2011 January | Bull City Real Estate

Archive for January, 2011

Dr. McGeehin, Welcome To Your New Home

Sunday, January 30th, 2011

On Friday, RTI International announced that Michael A. McGeehin, Ph.D., would be the new leader of their climate change health effects program.Dr McGeehin comes to RTI after a 32 year career at the Centers for Disease Control and Prevention in Atlanta and served as director of the Division of Environmental Hazards and Health Effects of the National Center for Environmental Health.

With his new position, we assume Dr McGeehin will be moving his family to the Research Triangle. We thought it would be interesting to look at some current house listings that are similiar to the home they currently have in Atlanta. Assuming there aren’t any major life changes involved, here are a few homes the McGeehins might be interested in.

Perhaps the closest match would be 100 Shotwell Court between Durham and Hillsborough. This beautiful home is in the Hardscrabble community in Hillsborough and has 4 bedrooms with 3 1/2 baths nestled on slightly less than one acre of land. This home also has a newly remodeled kitchen and is ready to move in, which means one less worry as the McGeehins drive up I-85. While it is a bit of a drive from Hardscrabble to RTI, most of that drive is straight down the Durham Freeway, so commuting should not be a major issue. Plus, the property is a great value listed at $485,000. [photo credit: Romesh Shonek]

If the commute is an issue, the McGeehans might want to look at 141 Westongate Way in Cary. This home in the Governors Row community has 5 bedrooms and 4 1/2 baths in just over 5500 sq ft of space. 1300 sq ft of that is in the finished basement, so the kids [or relatives, or pets] can have their own space away from the grown-ups. Compared to their home in Atlanta, they will lose some acreage, as this home sits on a quarter-acre lot, but it is just a few miles from RTI, so that commute should not be more than 15 minutes even on the worst days. This home is currently listed at $719,000. [Photo credit: Ann Neisz]

One final home the McGeehins might want to consider is 107 Ansley Walk Lane in south Cary. This is another great home in the Windermere community with 5 bedrooms and 5 full baths in just over 5500 sq ft. This home also has about 1600 sq ft in a walkout basement so the kids can have their space while the parents have theirs. Like the property on Westongate above, they will lose some acreage, as this property is about a third of an acre, but to commute up NC-55 should be a quick one, and become even quicker as I-540 is extended towards the area. [Photo credit: Duane Wilson]

These three homes are a small sample of the great properties available in the Research Triangle. If you are interested in any of these homes, or would like to know more about corporate relocation to Durham and the Research Triangle, please call [919-308-9816] or email me [steve@bullcityrealestate.com] and we’ll get started.

Posted in Uncategorized | No Comments »

* Buying Still Beats Renting in Durham – Raleigh

Thursday, January 27th, 2011

The Movity folks have worked up a nice maps for Trulia looking at the “Rent vs. Buy” question. It compares the median rental rate against the median purchase price for homes in several major markets and them modifies for the foreclosure rate, job prospects and population. Here is the info for all cities nationwide, but I wanted to point out what they think about our neck of the woods.

Tags: buyers, Durham, Raleigh

Posted in Uncategorized | No Comments »

* How Would Losing the Mortgage Deduction Affect Durham Home Owners?

Thursday, January 27th, 2011

With the government’s new-found focus on deficit reduction, politicians have been talking about eliminating the mortgage interest deduction. They throw around the big numbers about how many millions it would bring the federal government, but what would this do for the average Durham homeowner? Let’s run some numbers and find out.

For starters, let’s assume a Durham home owner just bought an average Durham home for $200,000 and financed $180,000 of it with the first payment coming due January 1, 2011. Their monthly mortgage payments [principal and interest] would be $966.28 and their interest paid in 2011 would be $8,939.69. When the new homeowners fill out their taxes in early 2011, that $8,939.69 is deducted from their taxable income. Assuming that their tax rate in 28%, that would reduce their taxes by $2,503.11.

Now, let’s assume Congress has gotten rid of the deduction. Our Durham homebuyers now have to come up with an extra $2,503.11 every year — $208.59 per month. Like many homeowners in this economy, our example family no longer has any place to cut expenses, so they have to downsize. Now they can only afford a mortgage payment of $757.69 [the original $966.28 less the former tax deduction of $208.59]. Their new mortgage can’t be more than $141,000 — almost 22% lower than their original mortgage.

So, what does that mean in English? If Congress completely eliminated the mortgage interest deduction, some combination of these two things would happen;

Home prices have to fall so that our original $200,000 home can still be affordable to our home buyers. Using this example, it would have to fall to $161,000 [don't forget that $20,000 down payment] – a drop of almost 20%
Everyone will move down a step [OK, a half-step] as they adjust to the new reality. Move up buyers stay in their starter homes, and former starter home buyers simply can not afford a home at all, so they stay renters and never enter the market. The pool of available buyers remains small and our housing recovery is delayed even longer.

Both of those are bad choices. Those of us in the real estate industry know that hard decisions need to be made in the future to rein in our government spending. We only hope that our leaders take a long hard look at all the numbers before tinkering with the mortgage interest deduction.

Posted in Uncategorized | No Comments »

* The (Real Estate) Times, They Are A Changing

Wednesday, January 19th, 2011

January is a time for changes. This is just as true in the real estate industry as anywhere else. January 2011 is a special time of change in real estate, as the NC Real Estate Commission fundamentally changed the process of buying a home in Durham. It is worth taking a moment to look at how the process changes starting this year.

