Jason Graves

Okay, this may not be new to some of you, but it was to me. The sad part is that I live and vote in Garner and I missed this (Though in my defense, the plans aren't new to me but the delivery is.)

Garner has opened a new web site called GoGarner.com to showcase recent planning initiatives. "The Streetscape Design, in combination with the Transportation Plan, has the opportunity to be the beginnings of a map for making important land use, infrastructure, and public service decisions for all of Garner." (From http://www.gogarner.org/)

I have read a lot of local news about Garner and Clayton lately that is great for current and future residents because as the area continues to grow, there is a defined, comprehensive growth plan. If you have read my blog in the past then you've probably noticed I don't necessarily agree with them all the time, but I'm first in line to tell my home buyers that the planning departments and their follow through can have a profound impact on your quality of life and rate of housing appreciation.

A couple of recent notes:

• Principal John Wall of North Garner Middle School was named Wake County's principal of the year.
• The top prize of the most expensive category in this year's Parade of Homes was awarded to a Garner home (The Rosemoor).
• Crosland has reached final approval for a proposed project in the Cleveland area of Hwy's 40/42 that incorporates a massive residential and commercial development into their growing market.
• Constuction of a new, 54 unit townhome communtity including first floor masters and garages has begun (www.SoutherbyBluffs.com)

Read more news about the area at http://www.garnerclayton.com/.

Jason B. Graves

Did you know that on-line home valuation monster Zillow.com has a chief economist? I like that they do because I feel opinions like his are market driven and not reports written for stock analysts.

Read New Homebuyer Tax Credit Proposal: Impact on the Housing Market by Stan Humphries. In his post he writes "Until now, we've been predicting that home values will likely bottom in the second quarter of 2010. But the tax credit could change that substantially, for several reasons." Following the guidelines of supply and demand and points out that the tax credit will increase demand but the addition of move-up buyers now included in the incentive will have an impact on supply and ultimately home prices. For a move-up buyer to take advantage of the incentive, they must first sell their existing home. With the incentives in play, what will happen to home prices?

The extension of the tax credit to existing homeowners brings not just demand into the market, but also an equal amount of supply (i.e., they have to sell their home in order to buy another). The existing tax credit to first-time home buyers was pure demand. Every buyer that was spurred to enter the market helped push inventory levels down by increasing demand relative to supply. With the existing homeowner tax credit, current homeowners are trading homes between themselves. What will be interesting to see is whether this game of musical chairs unfolds in an orderly fashion (i.e., some homeowners buying a new home before selling theirs; others doing the opposite) or whether skittishness about the market will lead more homeowners to try to sell their home first before buying a new one. The latter scenario could lead to more near-term supply than demand, which will push inventory up and prices down.*

My response:

You make some good points but I think your insight about inventory levels increasing and prices decreasing could be a book in itself. I would compare it to using software to predict storm paths like hurricanes, there are so many variables that it would take years of theory development to draw any viable conclusions. Now that we are adding a human element to the equation, get ready to be stymied.

Our growth in the Raleigh, NC real estate market has taught me an important fact: New construction will win 90-95% of the time when in direct competition with re-sale properties. People here who put their homes on the market for no other reason than they want to take advantage of the tax credit will not have a major impact on prices. They lack the motivations that many current sellers have and I don't expect they will add much downward pressure on home prices in Raleigh.

Even when our market was moving at a faster pace, our volume of new construction homes kept re-sale prices in check. Builders are adjusting their pricing through the margins they charge and the type of inventory they build. New homes are cheaper now than in 2006 and will continue that way for the next few years.

Only pocket areas of high desirability really saw bloated appreciation.

My prediction for Raleigh:

Prices will stay flat through winter with small, incremental increases through 2010. An outstanding year to buy in our market for individuals that will live in their home at least 3-5 years.

(Part of my thinking stems from forecasts of 3.5% growth/year through 2025).

This post was originally written for my regular blog. Raleigh Real Estate News. You maye read more available stories at http://www.gravesrealtyassociates.com/raleigh-real-estate-news-blog/

*Stan Humphries.New Home Buyer Tax Credit Proposal: Impact on the housing market. Zillow Blog. 11/06/09. http://www.zillow.com/blog/new-homebuyer-tax-credit-proposal-impact-on-the-housing-market/2009/11/05/#comment-192965

This post was originally featured on my blog Raleigh Real Estate News at http://www.gravesrealtyassociates.com/raleigh-real-estate-news-blog/

Did you know...

1. The annual, average appreciateion rate for a detached, single family home in Raleigh is about 3%? Line that statistic up against other parts of the country we hear about in the nightly news and we should feel fortunate.
2. The current average list price of a single family home in Wake County is approximately $356,000. That reflects a 3% drop from last year.
3. The average selling price is down about 10% to $245,000.
4. North Hills continues to be a driving force for the residential real estate community commanding nearly 11% appreciation annually. The great thing about North Hills is that is still under construction and will continue to increase in value for several more years to come.

Of course you will find the numbers will vary based on specific locations and home details but this should provide you a general picture of the Raleigh market. Our fastest appreciation comes from detached homes. Townhomes will normally appreciate a little bit slower and condos are the slowest. Inlike other markets, we have not seen major depreciation in home values. Over the past 12 months we have seen home prices slip about 10%.

Are you nervous to buy or sell a home in our current market? It's understandable, but if you haven't evaluated your home sale or purchase plan with an experienced, seasoned agent using common sense combined with a well thought out data set, then you are probably selling yourself short.

One statistic we have found helpful is a listing to pending ratio that evaluates how fast homes are going under contract vs. how fast they are being listed on a monthly basis. I'm proud to say that not everyone knows how to do this on a custom level and that this is an integral part of what we offer our clients.

Here's an example (Using made up numbers):

1. You want to buy a 3BR, 2.5BA home in North Raleigh with 2,100+ Sq. Ft. and a 2 car garage
2. You plan to spend $250k to $300k
3. Is it a buyer's market in the area you are shopping?
4. What have the sales trends been? When is the best time to buy or sell?

Using historical data from our local multiple listing service, you evaluate how many homes have been listed for sale each month vs. how many homes went under contract that same month.

1. 3 homes listed in January and 1 went pending- 33%
2. 4 homes listed in February and 2 went pending- 50%
3. 5 homes listed in March and 7 went pending- 140%
4. 4 homes listed in April and 5 went pending- 125%
5. 7 homes listed in May and 7 went pending- 100%
6. And so on for 24 months or more

100% will represent a balance meaning that homes are selling at the same rate they are being listed for sale. Numbers below 100% will favor a buyer because homes are being listed faster than they are being sold. Rates above 100% will favor a seller.

By utilizing data sets lilke this combined with a knowledge of where the market is heading you can ensure you are making good decisions. There is no way to predict the future, but wouldn't you feel better knowing your agent was doing this for you?