I have always heard that around a 6 month supply is a balanced market.  Less trends towards a sellers’ market and more trends towards a buyers’ market.

Here’s a question.  What would it take to create a sellers’ market?  More buyers absorbing the excess inventory?  It’s interesting how the heaviest buyer activity occurs during a sellers’ market, isn’t it?  When prices are rising and inventory levels are falling, the fear of loss take over and buying activity increases.  And when we have a situation like we do now, prices are at 2003-2004 levels and interest rates are as low as they have ever been, buyers seem to be waiting.

Here are the numbers.

February started out with a good amount of promise compared to the same period in 2010.  Especially considering that the tax credit deadline was approaching during this period last year.  The gap widened in March and especially April.  Just remember when you look at these numbers that the 2010 tax credit pulled a large number of buyers from the second half into the first half of 2010.

What do the months ahead hold for sellers and buyers?  Sellers must realize that the competition can be overwhelming.  Everything has to be done perfectly… from presentation and marketing… to price.

Buyers?  Ask yourself what you’re waiting for.  If you don’t need to move, by all means stay put.  But if you have a real need to move, the time has never been better.  If you’re waiting for prices to fall some more, carefully consider the effect that rising mortgage rates could have on your purchasing power.

All Cash Deals in December 2010

• 54.2%  Miami
• 45.9%  Las Vegas
• 44.9%  Tampa
• 35.6% Phoenix

Do those cities look familiar?  This is a list of the cities hardest hit by the housing fiasco.  And savvy buyers are moving in droves to pick up properties at bargin prices for cash.

So what the heck does all this mean for you and me?  I believe it’s a strong signal that we are either at or very close to the bottom with regards to prices.  If someone has enough money to pay cash for a house, we can probably agree that they have some financial smarts.  And if they were smart enough to accumulate a large stockpile of cash, they probably are smart enough to not squander it on a bad investment.

The number of cash sales are up because smart people are recognizing good deals on houses.  They don’t think prices will go lower.  If they did, they would continue to wait.

If you think about what drove prices down in the Raleigh real estate market, this actually is a pretty good reason to be optimistic about the future, locally.  Prices declined here because the number of available buyers decreased as inventory increased.  Simple supply and demand.

In the Raleigh area we rely heavily on buyers relocating from other cities.  Many of those other cities had home prices that increased way ahead of affordability.  That had to roll back at some point and people in many real estate markets found it impossible to sell their homes at a price that would allow them to pay off their mortgage.  What followed in those markets was sharply increased foreclosure rates and other sellers who just choose to stay put.

Here in the Raleigh area we were downstream from all that, and as the number of relocating buyers slowed to a crawl, inventory increased to a point that led to lower overall prices here.  So I believe that it follows that as inventory gets absorbed by cash buyers in the troubled markets, prices will begin to increase again as buyers compete for a shrinking supply of houses.  As sellers in other cities find ways to sell their homes, they can become buyers here in the Raleigh real estate market.

I hope I’m right.  You probably hope I’m right too.  Now for the next question.  How long will all this take?  Hard to say.  But I do know there’s a significant amount of national inventory that needs to be sold.  And it’s a pretty safe bet that there are more sellers all across the country poised and ready to add to the inventory by listing their home for sale as soon as prices do start to move up.

Here are a few of the key stats from this most recent American Housing Survey.

• There are 130,112,000 residential housing units in the US
• 86% of all homes are occupied
• 68% are owner occupied
• The median age of the American home is 36 years
• The median size of an occupied home is 1800 square feet
• Electricity is the most common cooking fuel at 68%
• Natural gas is used for cooking in 35% of homes
• 86% of homes have AC (65% central AC & 21% window units)
• 88% are connected to a public or private water system, 12% use wells

Does this align with your perception of the typical American home?

To read the entire 2009 American Housing Survey article click here.

Hasentree is by far one of the premier communities in Wake County.  And as you may have been aware, the development was foreclosed on last year by SunTrust bank.  Well, good news… Toll Brothers has purchased Hasentree and they are saying they have big plans for the community.

Hasentree is actually located in Wake Forest, just north of highway 98 and occupies over 800 acres. It is home to a Tom Fazio designed golf course and a 13,000 square foot community center.  I toured the community center a few months back and it is absolutely amazing. And of course, the golf course is beautiful too.

When you drive into Hasentree you know you are somewhere special.  The homesites in this gated community are large and the views are spectacular. And the homes are pretty awesome too.  The architectural detail is very pleasing to the eye and the current homes were built by some of the best custom builders around.

The obvious question is what changes now with regards to the look and feel of the homes.  The neighborhood layout is probably pretty well set in stone.  But Toll Brothers is a large national builder and the former builders were relatively smaller custom builders.  It will be interesting to see what they do as they move forward at Hasentree.  I’ll do my best to see what I can find and follow up with another article.

Toll Brothers also developed and built homes at Brier Creek Country Club and it has been one of the most successful developments of its kind in this area.  They have a good tract record with projects of this scope and scale, so the future could have very well just become a little brighter for Hasentree.

Prices in the past have ranged from about $700K to about $3 Million.  Quite the range and definitely in the high end of our market.  If Hasentree sounds like the kind of neighborhood you would be interested in, contact me for more information and to arrange a private tour.

Homes For Sale in Hasentree

The union of Pulte and Centex will result in America’s largest home builder. Move over DR Horton.

With Pulte in the number 2 position by volume, and Centex in the number 3 position, the combined entity will far surpass DR Horton, which will move to the number 2 position behind the new Pulte-Centex company.

Here are the 2008 sales numbers, in closings.

DR Horton 23,915
Pulte 21,022
Centex 18,241

No word that I’ve found yet on any new name, or when the deal is expected to be complete.  I suppose since Pulte is doing the buying, the Pulte name will remain.  Although it would be smart for the Centex brand to be capitalized on as well.