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Old 01-02-2009, 08:05 AM
 
Location: Morehead City, NC
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rubber_factory,
I thought you'd find this intereseting!

Local home sales take another nosedive

Local home sales take another nosedive | StarNewsOnline.com | Star-News | Wilmington, NC
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Old 01-02-2009, 08:48 AM
 
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Yup! I read that the other day. I am not sure what to make of it. I have observed that short-term sales volume has little/no effect on short-term prices. Sales could fall to zero, sellers would still wait for whatever it is they're waiting for.

I can say that there is a major disconnect between what some Realtors here claim: "We have fallen to 2003 prices!" - and what I see on my personal house-by-house analysis, which is that people still ask for $20,000 - $50,000 more than they paid in 2003-2007. (and my price range is sub-$200k, so that's pretty major)

You can find foreclosures/REOs for a steal, though. I've seen some sell for 25% off an already-discounted list price. I am beginning to move that direction, despite the extra risk and hassle. Several houses have been sold for $120k-ish, repainted, and thrown back on the market for $200,000. Looking for those $120k's might be my new angle.

Last edited by le roi; 01-02-2009 at 09:03 AM..
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Old 01-02-2009, 10:50 AM
 
Location: Morehead City, NC
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Here are the average sold prices for the Crystal Coast area. I feel confident that the trend parallels the Wilmington market.
Interesting to note-If you start with the '03 price and increase it by 4% to 5% each year you wind up with the $255K average.
I mention this because I have heard here at CD and other places that a 4% to 5% annual increase in real estate prices is a justifiable rate of a appreciation.

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Old 01-02-2009, 12:06 PM
 
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Bill,
I try to use median prices, since I believe that average prices can be skewed by the volume of beach sales vs. starter home sales. I think median sales give me a better idea of what the typical buyer is paying.

From my calculations, median prices were 45% higher in November 2008 than they were in December 2003. This gives us an appreciation rate of about 9% annually from 2003 to 2008. The declines of 2008 are minimal, and have just barely put us at 2006 prices. I can personally say that these median figures are indicative of what I see while I'm out there shopping.

So if we are using 2003 as a benchmark where prices were sustainable and uninfluenced by easy credit, and we assume that houses in Wilmington have appreciated 5% annually since then, then median prices should be $174,541. This means that prices are still about 15% too high.

Furthermore, I am not even factoring that Wilmington's economy itself will be hurt by the R/E slowdown. A large portion (20-25%, per the article) of Wilmingtonians put food on their table through Real Estate sales & development. If transplants aren't moving the inventory, and new homes aren't being built, then this creates a ripple effect on Wilmington, hitting incomes, jobs, GDP, and tax revenue. All that will probably feed into further declines down the road, in addition to the potential credit-influenced declines.


http://i200.photobucket.com/albums/aa215/reeeems/image001.gif (broken link)


BTW, this is info from the Wilmington Regional Association of Realtors, that I plugged into Excel. 2008 does not include December data.

http://www.wrar.com/LocalArea/Statis...icalreport.htm

Last edited by le roi; 01-02-2009 at 12:56 PM..
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Old 01-03-2009, 01:54 AM
 
Location: Morehead City, NC
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rubber_factory,
It's 3;45AM as I write and only have a few seconds to respond.
How will the RE slow down affect the local economy? Personally-I don't think by much. Although RE can leap a community forward in terms of standard of living-All that will happen here will be more of a "resumimg normality"
Availability of free money drove the great sales and price surge-Not demand or need-so the local economy won't be "hurt". It won't grow at the pace anticipated either.
Much more to add-But I got to head out the door to hop on a boat! The Discovery Channel's Modern Marvels has brought me out of my TV/Film retirement to shoot an episode on giant bluefin tuna!
Bill
PS: Rubber-I gotta add-You're very smart fellow. Just don't over think the issue.
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Old 01-03-2009, 02:23 AM
 
Location: Greenville, NC
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Quote:
Originally Posted by rubber_factory View Post
So if we are using 2003 as a benchmark where prices were sustainable and uninfluenced by easy credit, and we assume that houses in Wilmington have appreciated 5% annually since then, then median prices should be $174,541. This means that prices are still about 15% too high.
What are the P/R ratios? It should be around 15.

An area can appreciate at a greater rate than 5 or 6 percent if it's standard of living has gone up as well. An example is like comparing Beaufort County to Montgomery County, MD. The SOL in Montgomery County is significantly higher than Beaufort County as are the RE prices. If B County were to have an increase in it's SOL to make it more like M County then RE prices will increase at a rate greater than 5 or 6 percent. There are way more factors that affect the cost and appreciation of this simple exercise but you get the point.

Has the Wilmington area experienced any large scale changes in the last 5 years that would account for an increased appreciation rate?
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Old 01-04-2009, 03:48 PM
 
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Quote:
Originally Posted by Richard Martin View Post
What are the P/R ratios? It should be around 15.
I don't have any good data for average rent in Wilmington.

I do know that there are far more rental listings now than there were two years ago. There were about 10 - 20 listings per day in 2007, when I was keeping a close eye on craigslist. Now there are 50-200 per day. Flawed data, I know, but that's a pretty significant increase.

Quote:
An area can appreciate at a greater rate than 5 or 6 percent if it's standard of living has gone up as well.
I agree! I think 5 or 6 percent is reasonable over some time periods, in some areas of Wilmington. The devil is in the details.

Quote:
Has the Wilmington area experienced any large scale changes in the last 5 years that would account for an increased appreciation rate?
I know of some neighborhoods that have, and some that have not.
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Old 01-05-2009, 10:18 AM
 
22,769 posts, read 26,329,558 times
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Quote:
Originally Posted by Bill Hitchcock View Post
rubber_factory,
It's 3;45AM as I write and only have a few seconds to respond.
How will the RE slow down affect the local economy? Personally-I don't think by much. Although RE can leap a community forward in terms of standard of living-All that will happen here will be more of a "resumimg normality"
Availability of free money drove the great sales and price surge-Not demand or need-so the local economy won't be "hurt". It won't grow at the pace anticipated either.
They key word here is "anticipated." In any area, some peoples' jobs exist with the anticipation that houses will need to be designed, built, surveyed, mortgaged, and sold. As R/E sales volume falls all over America (and the world), the ranks are thinning among these industries.

My point is that in my area, these industries are not just "a market," they are the backbone of our economy. They employ a huge share of our blue and white collar workers. We don't manufacture cars or paper clips.. instead, we develop property and sell housing to transplants/retirees at a huge profit. My belief is that we've overbuilt this "backbone" to meet an artificial demand for housing.

I don't have to look far to see the signs: three of my friends (two carpenters and a R/E agent) have all left town in the past 6 months. National Gypsum, who makes drywall, went out of business recently, laying off 60 people. Unemployment has doubled in the past year. Vacant rental listings are through the roof. Listed homes for sale are through the roof. 1 out of the 15 homes I've looked at has been occupied, the other 14 were empty. Several of them were 100% financed. There are plenty of "Agent owned" houses for sale, too. R/E firms are consolidating. I'm betting there's a massive shadow inventory, too.

Having said all that, our city's leaders are very confident that out-of-state buyers will return in the Spring. Of course, they have a dog in this hunt.. most of them make their livings through real estate!

Last edited by le roi; 01-05-2009 at 10:41 AM..
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