Home Prices Increase in Greensboro NC

Single-family homes sales drop 26% in September

September sales of single-family homes in Greensboro were down 26% from he same month last year, while average sales prices increased 7 percent.

According to the Greensboro Regional Realtors Association, the number of single-family homes sold in September was 509, down from 689 during the same month last year and down from 732 in August.

But the average sales prices reached $190,938, an increase from $178,271 in September 2006, and a 5 percent increase from August, when the average price was $181,540.

The total volume dollar of single-family home sales was $90.4 million, a 17 percent drop from September 2006, when collective sales reached $108.8 million. Sales are also down from August figures of $113.7 million.

Honda Aero Inc. comes to the Triad

7/17/07 Honda Aero, Inc., a wholly-owned subsidiary of Honda Motor Co. Ltd., will establish its corporate headquarters and a state-of-the-art jet engine manufacturing plant at the Burlington-Alamance Regional Airport to produce engines of the new HondaJet. The company will create 70 jobs during the next five years and invest $27 million. Honda Aero will move to Burlington from Reston, Va. The new jobs will be mainly management and production positions, and while pay will vary by job function and skill, the average yearly wage for the new jobs will exceed $62,000, not including benefits. That is nearly double the Alamance County average of $31,300.

Third Quarter Economic Stats

Economic Stats

A unique living area to be created in the Triad.

Guilford County Sales Stats

Housing Stats

RISMEDIA, March 21, 2007-(MarketWatch)-Groundbreaking on new homes rebounded by 9% in February after a 14% decline in January, but less volatile building permits declined by 2.5%, the Commerce Department reported Tuesday.

Housing starts were up 9% to a seasonally adjusted annual rate of 1.525 million in February from a revised 10-year low of 1.399 million in January, beating the expectations for a smaller increase to 1.46 million. Starts are down 28.5% compared with February 2006.

Building permits, which are not as affected by weather, fell 2.5% in February to a seasonally adjusted annual rate of 1.532 million from 1.571 million in January. Economists surveyed by MarketWatch expected permits to be roughly unchanged.

Permits are down 28.6% compared with February 2006.

The government's housing data are subject to large sampling and other statistical errors. It can take five months for a new trend in housing starts to emerge from the data.

Forceclosures

Chris Cagan, First American CoreLogic Inc.

Last week, former Federal Reserve Chairman Alan Greenspan told futures traders at a conference in Florida that if home prices would just go up 10 percent, "the subprime mortgage problem would disappear."

You have to wonder whether Greenspan got an advance copy of one of the most sophisticated studies to date on a question that's keeping a lot of people awake at night: how much trouble are America's homeowners in?

Like Greenspan's observations in Boca Raton, the study -- by Christopher L. Cagan, director of research and analytics at First American CoreLogic Inc. -- will undoubtedly be used as ammunition by doomsayers and optimists alike.

On the first page of the study, "Mortgage Payment Reset: The Issue and the Impact," Cagan makes it sound simple: in the next six years, 13 percent of the 8.37 million adjustable-rate mortgages originated between 2004 and 2006 will default. That's 1.1 million foreclosures in a six- to seven-year period, and $112 billion in equity wiped out after homes securing $326 billion in debt are repossessed and sold.

But then Cagan complicates things, with a 180-page-plus explanation of his methods and an in-depth investigation of how changes in home prices might change that picture.

Cagan's study uses December 2006 home prices as the starting point for its assumptions. He estimates that from here on out, each 1 percent increase in home prices could save 70,000 homes from foreclosure. That supports Greenspan's observation that if home prices went back on the upswing, the current wave of delinquencies and foreclosures could disappear.

But Greenspan also said things could get worse if home prices fall. Cagan agrees, saying each 1 percent fall in home prices will put another 70,000 homes into foreclosure.

Cagan, who holds a doctorate in mathematics from the UCLA, was more interested in crunching numbers on millions of loans in a way that allowed people to interpret them for themselves, than in making a philosophical statement.

"I was driven by my love for mathematics," and not by anybody else's preconceptions, Cagan said. "I wanted to get past the anecdotes, and down to the nitty gritty of the numbers. I want this to be the authoritative, definitive study. A full academic explanation, so if you want to run a different scenario, you can."

Although Cagan does put the number of projected foreclosures in context -- he thinks they won't have a wider impact on the national economy -- the study still leaves room for others to argue about whether the subprime tsunami will cause widespread destruction, or just decimate a few ill-fated villages.

Many experts on lending say one of the best predictors of a borrower's likelihood of default is how much equity they hold in their home.

A family using a traditional loan with a 20 percent down payment has more at stake in staying current on their loan, and is less vulnerable to fluctuations in home prices if they need to refinance.

Borrowers who put little or no money down on a house, or whose loan payments only cover interest and not principal, can quickly find themselves "upside down." When home prices stagnate or depreciate, their homes may end up being worth less than what they owe, and it can be tough to refinance on better terms. For some the best solution is to walk away.

