We are fortunate, here in the Raleigh, Cary, Chapel Hill, Durham area of the Triangle because we were recently named the Number One Healthiest Real Estate Market in the Country! What does that mean? It means that we are the most likely to be OUT of the Housing Slump first.
But if you read the News and Observer, you’ll know that we are not out of the price slump yet. So, from the perspective of a long time resident, and mortgage lender, I’d like to share what we’re seeing in our local housing market from the contracts and appraisals coming across our desk.
Location has long been touted as the most important variable affecting the value of residential real estate. Recently, the S&P/Case-Shiller Home Price Indices suggested that location is still a front-runner in terms of determining valuation.
In October 2010, four cities in the 10-city composite index registered price gains from the previous year: Los Angeles (3.3 percent), San Diego (3 percent), San Francisco (2.2 percent) and Washington, D.C. (3.7 percent). I think it’s interesting to note that these cities, like the Triangle, all have a fairly high EMPLOYMENT rate. Unfortunately, in other cities around the country, like Las Vegas and Detroit, home prices continue to decline and see very high foreclosure rates along with high unemployment.
A large number of foreclosures and short sales in an area can bring the overall price of homes down. We’ve seen that in the Raleigh, Cary Real Estate market in some new home subdivisions. In those cases, it’s difficult for appraisers to find non-distressed comparable sales to support higher prices. However, if there are only a few distressed sales in an area, the distressed sales will probably not have as large an impact on the appraised value. The distressed sale will still need to be noted – but if there are other, non-distressed sales that have closed within the last six months it should more than balance out.
Location within an area can also influence home values. Some market niches in an area are doing better than others… A niche need not be a physical location. It could be a price range. For example, well-priced listings in the $400 to $500 price range in the Triangle, have been selling relatively quickly, sometimes with more than one offer. The $1 million and above price range has not been doing as well.
Proximity to jobs, Schools, and shopping is important to most buyers. Especially with gas prices going up!
Sellers in sought-after neighborhoods who put their homes on the market when there’s little for sale often get more than they anticipated. Supply and demand are up there with location in terms of impact on price. A surplus of unsold inventory gives buyers choice and a lack of a sense of urgency. In the Triangle, we have a 10 month plus supply for most price ranges – making this a buyers market.
Buyers take the condition of the property into account before they make an offer to purchase. A home with a lot of deferred maintenance might put off buyers altogether, particularly in the current market. As buyers make offers on homes that have been neglected, they will factor work that needs to be done into their price. The neglected items also get consideration in the Appraisal and Inspection. If the buyer is using USDA or FHA as their financing vehicle – it’s likely that the items listed on the reports will all need to be repaired… not just negotiated in the price.
Maintenance items can be corrected… however that’s not the case with Incurable defects. One of the main reasons that buyers need a Realtor in this market is to make them aware of Incurable defects which can be a huge problem when you go to sell the property. An incurable defect, like being located next to a highway or on a busy street, is something that can’t be corrected. You’ll have to live with it.
In a hot market, buyers often overlook these defects because prices are rising and buyers are more willing to make compromises. In a slow market, with no urgency to buy immediately, buyers are pickier. They take their time and buy when they find the right house.
If you are looking for a home in the Triangle, Raleigh, Cary, Apex or Holly Springs – please call Steve Thorne 919-649-5058. We have years of experience working with NC Buyers and know the mortgage process inside and out. We offer the best mortgage rates available for all programs – including Conventional first and second mortgages.