For all of Durham County there were 2,419 homes listed for sale at the end of August – a drop of about 5%. Only 199 sales closed in August, a drop of about a third. Using August figures, it would take 12.2 months to work through our current inventory. That’s an increase of 2.1 months, or about 20%

For the 27713 zip code there were 497 homes listed at the end of August – a decline of about 8%. Only 36 homes sold during August, an decrease of just about a third. That swing in completed sales moved the adsorption rate to 13.8 months – an increase of 3.2 months

As we predicted last month, housing sales continued their declines in August – in part due to the tax credit pulling sales from July and August into May and June. As a peek at sales going forward, we’ve looked at pending sales as of the 1st of the month. Here’s the updated chart;

August pendings show an increase from the July bottom, which gives us some hope that the local market is finding some sort of a floor. I’m optimistic that September sales will rebound back to, or close to, July sales numbers, which will give us something small to build on going into the Fall.

Here’s the updated neighborhood information.

As usual, Parkwood, Hope Valley Farms and Woodcroft account for the lion’s share of the homes sold in the 27713 zip code — almost half of the sales this month. Also worth noting is that Audubon Park has fallen to earth after several months of amazing sales. Overall, however, the individual neighborhood numbers are all over the place — some up, some down. This is something we might expect from a market that is approaching a bottom. Some local markets will “bounce” a little bit faster than others would

As I said earlier, I believe this is the bottom of the dip caused by the end of the homebuyer tax credit. the numbers imply that we will see a small recovery in September followed by the normal cyclical drop associated with the Fall. We’ll see next month whether my crystal ball is still callibrated.

If you factor out the high-volume roads in south Durham, however, you discover that most [almost all] of the accident prone intersections are in north Durham — most along the I-85 corridor. That, I suspect, shows just how much that area needed redevelopment.

If you’re a graphical person, Bull City Rising has a great map of the 20 most dangerous Durham intersections.

Apparently media outlets do not read this humble blog, because those July numbers, expected though they were, were clearly a sign that the sky was falling. Take a look at these articles for example;

• US Existing Home Sales Nose-dive in July — Triangle Business Journal
• Home Sales Collapse in the Triangle — News & Observer
• Triangle Home Sales Plummet In July, But Prices Rise — Triangle Business Journal

Plummet? Collapse? Yes, the decline in July numbers was large – over a third in some places. It was, however, completely predictable and expected. Despite what the media is telling you, it is not a crisis. Housing sales were really slow in July, they will probably be slow in August, but we should see some sort of equilibrium going forward from there. We may not like the level it will be at then, but at least it will be level [assuming the Feds don't go messing around with the housing market again to buy votes].

Don’t take my word for it — I have a second opinion. from the former mayor, no less

Here’s what the Journal had to say about Our Fair City;

Durham, N.C., for instance, is home to Duke University and is near the University of North Carolina-Chapel Hill. Big companies like International Business Machines Corp., GlaxoSmithKline PLC and Nortel Networks Corp., as well as numerous biotech start-ups, have facilities at the nearby Research Triangle Corporate Park. About 40% of area jobs are in health, education or government, according to Local Market Monitor.

We’re in some pretty good company as Huntsville, AL and Indianapolis came in at #2 and #3 respectively. Overall, the Carolinas made a very respectable showing with Winston-Salem coming in at seventh best and Greenville, SC at ninth best.

Oh, and the worst market for investors? Reno, Nevada followed by Las Vegas and Orlando. In fact, all ten of the worst cities were in Nevada [2], Arizona [2] and Florida [6].

If you want to take a look at some of the solid investment opportunities available right here in Durham, send me an email, and we’ll find the right investment for you.

This week, things may be turning around. Sue Stock reported in Friday’s News & Observer that an international grocery store will move into the old Circuit city space in January [scroll down to the middle of the article]. The 50,000 square feet of old Circuit City will become a source for Asian, Hispanic, Mediterranean and Middle Eastern cooking supplies and will stock fresh ingredients including seafood. In addition, plans include an international food court and coffee shop.

The owner of the yet unnamed store, Li Zhang, also owns the A&C Supermarket in Raleigh, so we hope he can bring that experience to the much larger store. Welcome to Durham!

To find out more about National Night Out, please visit their website.

