Looking ahead: Triad real estate experts share measured optimism for 2010
Looking ahead: Triad real estate experts share measured optimism for 2010
The bad news: The Triad real estate market isn’t out of the woods yet. The good news: It will be in less than a year.
That’s the consensus of experts who study the local market.
Don Jud, professor emeritus at the Bryan School of Business and Economics at UNCG, addressed a packed house Tuesday for a luncheon at the Greensboro Regional Realtors Association and offered generally good news during his forecast report on the state of the Triad real estate market.
“I think the national economy is in a recovery. And that recovery, in my tracking of it, seems to be picking up a little steam,” said Jud, who prepares quarterly reports for the GRRA. “I think the economy here in the Triad is in a recovery, and all of our numbers that we watch in the Triad economy point to a recovery here. As the national recovery takes hold, I think our local situation is going to improve. Short term, over the near term, I’m fairly optimistic, and I think as we move into the next year we’re going to start seeing some employment growth here in the Triad.”
Employment growth will be key to keeping the Triad’s high rates of delinquency in mortgage payments from turning into something worse, says Bill Guill, a Realtor/broker with Allen Tate Realtors in Greensboro and 2010 president of the GRRA.
“If unemployment continues to rise, that delinquency rate is probably going to lead to more foreclosures,” Guill said. “We’ve got a high delinquency rate and a low foreclosure rate. Something’s gonna have to give — either delinquency rates are gonna have to go down or foreclosure rates are gonna go up.”
Foreclosure rates are low in the Triad for now, and home inventories are starting to return to normal levels, according to Edsel Charles, president of MarketGraphics in Nashville, Tenn., a company that tracks real estate trends in North Carolina and 20 other states.
“What we’re finding in the Greensboro world is that inventories continue to drop,” Charles said. “The reason is this: The (number of) people that are moving into new homes continues to be more than the builders starting homes.”
Developers continue to overbuild in pockets of the Triad such as Burlington and Kernersville, he said, but for the most part inventories are leveling off.
He offered a detailed look at where inventories are headed over the next year. Areas that should be back to normal by February or March include northern High Point, west-central Forsyth County, northeast Davidson County, northeast Guilford County and Mebane in eastern Alamance County.
Charles predicts that the following areas will return to normal inventory levels by late spring: south-central Forsyth, Clemmons, Randolph County, the area just south of Greensboro and central Guilford County from the airport to Lake Jeanette. Areas expected to recover by summer include Kernersville, most of Davidson County, northwest Randolph, west-central Guilford and the city of Greensboro. Everywhere else should be back to normal by fall, he said, including northeastern Forsyth, Burlington and southeast Guilford.
Buyers waiting for the local market to bottom out have already missed their window of opportunity, Charles said.
“My sense is that we have already found the bottom in home pricing, and we already are seeing a little bit of firming up of prices in about three-quarters of the market,” he said. “I don’t believe there’s any more downsize. I think consumers who are saying, ‘We’re just gonna wait until it goes to hell in a handbasket,’ it’s already past that point. They’re already past the point of the best deals.”
Local buyers have been snatching up homes in the under-$200,000 range, thanks in large part to federal tax credits for first-time buyers and people who haven’t bought a home in three years or more, Guill said.
“We really need to try to shake up the price point above the $200,000 range and see if we can’t get something started in that,” he said.
It’s a buyer’s market, and sellers need to take several factors into account to give themselves an edge, according to Guill.
“I do feel like the market’s better,” he said. “There are a lot more serious buyers out there. But it’s also going to be critical, like it has been, for sellers to be aggressively priced, and the houses need to look good, because there’s such a selection that buyers will just go to the next one. It’s really important for the house to be staged right, priced right, look great.”Contact Eddie Huffman at 373-7335 or eddie.huffman@ news-record.com.
National groups also predict expansion
The real estate market will experience growth and expansion next year, according to projections from most major real estate organizations.
That’s the forecasting consensus of the National Association of Realtors, National Association of Home Builders, Mortgage Bankers Association, Fannie Mae and Freddie Mac. They are all predicting solid growth in 2010, according to a study conducted by Real Estate Economy Watch. The consensus is in sharp contrast with the market this year.
This year will show about a 36 percent drop in residential construction (housing construction starts) and a 17 percent drop in new home sales. The organizations are predicting a modest increase in existing home sales next year. This year, many sales resulted from the availability of foreclosed and other distressed properties, along with low mortgage interest rates and a substantial tax credit for first-time buyers.
In fact, foreclosure sales accounted by about 50 percent of all home sales during the first quarter of this year — 33 percent during the second and third quarters, according to a report from the NAR.
The organizations generally agreed on their projections for next year’s home sales, but differed on home prices. The group consensus pointed to existing home sales increasing by about 9.6 percent next year to about 5.4 million units.
Here’s an interesting comment from Jay Brinkmann, chief economist for the Mortgage Bankers Association, about housing projections:
“Whenever I’m asked when the housing market will recover, I explain that the economy and housing market are inextricably linked. The number of people receiving paychecks will drive the demand for houses, and recovery will begin when unemployment stops rising. Job losses put incredible strain on all our systems, especially housing.”
Unemployment is certainly a factor in North Carolina, which had a 10.8 percent unemployment rate in September, according to the state’s Employment Security Commission report from October. There was marginal improvement in the Triad metro areas: Burlington’s rate was 11.8 percent, down from 12.1 percent; the Greensboro-High Point rate was 11.1 percent, down from 11.5 percent; and the Winston-Salem rate was 9.8 percent, down from 10 percent.
— Jim Woodard of Creators News Service and staff reports
Looking ahead in Triad real estate 110809
Key numbers
There has been measured improvement calculated in the Triad housing market, according to a recently released report on third-quarter sales that looks at Guilford, Alamance, Davidson, Davie, Forsyth, Randolph, Stokes and Yadkin counties.
■ The number of existing, single-family homes sold in the Triad was 2,046 in the third quarter ending in September. The number was up 18.4 percent compared to the level of sales recorded in the second quarter, and it was 3.6 percent above the number sold in the third quarter 2008.
■ The sale-list price spread, which shows the ratio of selling to listing price, was higher at 92.3 percent, indicating a decline in the level of discounting in the market. Over the past year, time on the market has risen, but the spread has also risen, indicating the average home seller needs more time to sell a home but is getting a larger percentage of the listing price.
On the other hand:
■ The inventory of homes on the market was 10,628, or 4.6 times the number of homes sold in the third quarter.
■ The average quality-adjusted price of an existing home in the Triad was $157,957. The average this quarter was down
8.4 percent from the average recorded in the third quarter of last year. By comparison, over the past year, consumer prices nationally have slipped 1.5 percent.
■ The number of real estate foreclosures in the Triad was up 2.7 percent in August and is up 18.8 percent over the past 12 months. Nationally, foreclosures are up 18 percent over the past 12 months.
Source: Triad Housing Report, compiled by Don Jud, professor emeritus at the Bryan School of Business and Economics at UNCG, for the Triad MLS
