Barrett Powell

Chatham County and North Carolina saw lower than expected traffic according to the Credit Suisse Realtor Survey. As a monthly contributor to the report for the area, I get sent copies of the report which I share with my clients and my agents.

A copy of the full report can be downloaded here http://www.remaxchatham.com/reports/RealtorSurvey10-8-2009.pdf

Traffic for first time homebuyers and investors looking for foreclosures and deals continued to lead the traffic. First time homebuyers looking to take advantage of the tax credit at the last minute have been some of the most active buyers in the area.

Home prices continued to slide. The length of time needed to sell also increased slightly month over month.

As the Triangle area tends to be the last region to go into an economic slowdown, it may lag some other areas now in recover as well. Although the Triangle did not make it into the top 20 markets in the U.S. this period, it was still rated as a market to watch.

Buying a house in Pittsboro or other parts of Chatham County is not unlike buying a house in any other part of the Triangle or the Country for that matter, with one exception. Chatham has in the past been one of the fastest growing Counties in the region, the Country even. So depending on your idea of the "perfect" home, one thing usually stands out when considering where to buy...location, location, location. And even though growth and development has slowed in Chatham, that trend is not likely to continue.

Not to sound cliché' ish, but location is one of the single most important features of a home. Select wisely and you can be rewarded with the quiet and serenity of the deep woods. Select poorly and you may find a four lane avenue passing in front of your house in the coming years. Do your homework and select a good location and you can find your nest egg has grown nicely when it is time to move on to your next destination. Choose without some due diligence and you may find after years of improvements and paying your mortgage down that your dream home has turned into a nightmare and in order to sell you may have to practically give the house away, and it may take a long time to do that.

Why is this? There are many reasons and factors that go into what someone would call the "perfect" home. There are as many opinions as there reasons of what makes the "perfect" home. Many people come to what I refer to as the "Rural Triangle" to get away from it all. Get away from the traffic, the hustle and bustle, the noise, basically get away from people. While others come for the greater value and reduced cost of living, but still expect to find all the conveniences of Apex, Cary, or Chapel Hill. And still some want to be in a location early to take advantage of the market upswing in that area. All are good reasons in their own right, but they have different objectives, different location feature requirements, and way different outcomes especially when choosing well or not.

Let's look a few of these in more depth. We will focus on the Eastern section of Chatham County, especially in and around Pittsboro as that is the area I know most about and can offer the best advice. Let's first focus on the person moving out to Pittsboro and Chatham County to get away from it all and live out in the country as this is the person likely to be the most impacted by what is happening now and in the near future.

So your driving through the "Rural Triangle" part of Chatham County and come upon this sleepy little town called Pittsboro. You think to yourself, why this is Mayberry, that mystical little town once seen on TV in the 1950s and 60s whose North Carolina native Andy Griffin patrolled the quiet streets with his trusty sidekick Barney. Parking downtown you might opt for dinner or ice cream at one of our quaint eating establishments or shop in one of our unique shops. But sooner than later, if you wait just a little bit, like Dorothy found out in the Wizard of Oz, you might not be in Mayberry. At least not for long.

You see, change was in full swing in Chatham just prior to the economic downturn. And while that downturn has led many developers and developments to head for higher ground, the fact is those tracts of land will one day house many newcomers. That is a fact. No matter what the situation is today, we are still likely to have others pick up where previous developers left off. Some with deep pockets, like Newland Community's Briar Chapel, staid the course and have continued to prod a long. That pace is also likely to quicken as the economy rebounds and new growth pops up.

But perhaps the biggest reason we will likely see growth continue again at a brisk pace really has less to do with the rebound in the economy and more to do with software, computer software that is. Because when things started to go south for many developers in Chatham, another group started quietly making plans. That group was Preston Development, backed by SAS Software's Jim Goodnight, one of the richest men on the East Coast. No one really knows what is planned with the more than 6,000 acres the group has quietly amassed. Yes there are plans that have been floated around. But I think what we are likely to see is something very special, different but very special. For this reason we are likely to see renewed investment and growth, not only in Pittsboro, but the entire area, the likes that have not been seen.

Understanding where growth is likely to take place and what type of growth is likely to occur will go a long way in knowing where to buy or build your "perfect" home. It will help you determine where on this growth path you want to be and what is the best place for you live, based on your wants and goals.