Here’s where I rely on the pictures to tell their thousand words [thanks to Matt Babaian for the pics]

July pendings continued the decline of earlier months, but not quite as severly. Based on that, I would think we will see another fall in August sales, but not by as much — perhaps 10%.

Speaking of neighborhoods, here are the ones we look at each month.

Again, these numbers look scarier than they probably are, especially numbers like Woodlake and Parkwood where sales dropped to almost zero. Parkwood, in fact, is exactly where you would expect a strong turn, since homes in Parkwood are perfect for the first-time buyers who closed in June. Oh, and Audubon Park continued it’s amazing run as the community to watch.

The July numbers certainly support my contention that we’ve passed the peak of the 2010 housing market. Despite this month’s doom and gloom, it is worth noting that people are still buying and selling houses in numbers that are not unreasonable, and opportunities are still out there.Send me an email if you would like to hear more.

The article tries to discuss the main ways a buyer can get a “deal” on buying their new home. I think, however, they gave too little attention to the traditional way people buy homes — making a purchase of a non-distressed property from a unhurried seller. The overall relative strength of the Triangle’s real estate market means that many, probably still most, of the homes sold in our market are sold just like they always have been ["at retail" some would say]. Since this is the baseline, it isn’t talked about much in the article, but it’s important to realize this is still how most homes are sold in our market.

The first big group this article talks about is Bank Owned Properties. It notes that the average discount on such homes is in the 20%-30% range. There is a reason for this: most of these homes were not cared for well before the bank took them over, and being vacant for extended periods of time only makes those issues worse. Even in the best of these homes, one should expect to do some painting, carpet replacement and basic maintenance catch-up. My two major additions;

1. Bank owned properties are almost always sold “as-is.” This puts extra risk onto the buyer as any problem becomes theirs. I strongly encourage my buyers to have bank owned property inspected promptly – sometimes even before an offer is presented to the bank.
2. Banks almost always have their own forms, which they require in any transaction. These forms usually are very slanted towards the seller. The help of a professional is always a good idea when dealing with a bank-seller.

Next up is Short Sales – a situation where a private seller is selling the home for less than what is owed, and the bank agrees to eat the difference. The issues here are simple and straightforward. The buyer will generally get a small [maybe 10%] discount on the purchase price, but they have to work through the banks process to get there. In particular, they have to accept that the process will take a long time, and that the bank may still reject everything at the end

Finally, the article talks about New Home Construction. The writer seems to feel that the time for deals on new construction has passed. I’m not convinced that is the case. During the slump, developers had plenty of land, plenty of skilled labor, and little demand. Prices normally fall in those situations, and new housing should be no exception. In fact, in some markets outside of the Triangle, new construction can be cheaper than an equivalent older home, as price drops attempt to keep people in that market.

Where we are really seeing concessions here is in upgrades and improvements. Builders are reluctant to move on the price for the frame, but those granite counter-tops, better electronics and stainless appliances are certainly easier to come by. A skilled negotiator can certainly earn his keep with strong negotiations in these areas.

I think we [the author and I] agree that deals are out there. Like anything else in life, however, getting the best deal requires work. If you’re interested in exploring any of these markets, please send me an email, and I’ll start working to find the right new home for you.

• Foreclosure business gets big at auction
• Chasing deals at the auction block
• Opportunities exist to hit it big in new housing market
• ‘Hard money’ lenders at work for the gamblers

The articles mainly focused on buying foreclosure property on the courthouse steps. Collectively, they are a good introduction to that aspect of investing in real estate — they are worth the read. It is worth noting, however, that buying houses at the courthouse is probably the most risky way to purchase property. Buying at the courthouse does not allow the purchaser to thoroughly inspect the property, and possibly leaves the new owner subject to superior liens [for example, an IRS lien stays with the property even after foreclosure].

As for the “hard money” article, it does a great job of making hard money lenders look like day traders. “Hard money” has its place as a means for investors to purchase a property and resell it in a short period of time [either as a "fix-and-flip," or to resell to another investor]. No one I know of, however, looks like Gordon Gecko while doing it.

Taken as a whole a whole page of the Sunday paper dedicated to real estate investing tells me that people see the market as having potential. Given Durham’s relative stability over the past few years, that could be especially true here. If you would like to hear more about how real estate investing can fit into your investment plans, please email me and we’ll get started.