Real Estate in Durham with Sidetrips to Chapel Hill and elsewhere in the Triangle
Last week, the Triangle Multiple Listing Service released its analysis of the Triangle housing market. Overall, it’s a lot like my own analysis — listings are down, but sales are up — by a lot in Durham and Wake Counties. For those of you who can’t get enough of numbers and analysis, here are the links;
Last month the federal Housing Finance Agency [which oversees Fannie Mae and Freddie Mac] sent out a Request for Information looking for ideas on how to deal with the excessively large inventory of foreclosed homes held by Fannie Mae, Freddie Mac and the FHA. I sent my response off this evening and thought it might be a good springboard for discussion. It’s a bit long, but here goes;
[Here's the full RFI -- Request for Information - Enterprise/FHA REO Asset Disposition]
Last month the Federal Housing Finance Agency [FHFA] announced a request for information looking for new ideas and ways to reduce the inventory of foreclosed properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration. In that RFP, you stated the following objectives:
- reduce the REO portfolios of the Enterprises and FHA in a cost-effective manner;
- reduce average loan loss severities to the Enterprises and FHA relative to individual
- distressed property sales;
- address property repair and rehabilitation needs;
- respond to economic and real estate conditions in specific geographies;
- assist in neighborhood and home price stabilization efforts; and
- suggest analytic approaches to determine the appropriate disposition strategy for
- individual properties, whether sale, rental, or, in certain instances, demolition.
Additionally, FHFA expressed a willingness to consider a variety of options including lease-purchase agreements and rental arrangements.
I appreciate FHFA’s willingness to explore different approaches to reduce their large inventory of properties. There is, however, no need to reinvent the wheel. There are thousands of real estate investors eagerly waiting to purchase those properties, rehab them and return them to the market either as rental property or through some form of sale – lease option, seller financed purchase and so on. Unfortunately, there are several obstacles placed in front of the real estate investor when they attempt to purchase government owned property. Some examples of these obstacles are:
- Getting financing is especially hard for an investor. FHA could help by streamlining the process for FHA 203b and 203k loans. This would be especially helpful in selling properties which require large amounts of work to be habitable, a common problem with foreclosed property.
- HUD and other government agencies have 30-day preference for owner-occupants. Reducing or removing this preference would allow investors to purchase properties faster and get them off the government’s books.
- HUD and other government agencies have a rule requiring buyers own the property for 90 days before selling it [the "anti-flipping" rule]. reducing or eliminating this requirement makes properties more attractive for investors and would speed the sale of these properties.
- Both Fannie Mae and Freddie Mac have limits on how many mortgages an investor can have. Increasing or removing these limits would help investors obtain financing to purchase more government-owned property.
Removing these obstacles and actively encouraging real estate investment would cost the government almost no money, but would vastly increase the ability of investors to relieve the government of it’s excess property inventory, which would stabilize the housing market.
Thank you for taking the time to read my proposal.
What do you think? Would easing the restrictions on real estate investment spur a housing recovery? Or is there a better way? I look forward to hearing your comments.
So far, the summer months have been very good to the Durham housing market. Let’s see if August can keep up the pace.
For all of Durham County there were 2,081 homes listed for sale at the end of August – another decline of over over 100 listings. August saw 277 contracts close, a gain of 20 closings. Using August figures, it would take 7.5 months to work through our current inventory which puts us almost back to June’s numbers. An adsorption rate between six and eight months is generally considered a balanced market, so overall Durham is in pretty good shape.
In South Durham 735 homes were listed for sale at the end of August – another decline of 69 homes. 91 sales closed in August, a drop of 12 closings. It would only 7.6 months like August to work our way through all the available homes, which, as I noted above, puts South Durham firmly in the balanced market range.
Here’s the updated neighborhood information, with some of our new neighborhoods.
| Total Available Listings | Total Closed Sales | Adsorption Rate [in months] | Avg Sale Price | |
| Woodcroft | 59 | 9 | 6.6 [-0.8] | $180,711 97% of list price |
| Hope Valley Farms | 61 | 9 | 6.8 [-3.2] | $217,444 96% of list price |
| Woodlake | 19 | 5 | 3.8 [-1.0] | $203,500 96% of list price |
| Parkwood | 24 | 2 | 12.0 [+5.7] | $131,500 87% of list price |
| Chancellors Ridge | 19 | 1 | 19.0 [+13.0] | $299,980 100% of list price |
| Grandale | 3 | 2 | 1.5 [-1.5] | $279,500 96% of list price |
| Audubon Park | 13 | 2 | 6.5 [-5.5] | $210,500 99% of list price |
| Falconbridge | 14 | 2 | 7.0 | $171,750 95% of list price |
| Fairfield | 14 | 0 | N/A | N/A |
| Lochside | 9 | 0 | N/A | N/A |
| Marydell Estates | 2 | 0 | N/A | N/A |
[Remember how Penrith had 4 closings in July? Zero in August]
August continued the pattern of solid summer sales. Most importantly, as homes sold in August [and June and July], more sellers did not step up to replace them. This allowed us to work down some of that inventory and keep adsorption rates and prices fairly strong. The real notable exception to that is Parkwood, which is continuing its string of terrible months. I still believe that things will improve in Parkwood as the Revere Road construction winds up, but there is a lot of recovery to do there.
What does the future hold? Well at some point this Fall we will see sales drop off and the market settle towards its winter slumber. That might happen in September, although October is more likely
There is still time, but not much, to take advantage of this improved homebuying season. If you are interested in seeing how your home would fare on the market, or just want to see some of the homes available, please send me an email and we’ll gladly get started. See you
in October.
