Archive for December, 2012

Is it a good or bad time to sell a home in the Triangle?

December 7, 2012
Put a sold sign on your home today!

Put a sold sign on your home today!

The Triangle market has seen some positives. WIthout being too technical, I will attempt to give you a brief assessment of the current conditions and try to explain some of the data you will be given. Of course, it stands to reason that statistics can be modified to say what you want them to say, but I have not made up these statistics, just reporting them, courtesy of the Triangle Area Residential Realty (TARR) report and the Raleigh Regional Association of Realtors (RRAR).

October appeared to have been a great month for the Triangle as a whole. According to the RRAR, sales in the Triangle rose 31.1% and 33.2% in Wake County. Median sales price also rose in October with the area seeing a 2.7% increase while Wake experienced a 3.8% increase. The month supply for each has decreased over last year at this time with the Triangle having 6.6 month supply and Wake reporting 5.1 months of supply, down from 8.8 this time last year.

The year-to-date numbers run very similar to October numbers. The Triangle area saw 19.7% increase in sales and Wake boomed to 23.7% increase. In fact, Wake County had over 11,000 closings, the first time we have been over 10,000 since 2008. Median sales price has gone up in both areas; 2.4% and 2.9% respectively.

One of the glaring inaccuracies in the market is the reduction in inventory over the last two years. In Wake County, we are at 2005 levels of inventory. Normally, a market with improving sales would result in an increase in listings…as more homeowners will want to take advantage of an improving market. This has not been the case in the Triangle. Why?

I believe there are two reasons this trend has occurred. First, many of the homeowners who tried to sell in 2011 and could not sell because of the market have decided to stay in their homes. Whether they do not have the confidence in the market or they are tired of trying, they are staying put.

Another hypothesis reported by TARR centers around the four main reasons homes go on the market. Relocation and distress sales will be in the mix no matter the market condition. In our current market, there may be more distress sales, but ultimately, this will be present no matter the market. Those looking to move up or downsize are making emotional decisions that are not our of necessity and as such, are more tied to market conditions, or at least the perception of the market conditions.

Before the real estate market crashed, homeowners in the Triangle were staying in their homes on an average of 4.5 years. Today, we are seeing that trend move upwards to 9 years on average. Most of this can be attributed to the depreciation we have seen in the Triangle and the nation as a whole. As a general rule, people who do not need to sell are staying in their homes, hoping to wait out the market decline and see appreciation again.

With the fewer listings on the market and the rising sales, the Triangle and Wake County in particular, has been moving towards a seller’s market. Technically, less than 6 months of supply indicates a seller’s market. So, we are currently experiencing a seller’s market in Wake County. But, I would caution that as the market continues to improve and the perception of the economy recovering, we will begin to see more homes put on the market with those moving up or downsizing. Additionally, I had read an article several months ago that stated that only about 10% of all foreclosures have been released for sale to avoid decimating the housing values across the nation. If this is accurate, appreciation will be minimal over the next several years until these homes can be sold.

In conclusion, the market is not great and it is not bad. I expect that if the current trend continues through 2013, we should start to see some appreciation by the end of the year. A rise in median home sales price does not mean we have seen appreciation. With the cheap money (low mortgage rates), people are able to buy a little more home than they could with higher interest rates.

So, to answer the question of whether it is a good time to sell in the Triangle. I think it is a great time to sell. Traditionally, the winter months are the slowest times for the real estate industry. With nearly a third of all homeowners having school age children, the market tends to be tied to traditional school calendars, even though Wake has year-round schools. With this time of the year, historically there are fewer homes on the market during these months. However, as you have seen in October, there are still buyers out there looking to buy. This will allow you to take advantage of a seller’s market before Spring hits and thousands of potential homes flood the market. This may result in the market shifting back towards a buyer’s market. As Warren Buffet always says about the stock market, “buy when others are selling and sell when others are buying”. This is the best way to ensure you take full advantage when you sell your home.