Archive for February, 2008
The Good News Is Building Permits Are Down
February 20th, 2008 Categories: Real Estate Market Trends
How do you like my headline? Different, isn’t it?
The government released some key economic data today including housing starts and building permits issued for January. Building permits issued nationwide were 3% lower in January. Good!
As I looked at various news sources this morning most of the headlines made reference to the continuing decline of the national housing market and how building permits were at a 16 year low. I, of course 
decided to look at this news a little differently.
Let’s see, the basic economic problem with the national real estate market seems to be too much inventory. You could say there are too few buyers, and you would be right. However, the lack of buyers can be mitigated by a corresponding decrease in inventory. Remember that supply and demand lesson in economics class in college?
If builders are requesting fewer building permits, that can only help the current national housing market. If supply can be brought closer to equilibrium with demand, prices will stabilize.
Now this position assumes that falling home prices is the problem that needs correcting. But what if you are a buyer? Then falling home prices and lots of inventory are good things, right? Now if you could just figure out a way to buy a home without selling the one you already own.
The reality is, on a local basis, that the direction of prices only really matters if you are buying your first home, or selling your last one. If you get less than you might want to when selling your home, and then buy another one at less than you would have expected to pay a year or two ago, then you have done well. This applies to any of you who are selling in a declining market and buying another home in the same place.
The smaller group of people, who in a way are trapped, are those who must sell a home in a declining market and buy another home in an appreciating market. Even this is only a real problem for anyone who purchased a home during the past 1-2 years in one of the declining markets around the country.
If you are in the greater Raleigh area and need to move locally, then none of this really matters. There are things we can do together to get your home sold in a reasonable time at a very good price. And your next home should continue to appreciate at our steady and dependable rate of 3-5% per year. You won’t miss a beat.
The bottom line is that free markets are a beautiful thing. There are areas of the country where prices increased way ahead of affordability and the free market is correcting those prices. A reduction in building permits is a normal and expected part of this process.
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Homes For Sale in Wake Forest | Update on Northampton
February 19th, 2008 Categories: Buying a Home, Wake Forest
St Lawrence Homes is at it again! The Wake Forest community of Northampton has just announced a brand new phase.
Big lots and cul-de-sacs
This new phase features a total of 3 cul-de-sacs and some larger than usual lots that back up to trees and open space. How many times have I heard a client ask for this? 
Lots are currently available for pre-sale and a $100 deposit holds the lot of your choice while you choose options for your new home.
Ready to go now
In addition to the nice lots that were just released for sale, there are two very nice homes in inventory. Here’s the details.
Georgetown III - $344,900
3952 square feet, 5 bedrooms, 3.5 baths
Unfinished walk-up attic with over 500 square feet of unfinished space
Avery II - $399,900
3825 square feet, 5 bedrooms, 5 baths
Finished walk-up attic with huge bonus room and full bath
There are several resales for sale in Northampton as well. The link below will take you to a page with the most current inventory.
Search for homes for sale in Northampton
What’s the Realtor’s opinion?
I’ve sold in this neighborhood and showed homes here many times. My clients could not have been happier with their choice. The construction quality is very good and the floor plans feature all the things so many buyers are looking for these days, such as open living area, large master suites, and large gourmet kitchens. As previously mentioned, the lots tend to run on the large side with quite a few trees all around.
Wake Forest is a growing community with lots of amenities such as restaurants, shopping, parks, theaters, and more! Give me a call, or email me, if you would like any additional information on this great neighborhood.
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Is The Raleigh Real Estate Market a Buyer’s Market or a Seller’s Market
February 14th, 2008 Categories: Real Estate Market Trends
So you’re planning to buy or sell a home in the greater Raleigh area and you want to know who it favors. Are we in a buyer’s market, or a seller’s market? Let’s examine the facts.
Pricing Trends
I recently reported on the change in average sell price for homes sold in Wake County. In 2007 the average sell price increased by 5.4%. This is in line with what we experience historically here is the Raleigh area. As a matter of fact, it’s at the high end of the 3-5% range that we have seen over the years.
