Archive for the 'Real Estate Market Trends' Category
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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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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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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How Two Fed Rate Cuts Impact Your Home Buying Power
January 31st, 2008 Categories: Real Estate Market Trends, Real Estate Tips
Last week the Federal Reserve cut short term rates by 75 basis points. This week they cut another 50 points. What does this mean to home buyers and sellers?
It means you have more buying power than ever before. Mortgage interest rates are already very low. They have been that way for quite a while. 30 year rates under 6% are common now. Many of the riskier products have gone away, but that is probably a good thing.
Combine the low mortgage rates with a larger than usual inventory of homes and life is good for anyone wanting to buy a home in the Raleigh area. Prices have not dropped dramatically like they have in many other parts of the country. But prices never ran up to ridiculous levels either. We never had anything to correct in the Raleigh real estate market.
My wife and I are going looking at homes this weekend. Hey, when the Realtor recognizes it’s a good time to buy, that probably means something. If you need to move, do it. We need to move and we are very confident we will be happy with our decision.
We feel completely comfortable that we will be able to find the perfect home from the larger than usual inventory that is available right now. And we are also confident that our interest rate will be very low, which of course will help us afford more home than we could otherwise.
Want to get started pursuing your dream home in one of the best markets for buyers that we have seen in quite a while? Call me at 919–602–7000 or send me an email and we can talk about how to help you succeed too!
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Are Real Estate Markets Better When Prices Go Up or When Prices Go Down?
January 17th, 2008 Categories: Real Estate Market Trends
Is it better to buy a home when prices are increasing? How about when home prices are falling? Most people have to sell a house to buy another. Stop worrying, think long term, and get on with your plans.
I just read an article over at cnnmoney.com about how based on December data, national housing starts and building permits had their sharpest drop in 27 years. Sometimes you just can’t win.
Remember a few years ago when real estate markets in some parts of the country were increasing by double digit percentages? The traditional media lamented over how the average person was being shut out of opportunities for home ownership.
The problem then was too little supply (think housing starts and building permits) and too much demand. Simple economics drove the price of homes in markets like Southern California, Florida, DC Metro, and many parts of the Northeast through the roof.
Now that demand has dropped off, and builders and developers are reacting by reducing inventory (supply), the traditional media is at it again. Now the problem seems to be falling home prices are threatening the national economy somehow.
Why is everything in the real estate business always a disaster for these people? Prices go up, it’s a disaster. Prices go down, it’s a disaster. What if there was perfect equilibrium? Would that make the traditional media pundits happy?
I think the moral of this story is don’t think about real estate markets nationally and don’t look at them for month-to-month trends. If you buy residential real estate almost anywhere in the county, and hold it for 5-7 years (as most people do), you will make a profit when you sell.
The economically sound appreciation rates for residential real estate are about 3-5% per year. Interestingly enough, that is exactly what the local Raleigh real estate market tends to deliver. Year after year investors and homeowners alike can pretty much depend on this trend for homes in the Raleigh area.
Ready to buy a home, or invest in real estate, in a very stable and reliable market? Click here to search homes for sale in Raleigh.
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November Real Estate Market Update for Wake County
November 5th, 2007 Categories: Real Estate Market Trends
The most asked question I get regarding Raleigh real estate is, “how’s the market”? To be honest, it’s a challenge to give that one a quick answer. Great doesn’t exactly feel like the right response, because sales are down and inventory is up. People from other markets wanting to relocate to Raleigh who are having trouble selling their homes is what is driving these numbers. Not so good certainly isn’t the right answer either. My personal business is doing quite well and prices are holding steady with the exception of new construction. So I guess my answer is, “it’s doing pretty well especially considering the slow down in relocation business.”
Personally speaking, having a deep pipeline of clients and being able to keep in touch with them has really helped me. People are still buying and selling homes, now it just takes longer in many cases. As a result of the extended time that we have to communicate, and the “extra” help that my clients need to successfully deal with the challenges they face, it has allowed me more opportunity to build deeper relationships. Being someone who firmly believes things happen for a reason, I’m simply embracing the opportunity to add more value to people’s lives.
Okay, now on to the reason you began reading this article. Here’s the short story on Wake County real estate market statistics. Inventory is up 28% compared with last year. Pending sales are down 26%. Even so, the absorption rate is right at 5 months of inventory. All things considered, the local market was better last year, but is still doing pretty well this year.
Nothing dramatic will happen unless our inventory creeps up over the 6 month mark. Builders are doing their part to keep that from happening. There are lots of incentives out there right now for new construction that can close within the next 30–60 days. And there is good new home inventory to choose from. With 3,326 new homes listed for sale in Wake County, and all the incentives in the form of lower prices, free appliances, builder paid closing costs, and so on, now is a great time to get a great deal on a new home in the Raleigh area.
