Beach.

New phases of a subdivision were selling out in a day or two. Now, Highfill and Cass are among hundreds of investors along the inner coast who would like to sell. Their broker hasn't had a single nibble, though, since they listed the property in February.

“We're trying basically to get rid of one or two and hold on to the other in case they do grow in value,” Highfill said. “But it doesn't seem like anything is moving.”

The down market is bad news not just for investors but for local economies. Builders, many of whom run businesses out of their homes, have laid off workers and in some cases have gone bankrupt. Banks, real estate offices, restaurants, hardware and building supply stores are suffering.

Some developers have scaled back plans; others have sold tracts and walked away from projects. Those with solid financial backing are gritting their teeth and waiting, even as they pay carrying costs on their investments. All are waiting for strong sales to return and wondering when – and even if – that will happen.

“The places that were really hot are dead,” said New Bern attorney Ernest Richardson IV, who handles sales and foreclosures. “The ones that were just doing really well, like New Bern, are doing OK now, but speculative counties, like Pamlico and Brunswick, they're hurting.”

The promise of growth

The effects vary as much as the markets.

In the northeastern part of the state, where the boom arrived latest, it had been expected to have perhaps the greatest impact because there had been little industry or previous development. A handful of major projects was expected to double the tax base in Bertie, one of the state's poorest counties.

Local officials have heard little lately about one of the biggest projects, while another – which features a newly opened Arnold Palmer-designed golf course – has started to sell lots, though many in the area had expected it to be further along by now.

Foreclosures creep in

Two years ago, the southeastern corner of the state was the heart of the boom. But foreclosures in Brunswick County set a record last year, said Leslie Bell, the county planning director. He said many of them were on property bought by speculators attracted by soaring prices.

In the past year, several developers have requested extensions of their agreements with the county, typically seeking another year to 18 months to put in place infrastructure such as roads and sewer lines. In recent months, two have sought second extensions, he said.

Meanwhile, others are trying to jump-start sales with deals such as making the mortgage payments on a lot themselves for one or even two years, Bell said.

“I think the market needed to correct itself,” he said. “We had properties selling out of sight here. Unfortunately, when it hit, it hit hard.”

Everyone is asking when the real estate market will bounce back.

“A year ago, I would have said it would come back in a year and a half,” said Tim Smith, one of the partners in Preston Development Corp., which recently bought a tract in Beaufort to resell to developers. “If you ask me now when that's going to be, well, who in the heck knows?”

Some of the retirees expected to fuel the boom are showing up. They're not coming in the droves it would take to fill all those empty subdivisions, but there are enough new arrivals to keep the market alive.

Vinny Annecchiarico moved down from Egg Harbor, N.J., this winter to the Palmetto Creek subdivision, between Supply and Southport in Brunswick County.

On his block, 16 of the 17 homes have sold – including one he bought for his daughter – along with dozens of others in the immaculately groomed subdivision. The blocks of empty lots at both ends of his own don't worry him.

He talked to a man a couple of weeks ago whose family had just bought five of the lots. Meanwhile, why worry when the developer has already built the roads, the clubhouse and the pool?

“This place is about to boom,” he said. “The price is right. And if it takes a while, why should I care?” he said. “I have my pool, and nobody's in it but me.”

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