Current Market Trends

Story from the Press Democrat

The real estate industry is full of clichés and metaphors, for example: “location, location, location,” “a wave of foreclosures is about to hit the market,” “are we at the bottom of the market?” and “interest rates are the lowest they’ve been since the Macedonian Period!”

These clichés and metaphors are spewed out more frequently than the phrase “bailout” flashes across the ticker on Fox News, MSNBC and other media conglomerates who attempt to shape our economic thought process and buying habits. The million-dollar question: “Is this the right time to buy real estate?”

Although we can’t look into the future and give an accurate answer to that question, we can look at history and trends.

According to Kiplinger’s Personal Finance, “It’s a good time to snag a bargain if you’re confident in your job prospects and you don’t plan to sell for at least five years.” Over the past decade, real estate lost its way. Real estate was typically purchased to have a place to call “home” and raise a family or create lifelong memories. However, when real estate rose faster than a kindergartner’s hand when asked by their teacher “who wants a cookie?” real estate became a commodity and the American dream of owning a home changed overnight to an appreciation feeding frenzy.

Consumers thought it was their right to gain 20 percent appreciation year after year until they were ready to sell and retire from the proceeds or refinance with a less risky loan and take cash out for exotic vacations, vehicle and boat purchases or trips to the local home improvement store where homes were transformed from an outdated and sometimes unlivable dwelling to the neighborhood Taj Mahal.

With all of that aside, it does seem like now is a good time to buy real estate. In fact, according to Forbes.com, the number one item on their list of things to buy before the economy improves is housing. “This may be the best time in a generation to buy a home.”

The Pew research center reported that 75 percent of Americans said it was a “good” or “very good” time to buy (people-press.org). The Wall Street Journal reported that median home prices in the San Francisco Bay Area are up 9.2 percent year-to-date and MSN Money.com/Case Shiller posted the following statistics regarding return on investment from Jan. 1, 2001 through Dec. 31, 2008: The Dow Jones down 19.8 percent, the S&P down 35.2 percent, the Nasdaq down 59.9 percent and real estate up 69.8 percent.

I am often told by consumers that they’re waiting for the market to go down even more before they decide to buy. However, keep in mind that if homes decrease another 10 percent, you’ll save $50,000 on a $500,000 purchase, but if interest rates increase by more than 1 percent it will offset the $50,000 you saved on your purchase price and your monthly cost will increase.

USA Today is currently estimating that California’s excess supply of homes will be substantially depleted and new construction will be needed to meet demand, thus leading to a housing recovery. Over the past six years, 30-year mortgage interest rates have hit historical lows on five different occasions, followed by quick and dramatic increase in rates as reported by the Federal Reserve.

Again, one cannot predict the future, but with data and statistics one can be informed and make an educated decision. Our market place (especially homes priced under $400,000) is very competitive. Buyers in this price range are often bidding against multiple offers, homes are selling for above asking price and inventory is very low — all creating a demand for a supply that has decreased dramatically. It is a good time to buy, so contact a real estate professional, get pre-qualified with a loan officer and let the shopping begin!

Triangle Home Sales Dip, But Positives Emerge

Story from Triangle Business Journal

The number of Triangle homes sold in April was down year over year, but new data from the Triangle Multiple Listing Service show a couple of welcome trends.

First, while the 1,623 homes sold last month represented a 30 percent drop from the 2,324 sold in April 2008, it is the highest monthly total posted in six months. The triangle remains strong for those seeking Chapel Hill, Durham, or Raleigh relocation services.

Even better, the number of houses on the market represented a 7.5 month supply, down almost half from a high of 14.9 months in November. April 2008 featured a 6.9 month supply.

The median price for houses sold in April dipped 4 percent, to $177,600, from $184,922 in the same month last year. While a negative number, it’s still much better than the double-digit declines seen across much of the U.S.

The MLS figures, which are supplied by Stacey Anfindsen of research company Metrostudy, cover the Raleigh-Cary and Durham metropolitan areas. The numbers also are broken down by county.

• In Wake County, the number of homes sold dropped 35 percent, to 862. The inventory for sale represented a 7.3-month supply, up from 6.3 a year ago. The median price fell 2.5 percent, to $195,000.