If you are anywhere close to being ready to buy a home in Raleigh, or any of the surrounding areas, give me a call and let’s talk about how you can take advantage of the current conditions.
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Future of the Raleigh Real Estate Market
October 15th, 2007 Categories: Buying a Home, Real Estate Market Trends, Selling a Home
What is the future of the real estate market in the Raleigh area? Will home values go up or down? Will buyers be able to get a good deal? Is buying a home in the Raleigh area a smart move? The answers to these questions vary quite a bit, depending on where you get your information and who you believe.
Usually every Monday morning here at Raleigh Real Estate Talk I give you a nice chart with the weekly stats for the local real estate market. I’m going to skip that today and try to answer some of the questions I get in my email on a regular basis. The buying and selling public seems to be uncertain about the future of real estate markets across the country. In some areas uncertainty is understandable. I don’t believe you have to live with that uncertainty here.
Inventory is rising, but being absorbed
I just checked active listings for Wake County. There are 8,389 homes listed for sale. Last year this time there were 6,537. That’s a 28% increase. Is that good or bad? To answer that question you need context.
The correct context for this question is found by considering the absorption rate. The absorption rate is the number of months that it would take to sell all listed homes if no more were placed on the market and the volume of sales remained steady. That rate is currently 4.9 months. Last year it was 3.7 months.
Last year I was having trouble finding the right home for some of my buyers. When I did, many times we found ourselves in a bidding situation. Now, there seems to be a lot more choices for buyers.
Sellers may have to wait another 30–60 days to sell their home if it is not adequately prepared. If it is prepared as I have suggested in a past article, the home could sell in a few weeks.
The National Association of Realtors (NAR) and most economists will tell you that over 6 months of inventory is a buyer’s market. We’re not there yet, but we’ve moved in that direction.
Sales have slowed
Sales are down 32% from last year. Sounds alarming doesn’t it? Just remember the absorption rate. At 4.9 months we’re doing okay. In September 1,204 homes sold in Wake County.
This number is more like a healthy January or February number, so sales are definitely off the mark. I’m sticking to my theory about relocation clients not being able to buy here because they cannot sell their homes in other markets. I think this has had a huge impact.
Again, for buyers there is more selection and less chance of getting in a bidding situation. For sellers you need better preparation and targeted marketing more so than last year.
Prices are appreciating nicely
August average sell prices are up 4% year-over-year. The Raleigh area market has maintained a healthy 3–5% appreciation for a long time. Looks like we’re right on track, doesn’t it? Economists will tell you that residential real estate prices should track just ahead of inflation and that’s what we consistently do.
By the way, later this week I’m going to a presentation by Stacy Anfindsen, publisher of the TARR Report. Stacy is a very well respected local expert on market trends and the TARR Report is the premier publication that the local Realtors use to help understand those trends. Stacy will be speaking at an annual market trends conference at our local Board of Realtors this week. I’ll be sure to let you know what he shares with us, especially regarding appreciation.
Price must be based on the competition
Putting a sign in the yard and listing on the MLS doesn’t cut it these days. Inventory levels are up and if you want to sell your home quickly, in addition to preparation and staging, pricing it to beat the competition is critical.
When sales are down and inventory is up, the line to be the next to sell can be a long one, if you are not well prepared. If you want to move to the front of this line, it’s possible, and easier than you might think. Check out this article I wrote about how to do just that.
Sellers have to be smart and buyers have choices
You see, I think this is a great market. Selling homes, in a reasonable time frame, has become more of a challenge. I love challenges and this give me a chance to really shine with my market and pricing skills. I can add more value for sellers now and quite frankly, that’s a very rewarding feeling.
Buyers want a great home. I get to use my knowledge of neighborhoods and communities to put you in the best possible home. A good amount of inventory really helps make this possible. This also makes me feel good about what I do.
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Raleigh and Cary Mayors Favor Slowdown in Growth
October 13th, 2007 Categories: Real Estate Market Trends, Real Estate News
We held local elections in Wake County this week and the two largest cities, Raleigh and Cary, both elected mayors who have publicly made it known they think growth needs to be slowed down. Incumbent Raleigh Mayor Charles Meeker and Cary’s new Mayor Harold Weinbrecht each ran on platforms that would seek to limit building and impose more stringent and expensive impact fees on developers home buyers.
If they get their way, home prices will be subjected to a great amount of upward price pressure in the days ahead. It’s foolish to think that any business, home builders and developers included, will simply pay for new fees and restrictions out of their profits. Look for home prices to rise, especially in new construction, if the changes are as punitive as these outspoken politicians lead us to believe they could be.
In addition to higher home prices from fees that are passed through to consumers, what about an artificially dampened supply due to restrictions and limits placed on building permits? Do you think such outspoken anti-growth mayors might try to reduce the number of permits issued?
