Yesterday the N&O announced that Suntrust will be seeking foreclosure proceedings on Hasentree, a Creedmoor Partners development. That, just on the heels of prominent MacGregor Development Company's announcement, that they are seeking bankruptcy protection.  Who knows who will be the next domino in the Triangle  Luxury Home Market to fall?  The developers in the area had tremendous success with previous neighborhoods like Preston, MacGregor, and Wakefield which led them to believe that they could continue to build $700k plus homes and sell them.  With the recent downturn in the economy and economic growth slowing to a standstill they couldn't have been more wrong. 

Lending Restrictions have tightened

As lenders have tightened their standards and made it more difficult (which they should have) for consumers to purchase homes the impact has been felt hardest in the luxury home segment. Lenders, either out of caution or lack of liquidity, have also been less lenient with developers, who need home sales to cover their debts. 

Buyers Sitting on the Fence

I have a number of qualified buyers in the pipeline for the 2009 timeline that just aren't ready to commit - they are sitting on the fence!   Many clients are holding out to see what will happen with the changes made by the Fed.  In other situations I have buyers that are moving from other areas of the country that are particularly oversaturated with inventory and are unable to sell their homes.  The rest of them here are waiting for the "bottom", looking for the best buying opportunity possible.  This is especially true for buyers that are moving up to larger, more expensive homes.

Supply & Demand

Sales of all Triangle homes have been off 28 percent through the October of the year. However sales of luxury homes -- those $700,000 and above -- are off 66 percent.  At the same time, the number of luxury homes listed for sale grew 59 percent -- more than twice the growth rate of all listings.

That said, I thought it might be interesting to compare the numbers in the different Triangle towns to see how the numbers shake out.  The numbers in the table below are based on data collected through the end of October 2008.  It's also important to realize that the inventory spiked quite a bit in October.  The numbers are quite astounding.  Wake Forest, it appears, is faring the best during the turmoil. 

I've also included the Triangle Luxury Homes Market Share Table for Sales of Luxury Homes year-to-date for your reference.

It appears that Durham has really made significant gains this year.  Some of these homes could be in Durham with a Chapel Hill zip code which would skew the numbers somewhat. 

The Triangle residential real estate market is facing  a number of challenges including tough competition, soft market conditions and rapid technology innovations which are causing changes in the market. The luxury market in the Triangle also faces challenges with increased supply and less demand. Sellers and listing agents can not simply sit back and wait for the real estate cycle to come back around. Success is possible. However, a more sophisticated marketing plan implemented flawlessly by an experienced broker is necessary.