• In Durham County, the number of homes sold slipped 20 percent, to 245. The inventory for sale for each Durham real estate agency represented a 4.9-month supply, down from 5.2 a year ago. The median price rose 3 percent to $170,000.

• In Orange County, the number of homes sold plunged 48 percent, to 57. The inventory for sale represented a 6.5-month supply, up from 5.9 a year ago. The median price fell 11 percent to $258,000.

• In Johnston County, the number of homes sold dips 22 percent, to 173. The inventory for sale represented a 8.9-month supply, up from 8.1 a year ago. The median price fell 5.6 percent, to $150,100.

Durham-Chapel Hill Surges Past Raleigh-Cary For Job Growth Potential

Story from Triangle Business News

The Durham-Chapel Hill metropolitan area has surged past Raleigh-Cary in NewGeography.com’s annual study ranking job-growth potential.

Durham-Chapel Hill soared 24 spots, to No. 19, in the rankings of all U.S. metropolitan areas with at least 30,000 jobs. Raleigh-Cary tumbled 30 spots, to No. 38.

The rankings are based largely on federal job growth numbers for 336 metropolitan areas. Researchers assess the numbers for the current year, the previous year and the previous five years and also compare five-year growth rates over the past decade to come up with a score for each area.

In addition to the overall rankings, the metros are grouped by market size. Durham-Chapel Hill rose seven spots, to No. 4, in the midsize group, while Raleigh-Cary dropped seven spots in the large group, to No. 8, from No. 1 last year.

Joel Kotkin, one of the researchers who put together the rankings, said on his blog that Durham-Chapel Hill offers tax and housing-cost bargains compared to major markets such as San Jose, Calif., and Boston.

Asked why Raleigh-Cary fell, Kotkin said in an e-mail that “It is a drop of jobs that was a bit more than other high-flyers.”

But, Kotkin said, Raleigh-Cary’s job numbers were still relatively solid, especially considering how poor the U.S. economy has performed over the past 15 months. Both areas are still among the most popular in the nation for relocating, and Raleigh real estate continues to sell along with Durham and Chapel Hill real estate.

“In 2008, 2 percent growth made a city a veritable boom town,” Kotkin said on his blog.

“In past iterations, we saw many fast-growing economies – some adding jobs at annual rates of 3 percent to 5 percent,” said Kotkin.

The top city overall was Odessa, Texas. For the complete rankings, go to this page on NewGeography.com.

The Return Of Jumbo Mortgages

As Originally Posted to the Wall Street Journal

Jumbo mortgages became more expensive and harder to come by as the nation's credit crisis deepened. That might be starting to change.

"Jumbo" refers to mortgages that are too large to be bought by Freddie Mac or Fannie Mae. The "conforming loan limit" for those government-backed entities is $417,000 in many parts of the country, but goes up to $729,750 in high-cost areas of the continental United States.

Bank of America recently began trumpeting its jumbo program, offering 30-year fixed-rate jumbo mortgages with rates in the high-5% range. "We decided it was time to really go after that market," says Vijay Lala, a product management executive for the bank.

More lenders may soon join in, says Guy Cecala, publisher of Inside Mortgage Finance.

He says Bank of America appears to have lower jumbo rates than its giant banking competitors Wells Fargo, J.P. Morgan Chase and Citibank. "I suspect the others will slowly follow suit," Mr. Cecala says.

Big Drop in Rates

The rates on 30-year fixed-rate jumbo mortgages averaged 6.5% for the week ended March 27 -- the lowest since May 2007, according to HSH Associates, a publisher of consumer loan information. On Oct. 31, a recent high point, the average rate on a 30-year fixed-rate jumbo mortgage was 7.9%, according to HSH data.

GMAC also has been pricing its jumbos aggressively, says Paola A. Kielblock, national product specialist for Fairway Independent Mortgage, a mortgage broker and banker based in Madison, Wis.

She recently has seen rates in the high-5% to the low-6% range for 30-year fixed-rate jumbo mortgages, and the low-5% range for five-year adjustable-rate jumbos.

Bill Higgins, chief lending officer for ING Direct, says his firm has been offering jumbos in the 5% range for several months -- even back when average rates were higher.

