Raleigh NC Real Estate Home

Recently, one of my referral sources in California asked about the state of the Raleigh real estate market and commented his client was disappointed he could not find a good deal in Raleigh. This is what I wrote — 

     “Although we are seeing more softening in the Raleigh real estate market, our market is still not at the fire sale stage. Until late summer 2007, we had held our own throughout this economic cycle. However, we are now seeing builders offering more incentives during the spring market when they noticed their sales were not like they were last year. We have had price reductions, interest rate buy downs, additional “free” upgrades, more closing costs, appliance packages, and many other creative perks. We have 25% fewer sales and 47% fewer construction permits as this time last year. Of course, this is an optimum time to purchase in our market — low interest rates, negotiable sellers and a reduction in construction permits (which could create a shortage when the market makes a turn, and give a real estate investors a bump in appreciation due to shortage). And interestingly enough, even with prices on the move down, the average price of homes in our market rose which is unusual. The neighborhoods where I take buyers are clean, comfortable and safe, easy to rent, and areas I feel have the best chance to grow in appreciation over the years. We are not able to get the extraordinary deals from these neighborhood builders as I might be able to in a neighborhood that is in an area that I do not feel as positive about. Thank you for your call. I hope you can help your client see the value in our market although we are not able to dazzle your referral with a deal up front in our current real estate market. Builders are eager to get offers and they are ready to deal, but unwilling to show all their cards up front by offering deep discounts. I would love the opportunity to negotiate a really great deal for your referral.”

Over my 50 years of experience following the Raleigh real estate market, the Raleigh area has traditionally handled the ups and downs with style and grace when the inevitable real estate cycles come around. We are usually the last to feel the affects of the market and one of the first to feel it when it returns. The four cornerstones of our market — Education, Government, Technology and Medicine — serve us well and continue to attract jobs to our area.

I always love talking with buyers and sellers about our market and if you want to talk about it personally with me, give me a call – 919.961.7777.  

Little change is expected in Wake County NC real estate sales of existing homes over the next few months, before notably improving during the second half of the year, according to the latest forecast by the National Association of Realtors.  Lawrence Yun, NAR Chief Economist, said the market will come into clearer focus this summer.  “Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he said.  “The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”

Let’s take a look at the Wake County real estate market activity for this March to see how the spring is looking so far:
     
Inventory again increased by 25% this March in Wake County, compared with March 2007.   Sales for the month were down 29%, while year-to-date sales dropped 12% from the same time last year.  The average sales price increased a modest 2% to $259,301.

Now is a great time to buy or sell Raleigh NC real estate. For more personalized service, please call me at 919-961-7777.

Although the Raleigh, Wake County and the Research Triangle Park real estate market is being affected by the National downturn in the housing industry, we are a very sturdy market and observing the way our local economy has handled past economic cycles, we tend to be able to hang in there until the cycle makes a turn. Of course, we have seen things in this economic cycle that we have not seen previously, like higher than usual foreclosures due to the liberal mortgage guidelines that were once readily available. In reviewing the Triangle Multiple Listing statistics, home sales have fallen 28 percent when compared with sales from last year. (However, interestingly enough the average price of $235,175 was up by .6% from last year.) And when you take a look at building permits issued in Wake County (Raleigh, Cary, Wake Forest, Holly Springs, Garner, Fuquay Varina, Apex), there has been nearly a 47% decline. What does this all mean? Well, here is my SWAG (actually it is an educated opinion) – sellers are reducing their prices (MLS statistics report 42% reduced their listing price last month compared with 32% who dropped their price March a year ago) and interest rates are low and that makes for a great combination and excellent environment for real estate investing. Of course, I do not have a crystal ball, however, based on past experience this is one of those times in the market when one will look back and say “If I had only made a decision then, look what I would have now.” And, what about this – building permits are down. So what does that mean? To me it means when the economy turns we could have a shortage of housing which will encourage appreciation. So, bottom line, if you are “waiting for the economy to turn” or “get better” you may find you missed a golden opportunity to purchase real estate at a time of low interest rates and enticing price reductions. Don’t let it slip by.  

You have probably heard that Raleigh is in the Research Triangle area, but do you know where that name came from?  The Triangle referred to is the one created by connecting the research universities in Chapel Hill (University of North Carolina), Durham (Duke University), and Raleigh (North Carolina State University).   In the center of this triangle, the Research Triangle Park has developed as a combined effort of business, government and university leaders.  While there are a variety of businesses in the Park, the majority of companies are in the medical, research and technology fields.

This month Bizjournals included Raleigh in its profiles of the 10 smartest metro areas in the country.   Raleigh is one of 8 metro areas where at least 40% of the residents have at least a Bachelors Degree.  Bizjournals reports that a more educated work force boosts the economic strength of the nation’s metro areas.   We have certainly seen that in the Raleigh area.  Not only does the educated workforce have more income and more to spend and invest, they also attract employers that provide more job growth.  These dynamics help feed the vitality we are experiencing in the Raleigh area.  It pays to be smart.

