Effects of the national housing market are being felt but not nearly as dramatic as many local newspapers report. All too often local newspapers shock and awe readers with disturbing housing news, only to disclosing at the very end of the article that the national figures may not be applicable to the local area
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Cary, NC (PRWEB) December 9, 2008
Front page headlines professing an abysmal housing market are selling newspapers across these United States. But is there a less-reported locality where home owners haven't suffered equity erosion? If so, where would one find such an anomaly amidst a nation suffering though a record setting housing crisis? A prudent search might begin where home values didn't bubble in the first place, where home appreciation rates have been a non-newsworthy 3-5% going on 20 years now. According to the third quarter numbers just released from the Triangle Multiple Listing Service, the Triangle area of North Carolina is just such a place.
A strong economy, mild weather and now the #1 state for retirement living give North Carolina a substantial hedge against the national housing crisis. Statewide, home owners enjoy an average house price appreciation of 3.6%. Zooming into the Triangle region (Cary, Raleigh, Apex, Holly Springs, Morrisville), real estate owners, with an earful of national gloom, are often surprised to discover the current home appreciation rate is 4% per year.
Michael McLaughlin of The Real Estate Junction says, "Effects of the national housing market are being felt but not nearly as dramatic as many local newspapers report. All too often local newspapers shock and awe readers with disturbing housing news, only to disclosing at the very end of the article that the national figures may not be applicable to the local area". So with local statistics front and center, let's look at the 3rd quarter numbers for the Triangle area.
First the bad news:
• September 2008 expired listings were 227% higher than September 2007 expired listings.
• Resale home inventory has increased 25%, though new home inventory decreased 8%.
• The Wake County Revenue Department reported 4,963 third quarter home sale closings (a decrease of 22% compared to third quarter of 2007).
Now for the good news:
• While inventory of homes has increased, sellers are seeking appreciation rates above the historic average. The average seller has their house priced at 5.3% per year above prior purchase price.
• Home price appreciation data is collected by comparing the two most recent sales prices of the same home. Currently, the national average is negative 4.5% (-4.5%) While the North Carolina posts a positive 3.6% and the Triangle average is a positive 4.0%.
• Of the approximately 14,000 listings within the Triangle, only 3% of these listings are classified as foreclosure, bank or corporate owned.
• Looking at supply of homes for sale, the Triangle's normal housing market will historically range from 3 to 7 months of supply on the market. The national housing crisis has increased the Triangle area's supply of homes on the market to 8 months (the national average is 11 months). Wake county, in particular is doing even better with a 6 month supply of homes.
• Cities inside of Wake County vary. Raleigh neighborhoods has 6 months, North Raleigh neighborhoods has 7 months, Apex Neighborhoods has 4 months, Morrisville Neighborhoods has 4 months, Holly Springs Neighborhoods has 5 months and Cary Neighborhoods have a 4 months supply of homes on the market.
If we further dissect the current Triangle area statistics by price range we find the luxury homes are really taking a beating while standard size homes are selling swiftly. For example, there is a 5 month supply of homes priced below $500,000. Above $500,000 supply swells to an average of 17 months. This is will continue to put downward pressure on luxury home prices until supply levels equalize.
So what do all these numbers mean? Triangle area real estate will continue to appreciate in its historically slow and steady manor, except for the luxury segment which will continue to adjust downward, until supply normalizes.
There are a few underlying causes at work here. Many out of state buyers wishing to move here can't because their current homes aren't selling. Also, the nation housing news have many locals frozen in their boots, and the mortgage crisis tightened lending, especially for the luxury home market.
Homes under 300,000 are, and should continue to be, a healthy segment, owing in part to FHA loans filling the needs of buyers with low down payments. FHA limits loans in Wake County to under $295,000 and unfortunately, after January 1, 2009 the limit will decrease to $271,050.
There's an old adage in real estate that says the profitable investor buys when masses are selling and sells when the masses are buying. Triangle area statistics show the area is holding its value despite slowed home sales. When the housing crisis clouds part and the external restraints are lifted from this local economy, homeowners who bought now may be smiling the brightest.