Lenders' interest in making more jumbo loans isn't surprising, says Keith Gumbinger, vice president for HSH.

Lenders no longer have many institutional buyers for their jumbo loans, forcing them to keep the loans they write on their books. Banks held back when cash was tight. But banks have more money to lend these days, as consumers have taken money out of the stock market and put it into safer investments.

"More cash comes in the door," Mr. Gumbinger says, and so "the loans go out the other side."

Plus, banks have gotten assistance from the federal government, and record-low conforming mortgage rates have inspired more people to refinance loans -- giving banks some more liquidity, he says.

For financial institutions, the return on a jumbo mortgage is also starting to look appealing. Banks are "taking a look at what investment alternatives there are," says Mr. Higgins of ING Direct, and they "are saying 'we wouldn't mind a 6% to 7% asset on the books.' "

Cheaper But Not Easy

Borrowers in the market for this kind of loan, however, shouldn't expect a simple process. Mortgage shoppers will find differences in price and availability from lender to lender, Mr. Gumbinger says. Jumbo programs vary greatly from one side of town to the other, he adds, and lenders will sometimes originate a higher volume of loans for a while, then slow down.

"To be honest, I'm not certain if [the low rates] will be around for a while," Ms. Kielblock says.

What You Need to Know

If you think you're in the market for a jumbo mortgage, consider the following:

Do you really need a jumbo? Don't automatically assume that your mortgage will exceed the conforming loan limits, says Cameron Findlay, chief economist of LendingTree. As home prices have fallen and the U.S. has raised loan limits in some areas, more home buyers probably need conforming mortgages.

Some people who are looking to refinance and who originally needed jumbo loans may also fall within increased loan limits.

With a conforming mortgage, you will likely get a better rate.

Availability may be increasing, but requirements are still stiff. Bank of America jumbo loans, for example, require at least a 720 credit score and a 20% down payment (or 20% home equity on a refinancing). And borrowers need to have at least six months worth of reserves in the bank. ING Direct requires 25% down.

Search widely for good deals. "Borrowers need to shop around for any mortgage, but particularly for jumbos," Mr. Cecala says. "A small local lender or credit union may have a good deal, but you won't know unless you do your homework. Ask real-estate agents, your friends, or anyone who might have a lead on a good jumbo lender."

Compare apples to apples. Lenders often talk about their products in terms that don't allow you to easily compare with other lenders, Mr. Higgins of ING says. Make sure to draw fair comparisons that consider mortgage fees and costs.

Raleigh Real Estate Market Summary

Raleigh (, rälē or rah-lee) is the capital of the state of North Carolina and the county seat of Wake County.

Raleigh is known as the "City of Oaks" for its many oak trees. As of the 2000 census, it had a population of 276,093, making it the second most populous city in North Carolina, after Charlotte.

Raleigh, Durham and Chapel Hill make up the three cities of The Triangle, so named in 1959 with the creation of the Research Triangle Park, a research park between Durham and Raleigh (mostly located within Durham County).

The Triangle is a regional population, equivalent to the U.S. Census Bureau's Combined Statistical Area of Raleigh-Durham-Cary. Its estimated total population as of 2005 was 1,509,560. The estimated Raleigh-Cary metropolitan statistical area population, as of 2004, is 914,680.

While almost all of the city limits is located in Wake County, a few small portions of Raleigh are actually in Durham County as a result of annexation Raleigh Durham Annexation Agreement Lines.

The City of Raleigh estimates its population to be 353,604 as of July 1, 2006, making it one of the fastest growing cities in the nation.

Raleigh placed fourth on MONEY Magazine's 2006 list of Best Big Cities.

Raleigh Real Estate Market Stats:

Population: 412,559
Average Home Price: $250,000
Average Rental Price: $1,250
Average Cost of Living: +14%
Male/Female: 50%50%
Married/Single: 31%69%

Raleigh Real Estate Market Demographics:
Adults 20-24: 10%
Adults 25-34: 23%
Adults 35-49: 34%
Adults 50-64: 23%
Adults 65+: 10%

Leading Raleigh Real Estate Company: FOR Home BUYERS 800-333-2893
Email: staff@forhomebuyers.com or Visit: www.forhomebuyers.com

January House Prices Worse Than Expected

As Posted to CNBC.com

Prices of U.S. single-family homes in January plunged a record 19.0 percent from a year earlier, showing a U.S. housing market that is still in the throes of a deep recession, according to a Standard & Poor's/Case-Shiller report on Tuesday.

