Speaking Engagement at the Western Wake Leads Group

2484 Sapphire Valley Drive

This morning, I had the pleasure of speaking to a room full of business people at the weekly meeting of the Western Wake Leads Group. As I spoke to the group, I pointed out many statistics that attempt to explain the market in Raleigh, Cary and the Triangle. I pointed towards a number of articles that I researched as well as reports from the Triangle Area Residential Realty (TARR) reports.

One of the articles that I mentioned was actually a new story on WRALthat aired on Oct. 23, 2008. It mentioned several facts that were pertinent t the local real estate market. For instance, it pointed out that Raleigh-Cary foreclosure were down in Sept. 2008 from the previous month by 17% and NorthCarolina foreclosures were down 46% during the same period. Furthermore, the article talked about the fewer foreclosures for the 3rd quarter of 2008 of 16.7%. The most telling figure that was in this article is that all of the foreclosures in the Raleigh-Cary area was 1,279 or 0.31% of all properties in this area. I pointed out that many articles point to the large increases in percentage points, but fail to actually mentioned the actual number of homes in terms of total properties. Finally, the article mentioned that six states, California, Florida, Arizona, Ohio, Michigan and Nevada represented 60% of all foreclosures in the nation and California represented more than a quarter of all foreclosures. Is this really a national issue or is it isolated to a few states? The positive news coming out of California according to this article, foreclosure resales accounted for more than half of all sales of existing homes during Sept. 2008. Homes sales jumped 6 5% during the month while prices fell 34% from Sept. 2007 for the state of California.

The next article spoke about the reduction in foreclosures in North Carolina for Jan. 2009 of 7.3%. While North Carolina is the 10th largest state in population, we rank 33rd in the nation in foreclosure rates. This article also mentioned that 1 in every 76 homes in Nevada and 1 in every 173 homes in California were in foreclosure proceedings.

The next article came from the Las Vegas Sun and pointedout that Nevada was again the number one state in foreclosure rates, despite a 4% reduction in Jan. 2009. It also pointed out that foreclosures in Nevada were up 137% from Jan. 2008. California metro cities accounted for 6 of the top 10 metropolitan cities foreclosure rates in the nation.

Finally, I addressed the TARR reports that came out recently. The general Brokerage report mentioned that the U.S. home prices dropped 8.2% during the 4th quarter 2008. The South Atlantic dropped 5.86%, but North Carolina increased 1.2% from the 4th Quarter, 2007.  As a general rule, average re-sale prices in Wake county increased 3.02% during this same period.

According to Stacey P. Anfindsen, Birch Appraisal Group of Cary and author of the TARR report, the Triangle has a few “Ugly” items and a few “Good” ones as well. The Ugly includes 23 consecutive months of lower pending sales and 15 consecutive months of lower showings. 58% of all price points in the Triangle have an oversupply of housing products(Buyer’s market). Additionally, Dec. 2008 expired listings were 194% higher than Dec. 2007 and for the first time since 2001 v. 2000, Dec. 2008 employed workforce was lower than Dec. 2007.

The Good according to the TARR report is that annual closings were the 6th highest in this decade. Current supply of 7 months is much lower than the national current supply of 11 months. Additionally, average house price appreciation in the Triangle Multiple Listing Service (TMLS) has been 4%, where the national rate was -8.9%. Finally, houses priced correctly sell in an average of 65 days and sell for 97.5% of the list price. Other houses sell in an average of 128 days and for 90% of the final list price.

Finally, another great aspect of our market in North Carolina is the business climate. The BizJournaland Portfolio.com have released its annual report of the Top 10 Cities for Small Business and Raleigh topped the rankings with Charlotte coming in second. The top 2 cities are in North Carolina, which will only be positive for migration into the state to continue in the coming years.

Despite the anxiety and stress that I experience when I prepare for these presentations, I am always glad that I did it as it gives me factual material to combat the negativity that is expressed when people talk about the local economy and housing market. Sure, as one gentleman pointed out, his neighbor has lost value on her home as she it attempting to sell it now, but isolated spots will continue to happen in any market. The positive is the overall market is good and it relates to a great time to buy a home, if you qualify and can afford that home.

From my limited knowledge and research, it has become obvious to me that the states that are in the most dire situation today, minus Michigan and Ohio, are in their blight due to price speculating on the housing markets and over-inflated appreciation. Currently, these markets are seeing the market correct itself. If housing appreciates at a greater rate the income levels of a certain market, then you will be pricing a large portion of the buying public from the market. The result is a price correction so these buyers can now, buy that home. As complicated as people are attempting to make it, the situation we are facing in certain markets is the direct result of Supply and Demand. If the Supply is high and the Demand is low, then the price will come down. If the Supply is lower and the Demand is greater, then the price will rise. Now that the prices are coming down in California, the Demand is beginning to rise as more people can now afford to buy a home. As these people buy and the supply starts to decline, then a recovery will take place and home prices will begin to inch up.

For more information about the housing market in the Raleigh-Durham-Chapel Hill-Cary areas, please feel free to contact me as I will be happy to talk about it. There are few subjects that I am passionate about and this is one of them. Of course, be warned that I may talk quite a bit when you call or email.