As I’ve mentioned to you repeatedly on this blog over the past few weeks, inventory has risen to over 8,300 listings and the market still continues to absorb the increase with the absorption rate sitting at 4.9 months. Folks that’s a 26% increase in inventory and prices continue to rise with the average sell price up 8.4% from a year ago.
Government controls on supply cannot help but have a negative impact on what you will pay for your next home. It’s economics 101. Constriction in supply with strong demand will result in increased prices. And for all the wrong reasons.
The answer to congested roads and over crowded schools is not to wreck the local economy with government imposed sanctions on growth that is being demanded by the market. How about if we require accountability from our elected officials for the capital they already have in the coffers? We certainly don’t need to spend millions and millions on proposed public transportation systems that the federal government twice told Triangle Transit Authority was not feasible.
It just seems odd to me that as more people relocate to the Raleigh area and bring their tax dollars here with them that our leaders cannot structure a budget that allocates that money to the places it is needed. What do you think?
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National Association of Realtors Says Future Looks Bright for Selling a Home in Raleigh
October 12th, 2007 Categories: Real Estate Market Trends
The National Association of Realtors (NAR) just released its monthly market forecast and Raleigh home sales are given special mention for outperforming the rest of the country. According to NAR Senior Economist Lawrence Yun, “markets like Austin, Salt Lake City and Raleigh have been outperforming recently and will continue to do well next year.”
As I’ve written here before, our local numbers confirm this. The average sell price is up 8.4% for closed sales in September compared with same period in 2006. The average sell price for a home in Wake County, which includes Raleigh, Cary and Wake Forest, was $277,451 in September compared with $255,963 in 2006.
Now before we start to jump for joy and declare that we are in a total seller’s market, consider the decline in showing activity and closed sales in recent months. Real estate markets are driven by supply and demand and we cannot ignore the drop off in demand.
So what difference is the lower demand making? The immediate impact is that supply has been pushed up to over 8,300 listings in Wake County which is a 26% increase over the same period last year. The good news is the market is still absorbing the increase with current inventory at 4.9 months. And as we can see from the NAR forecast and our own local numbers, prices are up by a healthy amount.
I still believe that the slowdown in people wanting to relocate to the Raleigh area, due to the difficulties sellers in other markets are having selling their homes, is what is responsible for the reduced demand. So far sellers are okay waiting another 30 days or so to sell their homes and therefore the pressure on price has not materialized.
Accurate pricing, proper preparation, and targeted marketing are more important that ever for Raleigh home sellers. If you want to get full price without having to wait an extended period of time to find a buyer, make sure your Realtor knows how to create the right mix of these things.
If you are planning to sell your home and want to know how to use the current market conditions to your advantage, give me a call at 919–602–7000, or send me an email and I’ll be happy to discuss this with you.
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Wake County Real Estate Inventory Rises
October 8th, 2007 Categories: Real Estate Market Trends
Good Monday morning! Was it hot or what this weekend!?! Ninety degrees in October… only in North Carolina. We’re suppose to be in the upper seventies to low eighties this time of year. The Raleigh area real estate market is behaving a bit like the weather too.
We are supposed to see inventory levels begin to drop as we go into the seasonally slower part of the year. Well, that isn’t happening. The inventory of homes listed for sale in Wake County is up 26% over the same period last year. The pending ratio is also down from last year. In Oct 2006 it was 27.5% and it is currently 18.5%. Here’s your data for this week.
If you’re planning to buy a home in the Raleigh area, the selection has never been better. Builders and sellers are looking at the same rising inventory levels and beginning to adjust pricing to remain competitive.
Of course you’d never know that by looking at the average listing prices on the chart above. It’s up over $100,000 year over year. Okay, so the average list price is up and so is inventory. How does that happen? I believe that it has much to do with builders making a conscious decision to build more expensive homes. Here’s a chart that supports my theory.
The local Raleigh real estate market has had a very high content of new construction for quite a while. And this is especially true now that builders are struggling in other areas of the country. Many of the national builders have started very high end projects in our area. So have the regional and local builders. Hasentree is one example of this.
The chart above shows how the percentage of inventory in Wake County that is new construction rises significantly as the price increases. Want a high end luxury home? Plenty of those to choose from right now as well.
In case you are looking to buy a home in the Raleigh area and don’t want to spend $500,000, don’t worry. Look at what is not shown in the chart. While 18% of our inventory is over $500,000, that leaves the balance, 82%, under that price point.
As a matter of fact, there are 1066 homes for sale in Wake County under $250,000 and 673 between $250–350K.
Give me a call, or email me if you want to find out how to use the current market conditions to your advantage to buy or sell a home in the Raleigh area.
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