The composite index of 20 metropolitan areas fell 2.8 percent in January from December, S&P said of the index that dates back to 2000.

The U.S. housing market is in the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices.

The drops on a month-over-month as well as year-over-year basis were bigger than expectations based on a Reuters survey of economists.

Michelle Meyer, an economist at Barclays Capital in New York, said the large number of foreclosures were behind the steep home price drops in certain areas.

"Home prices fell on a year-over-year basis in all 20 metro areas surveyed, driven by steep drops in boom-to-bust markets such as Las Vegas, Phoenix and San Francisco," she said.

"Home prices are falling sharply in these markets due to deeply-discounted foreclosed homes, which make up more than half of existing home sales," she said.

S&P said its composite index of 10 metropolitan areas declined 2.5 percent in January from December for a 19.4 percent year-over-year drop, also a record. The 10-city index dates back to 1988.

As of January, average home prices across the United States are at similar levels to late 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 30.2 percent and the 20-City Composite is down 29.1 percent.

Most parts of the country appear to remain on a downward path, with all 20 metro areas reporting annual declines, and nine of them falling more than 20 percent in the last year, David M. Blitzer, Chairman of the Index Committee at Standard & Poor's, said in a statement.

"There are very few bright spots that one can see in the data," he said.

The composite indexes have been reporting consecutive annual record declines since October 2007, while on a month-to-month basis they have shown 30 consecutive months of falls, he said.

The U.S. housing market is critical to the economy, with a wide-ranging impact from the construction industry to the sale of appliances and furniture. After hurting growth for multiple quarters, a continued deterioration could prolong a turnaround for the world's largest economy, which has been in a recession since late 2007.

Economists believe the housing market will not begin to recover until home prices fall far enough to stimulate demand, which has emerged in some states, such as California.

Many potential buyers, however, are opting to stay sidelined, waiting for home prices to stabilize from their downward spiral.

The three worst performing cities, in terms of annual declines, continued to be from the Sun Belt. Phoenix was down 35.0 percent, Las Vegas declined 32.5 percent and San Francisco fell 32.4 percent.

Dallas, Denver and Cleveland fared the best though they too suffered drops, with prices falling 4.9 percent, 5.1 percent and 5.2 percent, respectively.

New York, buoyed by plentiful jobs and big bonuses in the financial sector in recent years, showed a more modest annual decline of 9.6 percent. Home prices in New York, however, are vulnerable, with rampant financial sector layoffs expected to take a toll on real estate.

Raleigh-Cary Tops Nation In Growth

Originally Posted to The News & Observer

The metropolitan area is home to more than 1 million people after growing by more than 4 percent from 2007 to 2008. But that is slower than in previous years.

As the national economy lost steam last year, the Raleigh area continued to attract residents, becoming the fastest-growing metropolitan area in the country.

According to census numbers released today, the Raleigh-Cary metropolitan area, which includes Wake, Johnston and Franklin counties, grew by 4.3 percent from July 2007 to July 2008, and is now home to close to 1.1 million people. It well outpaced its closest rival, the Austin, Texas, area, which grew by 3.8 percent.

The national average was just under 1 percent.

The Triangle has been near the top of the nation's growth chart for more than a decade, as newcomers poured into the area to take jobs in technology, tourism and academia. The resulting building boom, and the jobs that came with it, drew hundreds of thousands of new residents.

Much changed in recent months as the economy fell into a deep recession. While the downturn took longer to arrive in North Carolina, the state's unemployment rate of 9.7 percent is now well above the national average of 8.1 percent.

Next year's figures may show a darker picture for the Triangle.

Even this year marks a slowdown for the area, despite its place at the top of the list. The growth rate was nearly half a point lower than the two previous years, when it was 4.7 percent.

The Durham-Chapel Hill metropolitan area, which includes Durham, Orange, Chatham and Person counties, didn't make the Top 10, but its population continued to swell at a steady 2.5 percent, up slightly from the year before. Just fewer than 490,000 people live in that area.