State of Durham NC Real Estate Market- 1st Quarter 2010

Closed sales in the first quarter of 2010 were up 9.7% from the same period in 2009. This trend continued into April and May as sales were up 13.8% in April and 14.8% in May respectively over the same months in 2009. Showings in Durham County were down 33% in May, however, as buyers rushed to contract before expiration of the tax credits as buyers had to be under contract by April 30 to qualify for the credits. That left a void in motivated buyers.

The Durham residential real estate market begain showing signs of recovery in the 4th quarter of 2009 after experiencing significant declines over the previous two years. Homes sales in Durham County were up 27.8% in the 4th quarter after showing period over period declines in each quarter beginning the second half of 2007. A big reason for this surge in sales, though, was the first time homebuyer tax credit, originally scheduled to expire on November 30, 2009. Home sales in October and November were up dramatically, but sales in December, after the scheduled expiration, were flat when compared to 2008.

For the year 2009, sales of residential properties in Durham ended down 7.8% despite the 4th quarter surge. Home sales were down 18.1% through 3 quarters, falling 9.3% in the third quarter when compared to 2008, after declining 15.6% in the second quarter and 33.8% in the first quarter. This follows the calendar year 2008 when sales were down 29.1% when compared to 2007.

The number of home showings also reflects improvement in the Durham real estate market. Showings for the first quarter were up 9.2% as compared to first quarter 2009. Showings were up 25% in the 4th quarter 2009 when compared to 2008. Throughout the Triangle area though, showings were still down 3% for the year. This after showings were down 17.4% in 2008 when compared to 2007. (Source-Triangle MLS)

The price of homes continues to soften, despite the uptick in sales. The average sales price of homes sold in Durham County in the 1st quarter was $184,628, down 4.7% from 1st quarter 2009. The median sales price in the 1st quarter was $163,000, down 3% from 2009. There are a couple of reasons for the decrease in average sales price. First, the tax credits brought more first time buyers into the market who are purchasing the smaller homes. Secondly, in anticipation of the usual spring market upturn, sellers came out of the shell they have been in, and flooded the market with more inventory.

Until recently, despite soft sales, home prices in Durham held up relatively well. The average price of homes sold in 2009 was $196,310, flat when compared with 2008 average prices of $196,259, and down only 1.1% from the average sales price of $198,452 recorded in 2007. The median price of homes sold in 2009 was $171,200, also flat compared to 2008 median price of $171,250. (Source-Triangle MLS)

The average price for all homes on the market including re-sales as of April 15, 2010 was $234,312, down 7.8% from $254,173 in April 2009. The average price of new homes on the market as of April 15, 2010 was $271,148, down 7.7% from the average price of speculative (new) homes of $293,816 in April 2009. Resale homes make up approximately 3/4 of the available inventory of homes. (Source=Triangle MLS)

Inventory of available homes in Durham County as of March 31, 2010 increased 7.1% from March 2009, from 2,174 to 2329. Based on sales YTD through March 2010, the inventory of homes stood at 13 months in Durham, the same as for the entire Triangle area. This represents a significant increase from 6 months in inventory at the end of December 2009 but is consistent with months in inventory at the end of the first quarter 2009. (Source-Triangle MLS)

There was only a 6 month supply of homes in Durham as of December 31, 2008 based on average monthly sales. The supply of homes in the Triangle stood at 5 months at the end of 2007.
Inventory for homes priced below $300,000 stood at 11 months at the end of March 2010 while inventory of homes priced between $600,000-$800,000 stood at 45 months and inventory for homes price above $800,000 was a whopping 153 months. This is a great time to buy for the executive home buyer! (Source-Triangle MLS)

The average days on market for all active Durham homes was 84 days, while the average days on market for homes priced above $800,000 was 193 days. The average days on market for closed homes was 86 days versus 99 days in 2009, indicating that homes in the lower price ranges and priced correctly were still moving. Yet another indicator of the impact of the first time homebuyer tax credit. (Source-Triangle Area MLS)

According to figures released by the Federal Housing Finance Agency in May 2010, housing prices in the Durham-Chapel Hill Metropolitan Statistical Area decreased 2.9% for the twelve month period ending in March 2010 (-1.6% for the quarter) versus a negative 3.1% for the nation as a whole and negative 5.1% for the state of North Carolina. NC statistics are for purchase only transactions while MSA and US numbers included purchases and refinances.

Over the twelve month period ending in March 2010 home prices in the Durham Metropolitan Statistical area (MSA) ranked 68 out of 301 MSA's with at least 15,000 transactions over a 10 year period. Price appreciation in the Durham-Chapel Hill MSA for the past five years was up 13,5% versus negative 2.9% for the entire United States over the same period. Home prices in the Durham MSA have remained relatively stable, while other areas of the country have seen significant price decreases primarily because our area didn't see the rapid and unsustainable increases seen elsewhere. Still, the pressure of two years of slowing sales is beginning to have an impact on Durham area home prices.

The unemployment rate in the Durham MSA stood at 7.4% at end of April 2010, an improvement from the 7.9% unemployment rate at the end of December and from the worst months of June and July 2009 when unemployment reached 8.4%. The unemployment rate stood 6.2% at the end of December 2008, however, and was 3.8% at the end of December 2007. For the twelve month period ending in April 2010, Durham County gained 3,312 jobs which is encouraging as the county lost over 3,800 jobs in calendar year 2009.

Unemployment rates for the state of N.C. stood at a seasonably adjusted rate of 10.8% at the end of April 2010. The unemployment rate for the nation as a whole stood at 9.7% at the end of April. So while the unemployment rate for North Carolina is well above the national average, the Durham County unemployment rate remains below national and state averages indicating a stronger than average though still sputtering local economy. (Source- Employment Security Commission of NC).

Slowing sales over the past couple of years and now increased inventory has created more of a buyers' market in Durham. The best homes, in terms of location, price and condition, still sell within a reasonable amount of time, but with a lower absorption rate for the available inventory of homes, and therefore increased competition in some segments and locations, it is taking longer to move some homes particularly in the higher price ranges.

Sellers looking to put their home on the market need to understand that they must have the home in tiptop condition and priced correctly. For buyers, this is an excellent time to buy a home as inventory and thus choices are high while interest rates are still near historical lows. Meanwhile home prices in the area have held fairly steady despite recent declines, so waiting for the bottom is a game of chance.

Lending requirements have obviously been tightened in the midst of the recent bank rescues and credit crises, but loans remain available for qualified buyers with good credit scores and a solid work history.

For more information about buying or selling homes or other real estate in Durham, NC or other areas near Research Triangle Park, contact Larry Pulley at larry@larrypulley.com or call 919-604-0189.