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Home sales in the 3 main counties making up the Research Triangle Park area of NC were up 7.9% in the first quarter of 2010 when compared to 1st quarter 2009. The average sales price dropped 3.7%, however, from $237,900 to $229,000. Sales were up 13.7% in Orange County, 9.7% in Durham County and 7% in Wake County respectively.
New home closed sales were down 23% for the quarter, however, versus the 1st quarter in 2009. The average sales price of new homes sold decreased 8%, from $385,100 to $356,000. Showings of new homes also decreased 23% in the quarter, while inventory of homes was down 25%. Still there were 11 months inventory of new homes at the end of March 2010, the same as March 2009.
Home sales rose 19,5% in the 4th quarter of 2009, but finished the year down 14.6% when compared to 2008. Fourth quarter home sales were stimulated by the federal first time homebuyer tax credits which were set to expire at the end of November. Sales in November were up almost 70% from 2008, but December sales were actually down 7.3% when compared to 2008. Through the first three quarters of the year home sales were down 19.5%.
Sales in Durham County held up best in 2009, down 7.6% for the year. Orange County (Chapel Hill) sales ended the year down 10.6%, while Wake County sales (Raleigh-Cary) were down 13.4% for the year. Sales in the Research Triangle Park area were down 28.8% in 2008 as compared to 2007. The decline in home sales in 2008 was fairly consistent in the 3 county area with declines in each county in the 28-29% range.
Despite the slowdown in home sales, the average price of homes sold held up reasonably well in contrast to some other areas of the country. With the continued slowdown, however, home prices have begun to show some strain which continued in the first quarter of 2010 (see chart below). (Source-Triangle Multiple Listing Service)
2009 Average Sold Home prices and % change by County (City) through for 2009 are as follows:
Durham (Durham)- $196,310 up 0.0%
Wake (Raleigh/Cary)- $243,516 down 7.9%
Orange (Chapel Hill)- $317,847 down 1.2%
2008 Calendar Year Average prices for homes sold were
Durham (Durham)- $196,259
Wake (Raleigh/Cary)- $264,976
Orange (Chapel Hill)- $322,477
For the entire Triangle region, the average price of homes sold in 2009 dropped 6.6% from $238,573 to $222,827 for 2009, while the median price of homes sold dropped 4.2% from $190,000 to $182,000 in the same period. The drop in prices was influenced as much by of the type of homes that were selling, i.e. more homes priced below $250,000 purchased by first time homebuyers taking advantage of the tax credit, as it was by depreciating home values.
Inventory of homes in the Triangle housing market stood at 13 months at the end of March 2010, the same as March 2009. This compares to 7 months of inventory at the end of 2009, the same as at the end of 2008. Total inventory of homes was 14,095 at the end of March, an increase of 5.7% over March 2009. Total inventory at the end of December 2009 was actually down 14.5% from 12,388 homes for sale as of Dec. 31, 2008 to 10,594 homes for sale at the end of Dec. 2009. The increase in inventory in the first quarter 2010 is indicative of renewed hopes by sellers in the local market and a desire to take advantage of the first time and existing homeowner tax credits in place.
The slowdown in sales over the past 2 years has created more of a buyers' market in some of the outer reaches of the Triangle area and in the upper price ranges, although the demand/supply equation is still in balance in most parts of the Triangle area in the $100,000-$250,000 price ranges.
The months in inventory of available homes was typically much higher in the $400,000 and up price ranges creating a good bargaining position for home buyers in these upper price ranges. Many new home builders are offering increased incentives to buyers at this point as well including upgrade options and paid closing costs.
Average price of homes on the market as of March 31, 2010
Durham County
New Homes $271,148
All Homes - $234,312
Wake County
New Homes $388,087
All Homes $324,174
Orange County
New Homes $574,293
All Homes $454,537
(Source- Triangle MLS)
According to figures released by the Federal Housing Finance Agency (www.fhfa.gov) in May 2010, housing prices in the Raleigh-Cary MSA decreased 4.4% for the 12 month period ending in March 2010, while in the Durham-Chapel Hill MSA, prices decreased 2.9% in the same period. This compares to decreases of 5.1% for the state of NC and 3.1% for the entire U.S over the same period. MSA and US numbers include both purchase and refinanced homes while only purchase numbers are available for the states.
Raleigh-Cary ranked #112 and Durham-Chapel Hill 68th in home price appreciation out of 301 large Metropolitan Statistical Areas (MSA) for the quarter ending March 31, 2010. The Research Triangle Park area never experienced excessive run-up in home prices that occurred in other parts of the country.
So after several years of lagging the nation in price appreciation at the beginning of the decade, the downward movement of home prices in the Triangle area is significantly better than the national averages over the past 5 years. In the 5 year period ending March 2010, Durham MSA home prices have risen 13.5% while Raleigh-Cary MSA prices rose 14.4%. Home prices over the past 5 years for the entire US decreased 2.9%. Continued slow sales, however, are beginning to put pressure on prices in areas and price ranges of the Triangle with excess inventory.
The credit crunch, caused by an abundance of defaults in the subprime lending market, plus the dumping of homes by speculative investors, which drove prices higher than could be sustained, has created more supply than demand in many parts of the country. An uncertain economy and a desire to purchase at the optimum time kept many buyers on the sidelines. The first time homebuyer credit has stimulated the market for homes priced under $250,000, however.
Unemployment rates in the area remain below national and state averages although these rates have increased dramatically in the past 24 months. The unemployment rate for the Raleigh-Cary MSA stood at 8.4% at the end of April 2010 after peaking at 9.1% at the end of June and July 2009 and standing at 8.7% at the end of December 2009. The unemployment rate for the Raleigh-Cary MSA stood at 6.4% at the end of December 2008.
The unemployment rate for the Durham-Chapel Hill MSA stood at 7.2%% at the end of April 2010, after peaking at 8.4% in June 2009 and ending the year at 7.7%. Unemployment for the Durham-Chapel Hill MSA stood at 5.9% at the end of 2008. These figures were still well below the state unemployment rate of 10.8% and the national rate of 9.7% at the end of April as the entire country tries to recover from a lengthy recession.
There were 17,938 more people employed in the combined Raleigh-Cary-Durham MSAs at the end of April 2010 when compared to April 2009. December 2009 ended with nearly 33,700 fewer employed than a year earlier so the local labor market is beginning to show signs of life. Local economists predict a slow climb towards employment levels of 2007 however. (Source- N.C. Employment Security Commission).
Lender underwriting requirements have definitely tightened over the past couple of years but money for purchasing homes is still available to qualified buyers with stable employment and good credit history. For buyers short on downpayment money, FHA loans have resurfaced as the loan vehicle of choice. Trying to time the bottom of the market in terms of pricing and interest rates is a difficult proposition, just like trying to time the stock market. Interest rates are still near historical lows but fluctuate constantly. When the economy improves and buyers start to stir, both interest rates and home prices are likely to increase. Therefore, this is a great time to purchase a home!
In summary, home sales in the Research Triangle Park area for the first quarter were up nearly 8% after ending year 2009 down nearly 15% for the three county Triangle area. Meanwhile average home sale prices have fallen a bit, although at a slower rate than for much of the country. For the time being the local market is mixed; relatively balanced in the lower and middle price ranges (below $300,000) and in some of the more popular locations throughout the Triangle, but certainly favoring buyers in the upper price ranges including new construction.
For more information about the housing market in the Research Triangle Park area or to discuss buying or selling a home, please contact me at 919-536-0323 or larry@larrypulley.com. Thanks and I look forward to assisting you.
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