Watch for Part 2, where we discuss what is taking place in Chatham and around Pittsboro and how with a little planning on your side you can find your "Dream Home" and live happily ever after.

Part 1: The Perk Test

In this installment I'm going to spend some time on the process for buying or selling undeveloped land in Chatham County. This process is for undeveloped land and not improved lots that you typically find in a developed subdivision. With the case of improved lots, the developer or builder has done most of the work for you. But it is always a good idea to check with the County planning department or better yet, your Realtor to make sure all the requirements to build on the lot have been met. You may also find the process is very similar in other Counties.

The first and most basic thing is to determine if the current zoning of the property is applicable for what you plan to use the property for. As we are talking about mostly residential readers here we are going to limit the discussion to residential purposes and not talk about rezoning, special uses, or business zoning.

For the most part, most rural land will be zoned single family residential and agriculture. This means using the land for farming or to build a single family house on is permitted. Check to make sure the land around you is also zoned the same way or you could find a business going up nearby that may affect your value or at least you quality of life. Again the local county planning department or your Realtor can check on the zoning for you.

Once you are sure the land is zoned for the use you want, the next thing to check on is whether or not the property is a buildable lot. Many factors go into this, but the most important and basic factor is water and sewer. Unlike many surrounding Counties, Chatham for the most part does not have County wide water or sewer. There are pockets of areas in Chatham where County water may be available, but no where in the County is waste water treatment service available. While it is true that within the town limits of towns in Chatham there may be sewage service available, for this discussion we focusing on rural undeveloped land out in the County. Private sewage service is available in some developments in the County and in rare instances may be made available to an adjoining property. But again we are focusing this discussion on rural undeveloped land and not lots in a subdivision.

This means that for most of us interested in buying or selling land in the County, we must then obtain water and sewer permits from the County. Sewage permits, more commonly known as improvement permits are usually the one most coveted as it is dependent upon soil quality and soil types found on the land. The process of testing the soils by a County Soil Engineer for a septic system is called Perking or a Perk Test. I have heard in the past that only about 32% of Chatham County is suitable for a conventional type of septic (sewage) system. While given enough well depth, water can usually be found but not always. It is the soil quality on the property and not the absence of water that usually makes the property unbuildable or at least much more expensive to build on due to the requirement of a more complex septic system for poor soils.

The County information for application and fees associated with obtaining a perk test can be found at this link: http://www.chathamnc.org/Index.aspx?page=1054.

Chatham County's home sales were off in August by 12% year of year from last August. In 2008, Chatham had 54 home transactions according to the Triangle MLS system. For 2009 that number was down slightly by 6 to 48 home transactions, indicating a slowing of the drop in year over year home sales. The news is still tough for area Realtors, though all are seeing increased activity and pending contracts.

Looking at the numbers in more detail, we see that the average home sold square footage dropped by 154 sq. ft. indicating a continuing trend to smaller homes as well. The average sales price in Chatham for August 2009 was $348,274, down $58,064 from $406,338 for last August.

The average days on the market was up slightly from 122 days last August to 154 days for August 2009 for homes that sold. Homes were selling for 4% less as a percentage of asking price, from 96% in 2008 to 92% this year.

There were pockets of better than average performance and pockets or worse than average performance. For the most part, homes priced correctly were selling in all price ranges. Homes in what would be termed "First Time Home Buyer" market were the most active on the market, followed by land, and finally by luxury homes.

With today's market, many people are thinking about alternatives to selling their existing house, especially if they are trying to move do to a job or other relocation need. Before you go looking for that new house before the rental agreement ink has dried, you need to check with your mortgage company to make sure that will work.

Due to changes and new rules, many mortgage companies will not let you count rental income as income. At least not without some requirements. So what you end up with is an income to debt ratio that is way off. The problem occurs because you have an existing house whose mortgage is showing on your debt sheet. Then you go to try and include your lease income on your income sheet and the bank says not so fast.

It is best to check with your mortgage company to see how they need you to work with them. In many cases they will require a few months of rent to be held in your account or escrow, but in some cases they may just say they cannot approve you for a new loan while you still own your existing home, leased or not.

Again it is best to check first and ask around with different mortgage companies as requirements may differ from company to company.