Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Where are the high-rent areas in and around the Raleigh metro? It seems (coming from outside the state) that the rents are sooo much cheaper here, which is great for renters, but not so great for landlords...
I should think the Hayes-Barton area of Raleigh would be fairly high rent/high cost.
All this freakin doom and gloom.......enough! Why don't we all just jump off the nearest cliff and be done with it? I agree we are in for some less then prosperous times, but we are not heading into the GREAT DEPRERSSION HERE! Unemployment will go up a little across the country. We will get a mild spike in inflation, interest rates will go up some. Then things will stabalize and head back the other direction. This is just another cycle, caused by things we are not used to seeing. We have not had a real housing downturn in this country for 20 years. So everyone thinks this well be the end simply because we have not seen it before. Not going to happen folks.
I'm willing to wager anyone in here that within 24 months home prices will be stable and on the rise again.
I was just pointing out some data that shows that the best area for investment in this area might be in the future instead of now. You're saying the same thing, so I don't see why I get pegged with "doom and gloom".
BTW - housing cycles take years, not months, to play out. If you're willing to agree on an appropriate number for inflation, a reliable measure of home prices, and a reasonable definition for "rise", I'd take your bet.
KC, I was not responding to you, originally. I read all the posts and in general, lots of doom and gloom.
The national board of realtors, which has been historically
accurate with many of the their predictions, are estimating a 1.25% increase in home sales for 2008 over 2007! Sales from 5.6 million homes in 07 to 5.725 million in 08. However, they are also predicting a decline in existing home prices by as much as 15% in many markets. This decline would be in addition to what places like Florida, Boston, So. California have already been hit with. The "means" nationwide average deline is estimated to be somewhere between .0-2.25%. Now that number I can live with.
When you couple the fact that we will have up to 15% decrease in prices in many markets but only a maximum of a -2.25% overall across the country, what does this tell us? It means many places will actually go up in prices! Many will probably stay flat.
What do we know about RDU? Everyone and their cousin's dog wants to live here! I'll leave the rest up to you to figure. I actually see a very slight increase in prices in the triangle area over the summer months. Write it down!
Bottom line, we have a few markets that are going to get hit real hard! A few hit mildly, and a few will thrive. With sales expected to actually top last years numbers, this means there will be lots of home buyers, lots of demand still out there, lots of folks trying to buy and relocate.
This cycle began almost 3 years ago in Florida and Las Vegas when the prices peaked. The worst markets (Miami, Las Vegas, New Jersey, Detroit, San Diego, etc.) will likely bear the longest downturn. The healthier markets like Raleigh will probably have shorter and less severe issues.
Miami makes even southern CA look good by comparison, so I don't know how happy I'd be that we're doing better than Miami.
What's more interesting is to compare us now to us over history. Looking at it that way, things are less affordable here now than they've been in recent memory. What's fundamentally changed about the economics of this area since late 2004/early 2005?
The last two graphs in particular are interesting to me. It seems there was a fairly steady level of price to income ratio until about the end of 2004 and then it started climbing. The latest data on the site shows we're now 25% or more above a pretty steady historical average. The price vs rent ratio shows a similar trend (unfortunately the data doesn't go back as far).
Sure, it could be that in Jan 2005, the area magically became much more desirable totally separate from the housing bubble. But I think the timing is a pretty big coincidence given the number of equity refugees posting here asking for advice on buying a McMansion. With the housing bubble now a housing collapse in many of those areas, I don't see any reason why this area won't return to historical levels of affordability. This will bring rents with their historical ratio to prices.
This should fix itself as home builders slow down and go out of business as the bubble areas collapse, and as a recession sets in slowing down output from businesses.
Another thing to consider is that the average house size in Raleigh has grown over the last few decades. The luxury aspect has also grown. Therefore, we are not comparing apples and apples when looking at long term data. What used to be considered a very nice family home just doesn't cut it anymore with the "sophisticated" buyer. We are sort of comparing apples with caramel apples sprinkled with walnuts if we are comparing housing data and affordability over longer periods of time. I'd dare say that if we did compare similar housing, we would find that many properties are still affordable. It's just that the market is providing a much more upscale product than it used to provide. The same can be said for shopping, dining and other things that support our lives in the Triangle.
We don't need 'flip this house' types...we need good community members.
There can be positive or negative effects from "flipping" properties. Ihappen to think that crime ridden or run down areas benefit greatly from flipping so I went on a search to get you some information on this subject. As a real estate investor myself I believe that flipping properties in these crime areas actually helps the community. I agree that speculative investors can inflate property values in hot markets but in this market I think that flipping will help stabilize values by providing "sold comparables" that have been possibly rehabilitated helping the surrounding home values.
It's amazing, as soon as 1 or 2 properties get rehabbed in a less than desirable neighborhood everybody jumps opn the band wagon and it's only a matter of time before it becomes more desirable, purchased and restored/rehabbed.
Positive effects of real estate flipping
Although most arguments surrounding flipping tend to be negative, it is also possible to identify some benefits from the practice as well.
