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5 reasons NOT to panic over local house prices

Hello Bloggers – thanks for stopping by. Today, I’d like to pass along some encouraging and FACTUAL information concerning our local housing market written by my friend Stacy Anfindsen. Stacy has been tracking local housing statistics for years. He is one of the main sources of information we check before recommending a home. Enjoy a “positive” look at the local Raleigh and Cary real estate market. Here is Stacy’s comments:

In response to the main headline in the 10/27/08 N&O, I would like to present some data to contradict the headline, which is yet another attempt to scare local readers by using data from selected national sources. The writer states five reasons; crashing home prices, investor speculation, complex investments, job losses and repeat delinquencies. I will respond to each of these to provide some local perspective.

1). When analyzing our market, I look at data from the Raleigh, Cary and all counties that make up the Triangle, including Wake, Durham, Orange and Johnston.
Within this market, the average closed price of all housing is up 8% and the average closed price of resale housing is up 6%. House price appreciation, which compares the two most recent sales prices of the same house , is an area where the Triangle outperforms the national market. Our current rate of house price appreciation in the Triangle is just over 4%. This rate beats the state (+3.6%) and national rates (4.5%).

2). The Wake County Revenue Department has reported +/‐ 21,000 closed sales within the past 13 months. Roughly 5% of these sales were purchased by buyers from out of town, a huge difference compared to the 20% rate nationally.

3).It is almost impossible to track what percentage of local purchases were made via the sub prime loan mechanism. Per the FHFA mortgage metrics survey for the second quarter of 2008, 17% of all outstanding mortgages in the U.S. are rated as sub prime. Therefore it would be hard to argue that a majority of house purchases were made via this mechanism.

4).Job losses are real both nationally and locally. The Raleigh/Cary/Durham MSA did not have a work force increase comparing 8/08 with 8/07 for the first time since the 8/01 versus 8/00 period.

5).The mortgage metrics survey reveals some additional information regarding the national mortgage market. They surveyed over 30 million outstanding loans in the Fannie Mae and Freddie Mac system and found that 98.6% of these loans were rated as current. They also state that foreclosure proceedings were initiated on 432 homeowners per day during the second quarter, a big difference from the 2,700 per day figure stated in the lead paragraph.
There are currently +/‐14,000 listings within the four county area in TMLS. Roughly 3% of these listings are classified as foreclosure, bank or corporate owned. I have been tracking the residential market within the Triangle for over 20 years. The foreclosure market has always accounted for a very small percentage of activity.
Our current market can be summed up with my version of the good, the bad and the ugly;

The Good
• 3rd quarter closings were the 6th highest in history
• Current supply of 8 months is lower than national current supply of 11 months
• Average house price appreciation is superior to state and national rates
• Average re‐sale sales price +6%, average overall sales price +8%,average list price +2%
• Houses priced correctly have sold in an average of 55 days

The Bad
• Overall inventory grew 7%, making 2 consecutive months of <10% growth
• Withdrawn listings increased 2% compared to 9/07

The Ugly
• 29 consecutive months of inventory growth, 20 consecutive months of lower pending sales
• 63% of all price points have an oversupply of housing product
• 9/08 expired listings were 227% higher than 9/07 expired listings
A survey of Wake County house purchases where the house was purchased and then re‐sold within
the past 12 months reveals a median percent per gain of 0%. I think that is pretty impressive
compared to what is happening in the national market.

As we have seen during 2008, our local market is not immune from happenings in the national market. Our biggest challenges during the fourth quarter of this year and into next year are to grow the workforce and cut down on the number of price points with an oversupply of housing.

Thank you for stopping by today. Remember – go buy some real estate. It’s a great investment IF you know where to buy a home (we can help!) Also remember, real estate is Raleigh and Cary are on sale. Call or e-mail soon. God Bless.

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