2008 Market Update for Raleigh Real Estate
Posted by Kim Adamof on Thu, Jan 08, 2009 @ 05:31 PM
Economic Factors to watch.
Affordability is critical for our area to sustain its market value. We need to improve income, as well as watch unemployment and inflation rates.
Below is a graph showing our inflation rates since 1999.
Unemployment is growing. As of November, 2008, statistically North Carolina is #44 out of the 51 states for unemployment at 7.9%. For the Raleigh/Cary area, we are fairing better at 5.2%.
On the bright side.
Businesses are still looking to move here but they want to know if they can recruit talent. We are fortunate to have many dynamic colleges at our disposal. Our educational level plus our wonderful weather, create a draw for corporations.
Seattle has the most educated population with Raleigh right behind in 2nd place.
41% of employers worldwide say they can't find enough talented workers. 37% of college grads say they would move anywhere to find a good job. Tech jobs aggregate where high tech research is. Life Sciences make up two-thirds of new employment here in North Carolina.
People move here for jobs but also for our quality of life. We can offer good education, quality health care, cheaper housing, and low crime rates.
Appreciation
The median price of homes in Wake County overall has increased 7% since November 2006. The median price for Johnston County has increased 1.4% in the same time. The median price has only increased 1.9% in the entire MLS area.
The average price for a resale in a four-county area of our MLS has dropped. The above chart represents November stats for the last 4 years.
Concerns for our housing economy
November closings were the lowest amount since January of 2000 and were off 42% compared to 11/07. Based upon analysis of monthly closings, this year is shaping up to be very similar to 2002 and 2003.
Is there any hope on the horizon?
Hope and change got elected in November but our local real estate market will need more buyers and fewer sellers during December and in 2009. Pending sales were off 35% making November the 22nd consecutive month of lower sales when compared to the prior years month.
Months Supply of Inventory
63% of all price points have an over-supply of listings. We have had 21 consecutive months of increased re-sale inventory when compared to the prior years month and 14 consecutive months of inferior showings when compared to the prior years month. In 2008 there was 8 months supply of listings currently on the market unsold.
Another telling statistic is the Supply & Demand chart below. This represents the number of units sold each month.
For the month of November there were 2,527 units sold in 2006, 2,169 units sold in 2007, and only 1,186 units sold in 2008. This represents the entire MLS.
Days on Market
I think a great statistic for sellers is the Average Days on Market for Under Contract Properties.
This chart shows when we started to have problems in the Triangle. I noticed an affect on my business by the end of 2007 when the Raleigh market started feeling the effects from the rest of the country. Hopeful buyers living in other parts of the country were commenting to me about how tough their marketplace was. Grid lock started to take over around here. Relocating families were having a hard time selling so they weren't as quick to buy in North Carolina.
Our market had picked up this past spring in April and May. However, since July, the average days on market has been hovering around 3 months. Back in November 2007, our average days on market was 73. Currently November 2008 average days on market is 96.
Showings
Let's take a look at showings, another great statistic about our housing market. We had a spike in the number of showings around April and May but then the showings continuously fell off from June on. My sellers are asking me why they aren't getting showings. This graph explains there are less buyers every month out there shopping.
November showings for the past 4 years
How were sellers able to close on their house in November?
Have a house located in the sweet spot of buyers and have it priced correctly. For houses that closed in November where the final list price was equal to the original list price, the average sales price was $194,900, the average days on market was 44 and the average sales price/list price ratio was 96.15%. This number matches up nicely with the average closed price during the month at $206,000.
If you are thinking of selling, I'd recommend waiting until at least until the Spring market. If you need to sell, hopefully you are in a position to be able to negotiate your price. Buyers who are out there now want a deal. There is too much inventory to select from. If they feel they can get a deal and they have the means to buy, they'll buy. My buyers are emailing me about new listings and saying "It's over-priced. I don't want to look at it." The market will set the price of your house. Sellers should be open to that price and not blame the realtor, appraiser, or neighbor who sold a few months ago and got a higher price.
It's the perfect time to buy. With all that is going on in our economy right now, buyers seem to be sitting on the sidelines - waiting. Sellers are getting very motivated because of the lack of real buyers currently looking for homes. Why not find a motivated seller and make an offer. You never know what they'd be willing to take. Start hunting for a deal.
If you wait until the spring and the market starts improving, sellers will not be as willing to negotiate. They will rather wait for a better offer, than take a lower priced one.
In Conclusion. There is too many homes on the market, obviously. With builders dropping their prices, the threat to re-sales is declining values. The pool of buyers has significantly dried up, based on the showings. In speaking with mortgage reps, seems everyone is re-financing with the lower interest rates instead of selling and moving up. Foreclosures play a huge role in lowered house values. See my blog article "Shadow Inventory".
No one knows for sure when our economy and real estate market will improve. After talking to many different people around the country, most believe that by the middle of 2009 into 2010 we will see an improvement. I will be tracking several key indicators and keep you up to date. Stay tuned to my blog.