As my weekly ritual goes, I read between 15 and 20 articles surrounding the nation’s real estate market and its relation to the Raleigh, North Carolina market. This week amongst all of those articles, one particular number caught my eye, -3%. In an article by CNN Money (http://money.cnn.com/2005/12/29/real_estate/buying_selling/handicapping_housing_markets/index.htm) this percentage, -3%, appeared and represents the amount that homes in the Raleigh market are overvalued/overpriced. In other words, it means our homes are worth more than we are buying them for.
The percentage a home is overvalued is the amount of equity in a home that is not justified and can be lost when there is a downturn in the economy. Unfortunately, the national economy is in one such downturn. Raleigh is in a position where our home values will not be hurt and we are continuing to benefit from a strong local real estate market. In markets such as Naples, Fl and Sacramento, CA, homes are priced >60% the current value, hence it is more risky to purchase a home. These homes are losing value and the homeowners are losing money. As a result, owners are not able to list their homes, because they now owe more than they are able to sell the property for.
On the other hand, purchasing a home in Raleigh is currently a wise investment. Our homes are appreciating in value and the prices they are being purchased for are not only safe, but justified and often allow a buyer instant equity upon closing on a home. My heart goes out to those families in other markets who are experiencing difficulty selling their homes. I am relieved for the Buyers and Sellers in the Raleigh real estate market, the #1 Home Sellers market in the nation, to know that that is not a challenge we face.