Builders did cut prices on inventory during the last half of 2007. This was on inventory only and did not include pre-construction sales. The 5.4% increase in average sell price takes this discounting into account.
So far, based on just this statistic, it looks like a seller’s market. Certainly were not in a buyer’s market from what we’ve learned so far. Prices are continuing to increase over time at rates that are consistent with our past experiences.
Days on Market
I just checked the Triangle MLS and found that the average days on market are currently 105 days. This is up from an average of 67 days. That’s a 57% increase. Sounds like a big increase, doesn’t it?
What this number really means is that rather than a professionally priced and marketed home taking 2 months to sell, it is now taking 3 months. Remember this is an average and some homes sell sooner and some take longer.
Based on the previously mentioned data that shows prices increased in 2007, it appears that sellers are simply waiting the additional 30-40 days, rather than cutting their price. We still don’t have any hard evidence that we are in a buyer’s market, but sellers are being inconvenienced by having to wait longer.
Inventory
There are currently 8,404 homes listed for sale in Wake County. This is up from about 6,300 homes listed for sale in Wake County last year at this time. That’s a 33% increase in inventory.
This is clearly a result of slowed sales. Sales were almost 7% lower in 2007. Approximately the same number of sellers are putting their homes on the market, while sales have slowed, and the result is an increase in inventory.
I believe that the difference is in the relocation business. People wanting to relocate to the Raleigh area from other markets are still continuing to have difficulty selling their homes. I think it is very safe to say that the excess inventory is a result of a reduction in the number of relocation buyers.
OK already… is it a seller’s market or a buyer’s market?
I’d say that it is neither. In my opinion, we have a balanced market on our hands. The Raleigh real estate market is within a normal range of appreciation. Sales have slowed and inventory has increased, but the market is continuing to absorb the inventory within a time frame that has not put downward pressure on price. At least not to the point of actually causing prices to go down.
The current absorption rate is 5.4 months. In other words, if sales continued at the same pace as in the last 12 months, and no more homes were listed, it would take 5.4 months for everything to sell. Back in 2006, when our inventory was lower and sales were higher, we had an absorption rate of about 3.5 months.
The thing to take away from all this is that buying real estate in the greater Raleigh area is still a reasonably sound investment.
We never had the abnormal run up in prices that many other markets across the country experienced. In the absence of over-inflated home prices, there is no correction that needs to occur in our market.
Seek professional advice when buying or selling a home, buy or sell at market value, and over time you will be just fine. Inventory levels are good and multiple bids are rare. It’s a good time to move if you need to be in a different home for any of the usual reasons.
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Wake County Public Schools - 19th Largest in Nation
February 13th, 2008 Categories: Real Estate News
Last week we had some representatives from Wake County Public Schools come to our office for a Q&A session. Here are a few statistics that might be interesting to anyone contemplating relocating to the Raleigh area.
Key Stats
154 schools
134,000 students
17,000 employees
19th largest in nation
79.3% graduation rate
SAT Participation Rates
Wake 77%
US 48%
SAT Results
Wake 1576
US 1518
NC 1493
One other key factor to keep in mind when comparing our schools to other systems across the nation is that we are a county system. Many other areas of the country are township based. What that means is that the schools in Raleigh, Cary, Wake Forest, Holly Springs, Apex, and any other Wake County town have the exact same resources.
When you are considering moving to the Raleigh area, and schools are important to you, remember that the larger cities don’t necessarily have better schools. Any town in Wake County benefits from this excellent system.
Need additional information? Try my Raleigh area school resource page. And if you need something you cannot find there, give me a call at 919-602-7000 and I can out you in touch with someone at the school system who can answer all of your questions.
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Real Estate Expenses Are Profitable Tax Deductions
February 12th, 2008 Categories: Buying a Home, Real Estate Tips
Most people want to keep as much of the money they earn as possible. Tax deductions are one way to accomplish this. Do you know which real estate expenses are eligible tax deductions?
First, let me warn you that I am not a tax accountant, nor do I play one on TV. By the way, my Broker-in-Charge just stuck his head in the door and said I have to tell you to check with a tax professional to make sure any of this stuff applies to your particular situation.
