Where is it all going?

The bottom of the market may be at hand. Like so many others working in finance and business I am reluctant to say that we are there. Since 2006 yes that's right, 2006, home values have declined on a nationwide average of some seventeen percent while volume in sales is down nearly fifty percent. This according to Real Capital Analytics Inc out of New York.

Ouch! So let’s hope that this is the bottom. Where do we go in the future and what does home valuation look like over the next two to five years? To answer that we have to know where we are now. According to the TARR report in the first quarter of 2009 in Durham County the number of detached home sales was down 23.34% against 1Q 2008, condo sales were down 42.86%, townhome sales down 52.63%, newly constructed home sales are up 48.7%. Sold prices in all categories except condominiums are up between 2% and 3%.

For the next 2 to 5 years I see home prices in Raleigh/Durham as stable except for condominiums. I’ll explain that one in a moment. Builders are now building on demand, which means that there is little if no new home inventory. Buyers purchasing new homes are coming in, cash in hand and upgrading their dream home and waiting five to six months to close.

Resale homes are starting to sell again and should expect between 0% and 2% appreciation in value depending on geography. Southwest Durham, Chapel Hill and neighborhoods along the interstate 40, corridor should expect the best net result while folks in North Durham and further out should expect a relatively flat appreciation rates if any. Resale homes are selling due in large part to a 18% decline in inventory between 2008 and 2009 1Q.

Condominiums will remain the problem children within the market dependent on what the particular property looks like. Condos in established neighborhoods like the Duke St. warehouse, Five Oaks and Woodcroft should do fairly well while the glitzy, high dollar, high profile, urban and urban wannabe properties will continue to suffer and not sell without significant pricing reductions.

Home buying consumers will be unwilling in the next two to five years to dump $300,000 plus into small one and two bedroom condominiums when they can buy a comparable detached home or townhouse for $150,00 to $200,000 dollars. Penny wise consumers will avoid the exorbitant monthly maintenance fees in these condo properties recognizing that a la carte gym memberships and other amenities are more cost effective. Developers of this type of property will be wise to realize that declining stock and 401K portfolios mean less disposable income.

Interested in knowing the value of your home or the best deals in our market? Call me or text me and I will complete a free no obligation home pricing evaluation. If you do have to sell your home, I have tools and techniques in place to help you succeed.