Gains in local real estate trends...

Our local housing market may be headed in the right direction - with 17.6 percent more homes were sold in the Triangle residential market during October compared to the year prior!

The Triangle MLS (multiple listing service) tracks new and existing home sales data in Wake, Durham, Orange and Johnston counties and in October 2,009 homes were sold compared to 1,709 the year prior.

Data from the Triangle Area Residential Real Estate report also indicated that the dollar volume of homes sold last month also grew, by 8.3 percent, to $441.8 million in October compared to $407.9 million in homes sold the year prior. That’s the first gain in sales volume since October 2008.

Much of this change can be contributed to the federal $8,000 first-time home buyer tax credit program and the new tax credit program for move up buyers will help continue this trend. This program extends the first time homebuyer tax credit and offers a $6,500 tax break to qualified homeowners looking to move up to middle-market homes that cost no more than $800,000. Another important contributing factor is that home sales in the Triangle started declining in late 2008, so the market today is in comparison to one of the slowest housing markets in decades.

If you are a seller, keep in mind that overall, the average Triangle home sale price was down by 8 percent in October compared to October 2008, and it took four more days on market to sell than the year prior. The positive news is that the inventory of homes for sale has declined by 13 percent which means there is less competition for the homes on the market for sale. To look at this information by County:

· In Wake County, 1,141 homes sold in October compared to 967 home sales the year before, which is an 18 percent increase. Total dollar volume of homes sold in the county was $270 million, which was up by 5.5 percent from the year prior.

· In Durham County, 269 homes sold in October compared to 210 homes sold the year before, which is a 28 percent increase. Total dollar volume of homes sold in the county was $52 million, which was up by 23.4 percent from the year prior.

· In Orange County, 91 homes sold in October compared to 62 homes sold the year before, or a 47 percent increase. The total dollar volume of homes sold in the county was $28.3 million, which was up 43 percent from the year prior.

· In Johnston County, 193 homes sold in October compared to 176 homes the year before, or a 9.7 percent increase. Total dollar volume of homes sold in the county was $32 million, which was up by 5 percent from the year prior.

Home buyer tax credit extension and potential expansion

Everyone’s been asking about the home buyer tax credit extension and potential expansion so I thought I would give you an update.

“The new compromise which will be part of the unemployment extension bill would extend the existing credit and create a new $6,500 credit for move-up buyers. Both types of buyers must sign a binding contract to purchase a new or existing primary residence between December 1, 2009 and April 30, 2010. Buyers would have until June 30 to close the deal.

Move-up buyers will be eligible if the home they are leaving has been their principal residence for five years or more.

The cost of the newly purchased home may not exceed $800,000 for new or move-up buyers. There is no partial credit for homes over $800,000.

Home buyers would not have to repay the credit as long as they live in the home as their principal residence for at least 36 months.

The income limits for all buyers would rise to $125,000 for single returns and $225,000 for joint returns, up from $75,000 and $150,000 respectively, under the current program.

The full Senate will probably vote on the unemployment extension bill, which includes the home buyer credit, next week. If it is approved, it will move to the Assembly”, which "could agree to the amendment or disagree and send it to a conference committee."

I will keep everyone updated on the progress of this bill, you can check the story out here.

New data is out from the National Association of Realtors...

Existing home sales bounced back strongly in September with much of the increase being attributed to the rush of first-time buyers trying to claim the tax credit before the end of this month. Sales jumped 9.4 percent to 5.57 million units over August sales of 5.09 million, marking five gains in the past six months and is 9.2 percent above levels seen last year. Sales activity is at the highest level since July 2007 when sales hit 5.73 million.

The current housing supply is the lowest seen in two and a half years. Total housing inventory at the end of September fell 7.5 percent to 3.63 million existing homes available for sale, representing an 7.8-month supply at the current sales pace, down 16.1 percent from August’s 9.3-month supply. Compared to a year ago, there are now 15 percent fewer homes on the market. According to Lawrence Yun, NAR chief economist, “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.”

Mortgage Rates for 30-year fixed loans continue to hover around 5 percent. While having risen above the ultra-low 4.78 percent reached in the spring, rates remain at attractive levels for people looking to buy a home or refinance. As an economic recovery is underway and concerns over inflation come back, experts expect mortgage rates will likely go up. (NAR, Oct 23-09 Report)

My advice based on the current economic climate and local market conditions is as follows:

1. Buy well within your means. Although you may want to buy a home you can see yourself growing into, stay within a conservative percentage of what you currently make. If you had to take a part-time instead of a full-time job, if your salary or hours were cut, or if you become a one-income household instead of two, make sure your monthly payment would still be attainable.
2. Put down a large down payment. Not only will your monthly payments be less, but the equity from the down payment creates a buffer zone. If you put 20% down when you purchase your home and home prices in the area drop 5%, you still have at least 15% equity in your home. For sellers, this built-up equity provides flexibility-should you need to sell in a hurry.
3. Have an emergency fund. Experts advise everyone, not just homeowners, to have an emergency fund of at least six months’ worth of expenses. This fund should be saved in a liquid account, like a money market or savings account, for easy access if needed quickly. With the average time to find a new job currently above six months, seven or more months of savings is a good goal.
4. Pay down other debts. Lowering or eliminating debt service is always a good move and is particularly wise in the current job climate. If you were without a job and income, lower fixed monthly expenses help ease your financial burden and stretch the money in your emergency fund.

Believe it or not, it’s a great time to buy and sell real estate! If you or someone you know is considering making a move, I would love to help. Call today for a confidential consultation and find out if you can afford your dreams. Make it a great week!