Recently an International real estate buyer client came to visit Raleigh. He was interested in purchasing real estate investment property in our area since he had so many wonderful things about our economy and the quality of life we enjoy in the Triangle area. However, because he has also been reading the newspapers and listening to television reports, and the ”gloom and doom” talk, after we located a well-priced, strategically located property, he stepped back to take another look. He kept hearing “the voices” from the media and was suspect about the sustainability of our market. I have been licensed since 1978 and have seen many real estate cycles. Raleigh has demonstrated over and over that it can withstand the downturns. We continue to have jobs come into our market and that is the secret to our stable area. And, recently we were named #2 by Forbes as having some of the best bargains for house hunters.

http://www.forbes.com/forbeslife/2008/02/07/house-bargain-hunters-forbeslife-cx_mw_0207realestate.html

Here is how I responded to my cautious investor:

Your comment “in light of the recent happenings in the US market”. One cannot read National news and apply it directly to our local economy. It does not fit the Research Triangle Area like it fits many other parts of the country. We continue to have jobs flowing into the Triangle which of course is what any economy must have in order to maintain growth. We are in an optimum time for real estate investing in the Raleigh area, as we are one of the more stable markets in the US. Of course we have been feeling the effects of the national economy — we cannot help but be affected. I have been in Raleigh since 1959, and have seen a number of economic cycles. Traditionally our area is the last to feel the downward trends, and we are the first to respond when the economy makes a come back. Our local economy has demonstrated many times it is strong enough to withstand the continuing cycle. Stick around — in good times and in not so good — it will change — it always does. My personal prediction — we will smooth out for a while and “hang in there,” then begin to see an upturn in about 12 to 18 months. I am currently adding to my personal real estate investment portfolio. It’s a timely thing to do in the Triangle with interest rates as low as they are, along with it currently having turned into a buyer’s market. As an aside — last Spring we were in a seller’s market;  Summer came and we sensed a change; October arrived and we were could see the difference; then since November, sellers have been realizing more and more they are not able to take the hard line they enjoyed as few as 6-8 months prior. I am grateful to be working with more buyers than sellers right now. And, I am thankful to be a real estate broker who works with investor buyers and am not a builder. Look forward to hearing from you soon. Take care. jan

Selling real estate in Raleigh is such a pleasure. What a great opportunity I have had over the years to meet relocating families who are looking forward to making the Raleigh and Research Triangle Area their home. And as part of my real estate practice, for the past couple of years I have also had the opportunity to work with out-of-state real estate investors (California, Florida, New York, Massachusetts, Nevada, Oregon to name of few places) helping them locate sound long-term real estate investments in our area. The Raleigh real estate market is perfect for the long-term buy and hold investor who is looking at the future and wanting to invest to put a child through college, or prepare for retirement. The Raleigh real estate market has shown slow and steady growth over the years which makes for a stable area for real estate investing.

Based on recent predictions by financial forecaster Global Insight, provided to the US Conference of Mayors, the Raleigh-Cary economic growth is expected to decline by more than 20 percent next year. The Raleigh-Cary real estate market has been more or less sheltered from the national housing slump and has just recently noticed a slow down with more homes on the market than this time last year (however, interestingly, appreciation of homes has gone up 5% to 6%). Although we have been expecting the national real estate downturn to affect our market for a while, as in the past, we do not anticipate our area to experience the dramatic economic downtown as seen in many of our other national real estate markets. Real estate appreciation rates in the Wake County area for the last ten years has been 1996 3.4%; 1997 3.8%; 1998 4.2%; 1999 3.9%; 2000 3.1%; 2001 4.4%; 2002 2.4%; 2003 2.1%; 2004 3%; 2005 4.8%; 2006 6.2%  The coming year will be interesting one as our market is influenced by the national downturn in the housing market while facing the predicted 1.4 million foreclosures (nationally) and the pending reset of millions of adjustable rate mortgages. The Raleigh-Cary real estate market still has something that many of the other areas do not – job growth! We continue to attract high tech industries and our companies are continuing to grow. What a great area to be investing in real estate! 

Many thanks to Ethan Jarvis, Mortgage Consultant with Carolina Residential Lending, for sending this link along with his comments about the relationship (or lack thereof) of the prime rate and how it relates (or doesn’t) to mortgage rates. If you would like to consult with Ethan, you can reach him at 919.656.6647 or send him an email at ethan@carolinaresidentiallending.com  

“This is a great article explaining the how and why many times fixed rate mortgages do not follow the Fed cutting rates.  To sum it up, the Fed reduced the Fed Funds rate and the discount rate last week.  The fed funds rate is what prime rate is based on.  So when they cut rates last week it lowered HELOCs (Home Equity Line of Credit) and credit card rates.  The discount rate is what banks are charged from the Federal Reserve discount window.  Neither of these rates have a direct bearing on how the 30 year fixed rates with perform.  As we have seen in the past, many times when the Fed reduces the Fed Funds rate, fixed rates actually increased.  The bond market dictates how fixed rates move.  Many times people are confused to why fixed rates are not lower after a rate cut.  I hope this helps you explain to your customers how it works.”

Article Link:   http://bankrate.com/brm/news/fed/20071102_Fed_mortgages_differences_a1.asp