Renowned Economist Says Raleigh Real Estate Market is Solid
September 6th, 2007 Categories: Real Estate Market Trends, Why Move to Raleigh?
Distinguished NCSU Professor of Economics, Dr Michael Walden, spoke to a packed house at the North Raleigh office of Keller Williams Realty on Wednesday. What did he have to say about Raleigh area home sales? He confirmed what I have been saying for some time, based on my personal experiences and observations. We are very fortunate to have missed out on much of the real estate related pain that the rest of the country has been experiencing.
Dr Walden spoke about the current housing and mortgage markets on a national level. He explained how every 10 years, or so, our economy goes through a business cycle which includes expansion and ultimately recession. Along the way the economy grows and slows down. Over time, the trend continues upward.
The last downturn was in 2001 and as we all remember it had much to do with a huge run up and subsequent downturn in the technology sector. This time the run up and resulting downturn is in the housing sector. In major markets across the country, prices got too far ahead of affordability. This was not sustainable. Fortunately, this did not happen in Raleigh.
Dr Walden emphatically said he does not think we are currently headed for a recession. Based on the 10 year cycle, and the last downturn being in 2001, we will likely experience a more serious contraction in the economy by the end of the decade. But for now, Dr Walden speculates that the national economy will experience about another six months of reacting to lower overall home prices and tightening of mortgage lending criteria. He thinks growth will be sub-par, maybe only 1–3%, but that we will come out the other side without significant damage to the economy.
So what does all this mean to Raleigh home sellers and buyers? The bottom line is real estate continues to be a great investment vehicle available to the vast majority of citizens. Where else can you spend money for a staple of life (housing) and end up making a profit, over time, from the money you have paid?
And in Raleigh, we are in a rather unique position of being in a market where home prices did not increase ahead of affordability. Raleigh home prices continue to appreciate at a more normal pace. Just like they did when other markets were experiencing unnatural increases of 15–20% per year.
Real estate will continue to be a great investment, over time, even in these difficult markets across the country. Home buyers and sellers in Raleigh will do even better, especially in the short term.
