It’s a new year and a new real estate market. i've seen a flurry of activity in the past week.  I’m incredibly bullish on the Wake County NC real estate market for 2010.  The consensus on the market is that we have hit Bottom and are poised for recovery in 2010 which will be clear from the numbers below.    

What is going on with the Triangle real estate market in general?

Interest rates continue to remain low, the US housing market seems to be picking up in a number of areas in the country, the stock market has recovered ~20% in 2009, inventory is declining, and the government extension of the 1st Time & Homebuyer and repeat buyer tax credit will help jump start the market in Q12010.  Experts around the country predicted the Triangle NC housing market would be the last into the market downturn and the first to recover from the market decline.  Based on what I’m seeing this philosophy could hold true.  

Our residential real estate market depends on supply and demand as well as the amount of money available. There are a couple of factors at play here that could impact the recovery or at least extend the recovery into the 2nd half of 2010:  

1. Tightening of underwriting standards
2. Higher than expected unemployment rate 
3. Families that are relocating from other areas are bringing less cash/equity with them which is effecting the affordability of housing, especially in the high price ranges.   

How do sales this year compare to the banner years?

2006 was a banner year in Wake County and the peak of the real estate market.  Since that time period sales have declined year over year with the exception of Q42009.  In 2009 85% of all home purchases were less than $350k which demonstrates the impact the 1st Time Homebuyer tax credit had on the Q42009 numbers and the biggest spike in home sales since the market declined in 2006.  

I thought I'd include numbers from the MLS that indicate the change in the market year over year in Wake County for your reference.  Comparing Q42009 Wake County numbers with Q42008 Wake County numbers the changes are quite dramatic:

• YTD homes sales are now off by just 26% 
• This is the 1st November in memory that home sales exceeded June/July closings
• Supply of homes on the market is generally off during the 4th QTR but declined 39% compared to Q42008
• Number of homes under contract are up a respectable 15% 
• Average Days on Market has also stabilized at 83 DOM but could use some improvement during 2010

What about the supply of inventory for Wake County in particular?

• The average supply in the Wake County area is running at 7 months supply. This number is up from the glory days but getting closer to market stabilization with 6 months supply of inventory. 

What about market appreciation? 

Fortunately, in this area, we have not had the run up in prices experienced around the rest of the country which has helped maintain some stability in sales and pricing.  Typical appreciation rates in the Triangle ran 3-4% consistently over the past several years.  However, most appraisers that I work with are discounting home prices 10% from last years numbers. This means that anyone that purchased in 2006 or after will have difficulty breaking even on their homes if they have to sell in this market.  This is the first year in real estate I’ve had difficulty with appraisals and having sellers bring cash to the closing table.  While this must be difficult for many homesellers to swallow it pales in comparison to other areas in the country like Florida, Arizona, and California. 

Here are some additional variables to consider if you like to look at numbers: 

• Average Detached Sales Price $267,597 down 10%
• Average Townhouse Sales Price $173,225 - Stable
• Average Sales Price for Wake County $239,706 off 12.5% 

Is there a light at the end of the tunnel?

My sellers are finally convinced that the market has taken a downturn, and to be competitive in this market, sellers have to be priced in ahead of the market as well as having all of the other wonderful attributes and updates needed to sell a home today. 

With the recent price reductions, decline in inventory, decline in new construction inventory, and tax credit extention/expansion for repeat purchases I believe the Triangle market has great potential in 2010 for both buyers and sellers.  Here’s to the market recovery in 2010!!