That being said, I can certainly let you know about some of the common real estate related tax deductions that you should be asking about if you have recently purchased a home, or if you own a home.
Mortgage Interest
This is the big one. You should be able to deduct the amount you pay in interest from your earned income. That means you don’t have to pay tax on that amount of money. If you just got a 30 year loan, this is a big number.
You should also be able to deduct any interim interest you payed at closing if you purchased your home last year. If you are one of my clients, you will be receiving a copy of your closing statement in the mail in the next few days. Be sure to have your tax preparer consider this as a deduction for you.
Real Estate Taxes
Hey, my accountant tells me that I can deduct the amount I paid in real estate taxes from my income taxes. Hmmm. Deducting your taxes from your taxes. Sounds like fun, doesn’t it? Maybe I should have been a tax accountant if I think this stuff is fun. Sorry, I digress. be sure to ask your tax preparer about deducting real estate taxes you paid from your earned income.
Discount Points
This one doesn’t come up too often because not many people use discount points to buy down their loan rate. With the historically low rates we continue to see, this option just doesn’t get used very much. But, just in case you closed on a home last year, and paid discount points, be sure to ask your tax person if you can use this as a deduction.
Other Stuff Like Origination fees
This is a little more tricky. Definitely get professional advice on origination fees, etc. Although usually these items are not deductible, there are certain instances where they might be.
Need a good tax accountant? I’m really happy with the person who keeps me straight. Just email me and I’ll be glad to pass his contact info along.
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2007 Wake County Real Estate Sales Results
February 11th, 2008 Categories: Buying a Home, Real Estate Market Trends, Selling a Home
I thought some of you might be interested to know how 2007 turned out for homes sales in Wake County. Here are the numbers straight out of the Triangle MLS.
2006 WAKE COUNTY HOME SALES
20,736 Homes Sold
$249,248 Average Sell Price
2007 WAKE COUNTY HOME SALES
19,314 Homes Sold
$262,786 Average Sell Price
The main thing I get from these numbers is that, on average, it cost $13,538 more to buy a home in 2007 that it did in 2006. That’s a 5.4% increase. All indications are that 2008 homes sales should follow the same pattern.
2007 sales were down 6.8% overall. If I look at Q406 versus Q407, I see that unit sales were 16% lower, so it is probably very safe to say that the downward trend accelerated late in the year.
Q407 also showed a 2% increase in average price over Q406. Interesting that no matter how we look at this, unit sales were down while the average price increased, isn’t it?
Taken as a whole, it looks like sellers are having to wait longer to sell their homes, but that is not motivating them to lower prices. Condition, presentation and marketing is the competitive difference for sellers right now.
I still attribute the slowdown in unit sales to the relocation market. People continue struggling to sell in other markets so that they can move here. Once that recovers, the Raleigh real estate market should be well positioned for a sharp increase in buyer activity. If supply drops, at that point we could see even stronger upward pressure on price.
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What is Earnest Money?
February 4th, 2008 Categories: Buying a Home, Real Estate Tips
When making an offer to buy a home in North Carolina, it is customary for the buyer to offer something called earnest money. As a home buyer, it is very important for you to understand the benefits as well as the risks before you write that check!
What Is it?
Earnest money is just what it sounds like. It is money presented with an offer that proves to the seller you are serious about buying their home. Typically it goes into the trust account of the listing agent’s firm and is held in escrow until closing.
If all goes well, and closing takes place as planned, the earnest money is simply credited to the buyer’s side of the transaction. This money is not a fee, but rather an advance payment towards the purchase price of the home.
How Much is Enough?
I’ve always been told that the earnest money should be between 1-3% of the purchase price. So, the earnest money deposit on a $200,000 home purchase should be between $2,000 and $6,000.
If we are making an offer on a new construction home, many times the builder has a required amount. Be careful with the terms of earnest money on new construction. If the builder is not using the standard North Carolina contract, this money could be non-refundable.