One of the more interesting findings of Cagan's study was that 93 percent of the homeowners in one database of 32 million loans held some equity in their homes.

If home prices fall by 10 percent, the percentage of borrowers with no (or negative) equity in their homes would grow from 6.9 percent to 15.8 percent, Cagan predicts. If home prices were to rise by 10 percent, just 2.9 percent of borrowers would have no or negative equity in their homes.

Since nobody can predict what will happen to home prices in the future, Cagan's study is of somewhat limited utility to those hoping to, say, decide whether or not to invest in the deflated stocks of some subprime lenders.

Cagan said he wasn't able to account for some other important variables at all, such as unemployment rates, housing inventory, death, divorce, illness or fraud.

But the study is useful for predicting what the magnitude of the problem might be, and when it will peak. Cagan said the critical year will be 2008, when 2/28 loans originated in 2006 and 3/27 loans dating to 2005 reset.

Table 29 on page 52 of the study illustrates Cagan's point: the percentage of homeowners facing resets who have less than 20 percent equity in their homes is projected to peak at 69.5 percent in 2008, up from 40 percent in 2004.

The 20 percent equity threshold is important because those who have reached it should be able to refinance into conventional, fixed-rate loans.

A remarkable 25 percent of ARM borrowers facing an interest-rate adjustment in 2008 will have no or negative equity in their homes, compared with 12.9 percent of those facing a reset this year.

The greatest risk is for people who bought at the top of the market," Cagan said. "It's a truism that risky investments are more risky."

Cagan divided loans that are scheduled to reset into three categories: teaser loans with initial interest rates under 4 percent, which usually adjust within a few months; subprime ARMs with higher initial rates of 6.5 percent or higher, which adjust in two to three years; and market-rate adjustable loans with initial rates of 4 percent to 6.5 percent.

Cagan predicted 32 percent of teaser loans will default when they reset, compared with 12 percent of subprime and 7 percent of market-rate ARMs.

Triad Listing Stats

                               Current Triad Listing Stats

                January 3, 2007  

                                                Allen Tate        Greensboro               High Point               Winston Salem

                                                   Realtors       MLS members         MLS members            MLS members

Average Active                       116 Days        121 Days          137 Days                   133 Days

Days on the Market:            

Average Active List Price:      $257,732        $240,455          $189,359                  $212,520

Average Closed

Days on the Market:                86 Days          80 Days              81 Days                   92 Days

(1/1/06-12/31/06)

 Average Closed Price:            $205,171        $193,454           $153,654                 $180,322

(1/1/06-12/31/06)

 Total Active Units:                       867                 2,741           1,452                      2,725

Total 2006 Closed Units:          1,685              6,102                     2,600                       5,198

Listing side only (1/1/06-12/31/06)

List Price to Close Price:          97.51%          97.69%                 97.80%                    97.80%

Ratio for 2007:               

2007 Current Inventory Supply:                   7 Months         8.5 Months        8.5

Mortage Rates

How do Triad residents find homes?

Remodel or Not

Many homeowners who complete midrange bathroom remodels can expect to make money; the cost on a national average for this project is $10,499, and the return is $10,727, or 102.2 percent, compared with 87.5 percent in 2002. On average, major midrange kitchen remodels cost $43,862 and return $39,920, or 91 percent of the costs to remodel, up from 66 percent in 2002. Nationally, homeowners who add an attic bedroom spend an average of $39,188, and on resale, they recoup 93.5 percent of the cost. Master suites, however, do not fare as well; an upscale addition, which costs $137,891 on average, returns only $110,512 on resale, or approximately 80.1 percent of the remodeling expense.

Buyers in the South are partial to upscale bathrooms, which return an average of 98.5 percent of project costs. When considering resale value, however, Southerners may want to think twice about midrange window replacements; this improvement, which is so popular in the West, only returns an average of 83.7 percent of project costs in the South.

Home Staging Ideas

Triad Home Sales

N.C. Existing Home Sales for 2006 Post 3 Percent Increase from Last Year
Sales of existing homes in North Carolina defied national trends in 2006, posting a year-end increase of 3 percent when compared to 2005. According to statistics compiled by the North Carolina Association of REALTORS® (NCAR), 139,676 residential units were sold in 2006.  Total sales dollars for the year were $30,023,576,822 and the average existing home sales price was up 2 percent to $214,952. In 2006, Jacksonville, Brevard, Wilson and Catawba Valley led the state in positive growth, posting the strongest year-end increase in total dollar sales at 28, 25, 24 and 23 percent, respectively.  Brevard (18 percent) and Pinehurst (14 percent) posted the highest price appreciation for the year.

REALTORS MLS

UNITS SOLD IN 05

UNITS SOLD IN 06

% CHANGE

05 AVG. COST

06 AVG. COST

% CHANGE

05 TOTAL DOLLARS

06 TOTAL DOLLARS

% CHANGE

 

TRIAD

16520

17669

7%

$174,251

$177,689

2%

$2,878,630,993

$3,139,587,848

9%