Under the old system, there were many timelines and deadlines. Inspections had to be done by a certain date, followed by several repair deadlines. Then there was a separate deadline to make a loan application followed by a deadline for confirming financing and a few other deadlines all of which had to be met to make a smooth closing.

Under the new system, all of that is gone. Instead, there is a single deadline – the “Option Termination Date.” When the initial deal is finalized, the buyer pays a negotiated amount [the "Option Fee"] which is non-refundable, and gets the right to do whatever inspections and reviews are necessary for an amount of time negotiated between the buyer and seller. Until that period ends [the "Option Termination Date"], the buyer has the right to withdraw from the agreement for any reason, or no reason at all and keep the earnest money. After that date, the seller generally keeps the earnest money if the contract is terminated [unless, of course, the seller breaks the contract].

(This is, in fact, the way commercial real estate has been for years. It is also very much like the “Alternative 2″ section in the old contract)

So, why is this an improvement for Durham home buyers and sellers? First of all, it makes the closing process easier. All the schedules and timelines have been replaced by one go/no go date. That makes the process easier to explain, easier to track, and leaves little room for “gotchas.”

Secondly, it lowers the mental threshold for entering into a contact. If a buyer likes a property, there is the chance to “put it on layaway” for a period of time. This could lead to faster sales as that one big hurdle for buyers is split into several smaller decisions.

Overall, it remains to be seen what all the impacts are going to be. In particular, it will be interesting to see what is paid in Option Fees. Local real estate agents are divided on this — some feel that it will approach the mortgage payments required during the Option Period, while others feel option fees will be relatively low. Personally, I fall in the latter camp — I expect to see Option Fees in the $250-$500 range with an equivalent reduction in the earnest money offered.

We will certainly keep an eye on how this shakes out. Hopefully, as transactions using the new forms start of close in February, we will begin to see how the wind blows. When we get that forecast, we’ll certainly let you know.

Tags: buyers, legal, sellers

Posted in Uncategorized | No Comments »

* December Housing Numbers for Woodcroft, Parkwood and Elsewhere in Durham

Saturday, January 1st, 2011

2011. New year, new opportunities. But to close the books on 2010, we have to talk about December housing sales, so let’s get into it.

For all of Durham County there were [believe it or not] 2,011 homes listed for sale at the end of December – a drop of just over 10%. 193 sales closed in December, an increase of almost 50%. Using December figures, it would take 10.4 months to work through our current inventory which is an drop of 6.2 months.

For the 27713 zip code there were 422 homes listed at the end of November – a decline of about eleven percent. Only 35 homes sold during November, a drop of a single closing. That combination moved the adsorption rate to 11.1 months – an drop of exactly one month.

For what it is worth, these sales numbers are almost exactly what the numbers looked like for December 2009, which had 179 closings in all of Durham County and 36 closings in the 27713 area code. Where things are different is the number of homes in the market [countywide: 1,774 in 2009 vs 2,011 today | 27713: 286 in 2009 vs 422 today.

There could be a number of reasons why homes are remaining on the market over the Holiday season. One possibility is that more of the market is bank-owned property, which isn't withdrawn in the winter. A second possibility is that sellers are under enough pressure [either to sell via a short sale, or just to sell in general] they have decided to leave their home on the market during Christmas. We will learn more about the why after we see how many houses are listed in early 2011.

As for the low sales, one of the bloggers I follow said it best – “You know who buys home between December 15 and December 31? Investors”

Here’s the updated neighborhood information.

	Total Available Listings	Total Closed Sales	Adsorption Rate [in months]	Avg Sale Price
Woodcroft	55	4	13.8 [+5.4]	$120,750 98% of list price
Hope Valley Farms	53	7	7.6 [-4.0]	$202,343 97% of list price
Woodlake	10	3	3.3 [-11.7]	$213,333 97% of list price
Parkwood	28	3	9.3	$140,667 98% of list price
Chancellors Ridge	16	1	16.0 [---]	$313,000 98% of list price
Wynterfield	14	1	14.0	$121,990 98% of list price
Grandale	9	0	N/A	N/A
Audubon Park	8	0	N/A	N/A
Colvard Farms	13	0	N/A	N/A

As is usual in slow months, sales tend to congregate in the larger neighborhoods — Hope Valley Farms, Woodcroft and Parkwood. Woodlake also tends to hold up well in these slow months. The only surprise in the data was Forestwood with two closings. Forestwood, however is a community with a large number of rental homes, so it goes back to what we said earlier — investors were still out in December.

So, where do we go from here? Sales were weak throughout first quarter of 2010 as the general market combined with bad weather kept buyers out of the market. while I can’t predict the weather, there is no reason to believe the general market will be different in 2011. I expect a slight improvement over 2010 numbers going into 2011, but there probably won’t be anything to really crow about until the weather turns and we see the March numbers.

Finally, an administrative note. Starting in 2011, we’ll be tracking more communities in Southwest Durham — the communities along Garrett Road [Trotters Ridge, Marydell Estates, Bent Creek, Sterling Ridge and Ashworth] as well at the ones closer to Chapel Hill such as Downing Creek. The “27713 zip code” category will morph into a more general “South Durham” tracking system. Among other things, this gives us a larger sample size, which will hopefully make the data more useful. We look forward to adding our analysis to these new communities.

Posted in Uncategorized | No Comments »