The Risk
When using the standard NC contract, earnest money is only at risk when the buyer breaches the contract. If you just change your mind after signing a contract, and refuse to close, your earnest money could be at risk. Other ways to put your earnest money at risk include not providing proof of loan application on time, or failing to close without providing proof that your loan was denied, through no fault of your own.
Competitive Advantage
There is a strategy behind determining the amount of the earnest money. If you want to make your offer more appealing, compared to competitive offers, more earnest money is a way to do this. I have had offers accepted in a competitive situation more than once because we offered a higher earnest money amount. Keep in mind that this money is only advance payment on a home you intend to buy anyway.
Even if there is not a competitive bid, a larger earnest money amount can make a lower offer look more attractive to the seller. The bottom line is that a larger earnest money amount could contribute to a lower overall purchase price.
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Homes for Sale in Morrisville - RTP - The Townes at Keystone Crossing - Live Where You Work
February 2nd, 2008 Categories: Morrisville, New Construction Homes
Vanguard Homes is building an exciting new townhome community right in the heart of Research Triangle Park (RTP). Location, quality and energy efficiency are the primary characteristics of this Morrisville townhome community. There are townhomes for sale in this ultra convenient neighborhood from the $160s to the low $200s… very popular price points!
There is no better location if you work in RTP
Placing a townhome community in this price range in the heart of RTP was absolute genius! There are some firms that you could literally walk to from Keystone Crossing. Others that would be a great bike ride on a nice day. And just about any RTP company is a very short (5–10 minute) drive to work.
Check out this map.
Lots of choices and options
Need to keep the price down? Choose one of the townhomes without a garage. Able to spend a little more and single? How about a one car garage. Two working professionals with two cars? There are two car garage plans available for you.
Other options include finished flex space (think bonus room), gourmet kitchens, stainless steel appliances, covered patios and decks. The various elevations offer stone or brick accents, box windows, metal roof accents, and and maintenance free siding and trim.
Energy Star rating
Want to be comfortable in your new home and save money on energy costs at the same time? Vanguard Homes has been awarded the 2007 Energy Star Partner of the Year award and can deliver a home that does exactly that!
This energy efficient specification provides for a low operation cost and comfortable interior environment. Click here for a brochure that details the key features of the Energy Star home design.
By the way. Several months ago I sold a Vanguard Energy Star home to an engineer who worked in the heating and air conditioning field. He was very impressed!
Great price point
I can tell you there are lots of people looking for housing solutions in the $160s to low $200s price range. Especially conveniently located housing solutions. This neighborhood targets consumer needs in a way that is very refreshing to see.
Here is a list of inventory and homes available in the next few months. Please call me at 919–602–7000 or email me if you do not see what you want here… new buildings are being scheduled for construction just about every month.
2–car garage townhomes for sale
1600 sq/ft, 3BR/2.5BA, $187,900
1–car garage townhomes for sale
2141 sq/ft, 3BR/3.5BA, $214,900
2181 sq/ft, 2BR/3.5BA, $219,900
2135 sq/ft, 3BR/3.5BA, $204,900
2188 sq/ft, 3BR/3.5BA, $219,900
Townhomes for sale without garages
1742 sq/ft, 2BR/2.5BA, $179,900
1742 sq/ft, 2BR/2.5BA, $174,900
1742 sq/ft, 3BR/2.5BA, $172,900
1629 sq/ft, 3BR/2.5BA, $163,900
It is important to note that when I originally gathered the information for this article several weeks ago, there were 7 homes available that have been sold during that time.
Bonus
The builder is currently offering up to $9,000 in incentives. Makes this community even more attractive, doesn’t it?
Oh, and in addition to building a quality home, the people at Vanguard Homes are great to work with! My experience with them in the past has been wonderful. Whenever we have encountered a problem, and there are always problems to be dealt with when buying a new home, they have stepped right up to the plate, taken full responsibility, and resolved the issue.
What do I think? This is a great product, at a great price, and in a great location for all of you who work in or near RTP. And because these are townhomes, there is no exterior or yard maintenance. Great lifestyle opportunities here!
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