For example, "rational" flipping can encourage a rejuvenation and restoration of a previously decrepit neighborhood. (Under the broken windows theory, an unkept house/area attracts a criminal element, which drives out those making a responsible living, which allows for more criminal element, and so on in a vicious downward cycle.) The restoration creates jobs, particularly in construction, for locals and generates more sales (and sales taxes) to local vendors (initially those involved in selling construction materials). The newly remodelled homes will then attract new populations and businesses to a region, encouraging more economic development, plus the remodelled homes' higher assessed values brings more property tax revenues to local governments, allowing for more improvements to the area and driving out the criminal element.
Even on a single home basis, flipping can have positive impacts (the house itself will be in better condition and last longer, and can be sold at a higher price, thus increasing its property tax assessed value, plus increased sales for goods and services related to property improvement and the related increase in sales taxes).
Another thing to consider is that the average house size in Raleigh has grown over the last few decades. The luxury aspect has also grown. Therefore, we are not comparing apples and apples when looking at long term data. What used to be considered a very nice family home just doesn't cut it anymore with the "sophisticated" buyer. We are sort of comparing apples with caramel apples sprinkled with walnuts if we are comparing housing data and affordability over longer periods of time. I'd dare say that if we did compare similar housing, we would find that many properties are still affordable. It's just that the market is providing a much more upscale product than it used to provide. The same can be said for shopping, dining and other things that support our lives in the Triangle.
It's great that there are more expensive homes available, but the data is showing that people's ability to pay for them is not increasing along with the higher cost. People can be as sophisticated as they want, but without a way to pay for the added luxury, it's not a sustainable situation.
Loans are tougher to get, and getting more difficult if the GMAs have anything to say about it. There's less equity available to transplants, since their houses are worth less - if they can sell at all. So wages would have to make up the difference in affordability, and the data I posted shows that wages are going down compared to home prices, not up. So where's the extra money coming from to support a long-term move away from the average price-to-income ratio?
KC, I was not responding to you, originally. I read all the posts and in general, lots of doom and gloom.
I just see presentation of data and facts. It's not a good market. That's not doom and gloom, that's reality. If I were looking to buy a home with appreciation as an important part of the purchase, I'd like to see this information.
Quote:
The national board of realtors, which has been historically
accurate with many of the their predictions, are estimating a 1.25% increase in home sales for 2008 over 2007! Sales from 5.6 million homes in 07 to 5.725 million in 08. However, they are also predicting a decline in existing home prices by as much as 15% in many markets. This decline would be in addition to what places like Florida, Boston, So. California have already been hit with. The "means" nationwide average deline is estimated to be somewhere between .0-2.25%. Now that number I can live with.
When you couple the fact that we will have up to 15% decrease in prices in many markets but only a maximum of a -2.25% overall across the country, what does this tell us? It means many places will actually go up in prices! Many will probably stay flat.
The National Association of Realtors made a forecast a year ago that was far more optimistic than those by Wyss and many other economists. The Realtors expected only a 1 percent drop in the pace of existing home sales, and a 1 percent gain in median prices. Instead, 2007 will likely end with a 12.5 percent plunge in the pace of sales, and nearly a 2 percent drop in prices, the first such decline on record.
Keep in mind that the number's you're quoting above were made in the 4th quarter of this year - they're predicting 2 months out (and will still come in high). The "predictions" are consistently revised downward each month as new data comes in, so that by the end of the year after revising the number down a dozen or so times, the "prediction" is only a few % higher than the actual results instead of 10-20% wrong.
The Realtors also cut its existing home price estimate for the current quarter to a 5.3 percent year-over-year decline, which would mean the current period would see the steepest drop in that price measure on record.
Only a month ago the group's estimate was for only a 2.5 percent drop in prices in the first quarter.
The group's forecast released Tuesday also no longer sees even a modest rebound in existing home prices this year, as it had previously forecast, and pushed back the estimate of a full-year uptick in prices to 2009.
I'm not going to go through the effort of looking it up (google will find them), but the NAR has been predicting an uptick a few months out since 2006. Eventually they'll be right, but I've got no reason to believe it's going to be this time.
I've posted other examples of NAR forecasts being recklessly optimistic on city-data, but they're the last group to believe when it comes to giving an honest evaluation of the market. They're paid to help improve their member's business, which means pumping up home sales (and hence agent's commissions) no matter what it takes.
Quote:
What do we know about RDU? Everyone and their cousin's dog wants to live here! I'll leave the rest up to you to figure. I actually see a very slight increase in prices in the triangle area over the summer months. Write it down!
Bottom line, we have a few markets that are going to get hit real hard! A few hit mildly, and a few will thrive. With sales expected to actually top last years numbers, this means there will be lots of home buyers, lots of demand still out there, lots of folks trying to buy and relocate.
Keep in mind the difference between "wants to move here" and "can find a job, sell their old house and get enough money out of it to buy here". The active inventory numbers going through the roof mean that demand trending is down, not up.
And who's expecting sales to top last year's numbers? Sales over the past 5 months have been down 10-20 percent versus a year ago. What data indicates that this trend will change?
I mentioned this last time - what I'd love to see is evidence that I'm wrong. That is, some sort of real data (not annual predictions made 10 months into the year) showing that there are some positive things going on in RE. I'm just not seeing them.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
