Each month, the Triangle MLS reports statistics on the Raleigh real estate market and the surrounding areas as well. I thought I’d write a quick post summarizing what December (and 2009) looks like vs the previous year. Most of you will not be interested in this, but for stats geeks like myself, you might find it interesting. If nothing else, it will give you reassurance that the Raleigh real estate market is slowly improving, and the trends show that although it has been a tough year, it certainly has not been nearly as bad as other markets around the nation.

In 2009, we saw 21,983 closed sales, an 11.5% decrease from 2008. However, we also saw a larger decrease (-15.6%) in the number of new listings that came on the market in 2009. What this means is that the inventory level, or supply of homes on the market has decreased to 8.6 months. This means that it would take just over 8 months to sell the current listings if no new listings came onto the market. The 8.6 inventory number is supposed to give us a way to determine the supply and demand levels that currently exist in our market.  There are particular places such as the downtown Raleigh real estate market, and parts of the North Raleigh real estate market that have seen a more dramatic reduction in supply, and some places such as certain Cameron Village neighborhoods have actually seen appreciation in the last year.

So, the inventory level really gives us an idea of how healthy our market is. The number has improved 6% from 2008. Most people consider a level of 6 months to be a very healthy market. So as we enter 2010, we see signs that supply and demand are shifting more back toward a seller’s market.

Other stats that are important: average days on market for listings is currently 104 days, and the median sales price is $178,000, down 4.7% from a year ago.

There are still plenty of hurdles ahead for our economy including a bleak job market outlook for the near term future, incredibly high government spending (which could cause interest rates to rise), and an ever growing national debt. These factors could cause high inflation (I see no way around it at this point), but there is a silver lining for real estate owners. If you look back over the last 100 years, hard assets like real estate, oil, and gold often appreciate significantly during times of high inflation. The reason for this is that these commodities are measured in US Dollars, and as the dollar goes down in value, real estate acts as a protection, or “hedge”, against inflation.

My current take: I am actively buying real estate and I would encourage you to do the same. I believe that with interest rates at an all-time low, and prices back to levels that are much more affordable, combined with the fact that Raleigh real estate has been an historically stable market, I think it’s a great time to buy. Whether you are a first time homebuyer or “move-up” buyer looking to take advantage of the tax credits, or an investor looking to create equity through real estate, I think there are a lot of opportunities out there….

First time homebuyers will receive $8,000 as a pure credit (it does not need to be paid back) if they contract on a house by 4/30/09. As of right now (I will update you on any changes), the bill allows you to get under contract by 4/30/09 and close by 6/30/09. So, if you are a first time homebuyer, I would recommend aiming for an April closing date (at the latest) so you don’t have to rush at the last minute.

There is one other interesting aspect of the new bill. There is a $6500 credit for “move up” buyers. The bill stipulates that anyone who has lived in their home for 5 years will be eligible to take advantage of this $6500 if they buy a new primary residence.

I’ll have more details as they develop… Call me or email me with questions.

The Raleigh real estate market will see some benefit to this bill as there continues to be an excess inventory of foreclosure properties available. About half of the properties that are selling right now are either short sale or REO (bank owned foreclosures). This tax credit will allow the market to absorb some of this inventory, as many first time homebuyers choose to buy foreclosures. Most of the national market continues to see signs of improvement as well. I am excited about the prospect of real estate in 2010, as it remains a buyers market and people who take advantage of buying property now, will reap huge rewards when the cycle shifts back toward a seller’s market. I anticipate the Raleigh real estate market to lead the way in many categories during the next few years, especially certain locations such as downtown Raleigh real estate, and North Raleigh real estate.

In fact, this might be the only time we see this type of credit. With the national deficit rapidly expanding and with the out of control spending that we are witnessing, the US will have plenty of obligations to meet (namely repaying China), and those obligations won’t go away anytime soon (our kids and grand kids will not be thanking us). We have gone from the world’s biggest lender to the world’s biggest borrower and we (as a nation) do not have enough money coming in to repay our debts. One way you can personally hedge yourself against rampant inflation (a likely outcome given our current policies) is to buy and hold real estate. Real estate is a hard asset that has real, intrinsic value. This means that as the value of the dollar declines, assets that are measured in dollars like gold, oil, and real estate tend to appreciate. If you hold real estate over the long term, you will be better off than keeping your money in a bank or CD (or worse, paying someone else’s mortgage in the form of rent!)… Savings accounts will likely fall short of inflation which means that the more you put in the bank, the more your buying power will deteriorate over time.

I could continue talking about my opinion on government spending, but I’ll save the rest of my thoughts for a later post… the point I want to make is that this $8000 tax credit may not be extended and this could be the only time that you will be able to take advantage of it. The credit runs out on 12/1/09 (unless legislation passes to extend it). This means that if you are thinking of taking advantage of this credit, you have less than three months to find a home, get it under contract and close. Here in the Raleigh real estate market, you will need to write a contract on a home by mid October if you would like to close by the end of November. Please take advantage of this credit! If you have any questions on the Raleigh real estate market, or Raleigh real estate investing, please feel free to contact me.

John Huber works in the Raleigh real estate market, and he specializes in downtown Raleigh real estate, North Raleigh real estate, and Raleigh Investment Property.

Southeast Corner of intersection

But let’s face it, people wouldn’t be moving to Cary and it’s population wouldn’t be increasing 4% per year if they didn’t like the rapid growth.

The image to the left shows an aerial map of the extremely valuable intersection of Davis Drive and High House Road. The gray section of the map shows the planned development that was initiated by Sears Farm, LLC. This 24 acre area is valued at about $7.2 Million and was purchased from the Sears family to develop into an upscale retirement community with 135 apartments, 26 plaza apartments, 46 estate homes, and 16 assisted living suites.

If you look to the adjacent corner (the Northeast corner), you’ll see the 42 acre piece of real estate that was just purchased by Crosland, a Charlotte development company, for $11 Million. High House Davis LLC was the seller.

This planned development was approved by the Town of Cary about a year ago. It has not commenced yet but should get underway soon as the real estate market continues to improve. This mixed use development will contain 140,000 square feet of retail space at the corner, along with 390 residential units, including townhomes and condos.

So another one of Cary’s prime corners will soon have the buzz of commerce and activity. Wouldn’t it have been nice to have been a land-owning farmer in west Cary about 25 years ago? I wonder what Mr. Sears (owner of the corner at one point) is up to these days?

I know one thing: he sure understands the value of holding real estate and the long term wealth that it can produce.