Last month I predicted the market would sag in January due to both the normal market decline and the lack of people making offers during the Holiday season [offers made in December usually close in January]. Was my crystal ball accurate? Let’s find out.

For all of Durham County there were 1,896 homes listed for sale at the end of January – an increase of almost 10%. 116 sales closed in January [a drop of just over a third] meaning that it would take 16.3 months of Januarys to work through the current housing inventory. This is a another big step backward from last month’s 9.9 months of inventory and the highest total I’ve seen since I started tracking these numbers.

For the 27713 zip code there were 335 homes listed at the end of January – a 17% increase. Only 24 homes sold during January leaving the
adsorption rate at just under 14 months — almost double the December number and again the highest I’ve seen.

Here’s a look at the communities we’re tracking. If you would like to see data from your community, please let us know in the comments.

I left the column for adsorption rate, but with sales numbers so small, it isn’t useful to calculate it. Like I mentioned above, I believe the staggering drop in sales is due to two main factors;

1. There were very few days in December for buyers to be looking at property. The Holidays ate up a lot of the month, and much of what was left was bitterly cold, so no one was out looking at property.
2. The first iteration of the $8,000 First Time Homebuyer’s Credit made a lot of December closings into November closings.

I am, however, surprised by the number of people who listed their home for the first time in January. Whether it is people trying to trade up before the new tax credit expires, or people trying to move down as their job situation changed, or something entirely different, I don’t know. I do know that those new listings really affected the numbers for January.

What does the crystal ball say for February? I still expect sales to start showing an improvement in February [they can't go much lower, right?] as the weather improves and people again start getting into that new home frame of mind. I also believe people will start thinking about the new, improved tax credit, and that will stir up some movement. We’ll have to wait another four weeks, however, it see if I’m right

Last week the Wall Street Journal reported that Rep. Barney Frank [D-MA], the chariman of the House Financial Services Committee, called for the elimination of Fannie Mae and Freddie Mac. To quote Rep. Frank

“The remedy here is…as I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance.”

No details were given about what would replace them, but given Frank’s political DNA, I’d bet much more towards direct government control than a smaller privatized company.

Currently, Fannie and Freddie combined own or guarantee about half of the $11 Trillion in outstanding home mortgages. By controlling such a large percentage of mortgage assets, they essentially control the mortgage industry. The market [or more accurately, the lack of a market] for jumbo loans is a prime example of this. Having that completely replaced with a government agency would, essentially, nationalize the mortgage industry.

This might be good in the short term, as it would make the mortgage markets more predictable and stable. In the long run, however, government control is a mistake — it would give the government almost total control over what gets built, who can buy it, and where citizens can live. Putting something this integral to the lives of Americans in the hands of politicians only invites a repeat of the tragedy that got us here in the first place.

In my blog reading today, I came across this great video. If you have ever wondered why the economy works the way it does [in real estate, stocks or whatever], watch this. I promise it will be worth the 7 minutes.

By now you have seen many post on many blogs about New Year’s resolutions. I’ve never been a fan of resolutions — part of the point of making resolutions seems to be breaking them in mid-February. Instead, I have a list of goals I want to achieve during 2010. Here are some of them that apply to either the website or my real estate career;

1. Be more active on the blog: If you look at the archives list, you’ll see that I posted about two articles a week during 2009. That is nowhere near enough. In 2010, I’d like to get that up to posting about every other day. I won’t be able to do that from the starting line [although I'm doing pretty well in January so far], but by the end of the year, I’d like to be making about 15 posts per month.
2. Improve my Facebook Page: I finally got with the 21st Century and built a Facebook page. I now have a main page, plus a page for my current listing. In 2010 I want to continue to develop those.
3. Learn to use Twitter: I admit it — I didn’t get Twitter. I couldn’t figure out why people would care what I had for breakfast. slowly I’m starting to see that Twitter can be much more than that. In 2010 I want to be better at using Twitter to communicate with people.
4. Start a Networking Group: I’ve been reading Trust Agents over the holidays, and it talks about the value of building a group of people from different professions who meet regularly to share ideas and connections. That’s not the first time I’ve read about the idea, and it’s something I want to work on this year. If you think you might be interested, email me.

Four goals . . . that should keep me busy for most of the year, right?

I wanted to take a moment to invite all my readers to my Open house this Sunday at 1824 Birmingham Avenue. This beautiful home was built by master builder George Birmingham as his personal residence in 1939. It’s 1,600 square feet and four bedrooms make it a great starter home with plenty of space. The half-acre lot gives you plenty of space around you too! Plus it’s minutes from Northgate Mall, I-85 and just about anywhere in Durham you want to go.

We’ll be holding the Open House on Sunday, January 10 from 3PM until 5PM. I hope to see you there!

One of the things common to almost every American household is that we need to get rid of a Christmas tree right about now. If you live in Durham, here are the instructions for tree pickup straight from the city.

“The Department of Solid Waste Management will collect Christmas trees from all Solid Waste customers from January 4-29, 2010.  Trees should be placed at the curb by 7 a.m. on residents’ normal household garbage collection day.  Residents are asked to leave the tree at the curb for one week before contacting Durham One Call at (919) 560-1200 to report a missed tree collection.

Trees taller than six feet should be cut in half.  Residents should also remove all decorations, including tinsel, lights, garland, and ornaments, as well as stands, nails, and other hardware.  Residents are also asked to not place trees in bags.

Christmas trees may also be dropped off at the City’s Waste Disposal & Recycling Center at 2115 E. Club Blvd., Monday through Friday, 7:30 a.m. to 4 p.m., and Saturday, 7:30 a.m. to 12 p.m., at no charge until January 29.  Trees delivered after that date will be subject to the usual disposal fees.”

[photo credit zin1223 and Creative Commons]

Last Wednesday GMAC Financial Services, citing losses in its mortgage division, received another infusion of cash — $3.8 Billion this time — from the Federal government. This means that GMAC has received a total of $16.3 Billion from American taxpayers. In exchange for this aid, the Feds now own 56.3% of GMAC. No matter what your political leanings, this is a huge amount of money and an unprecedented amount of government control.

Here is the interesting question: DiTech Mortgages, one of GMAC’s subsidiaries, is one of the nation’s largest mortgage lenders. Given that Fannie Mae and Freddie Mac are both now owned by the Feds, and now have unlimited capital to buy mortgages, will mortgages from DiTech receive preferential treatment? After all, this level of vertical integration is the goal of many private corporations. If the Feds could somehow pick up a national real estate firm, they could pretty much control the transaction from start to finish.

What do you think? Is this level of government control what is needed to revive the mortgage market?

[photo credit: Creative Commons and Shiny Things]

Last month I predicted the market would sag in December due to both the normal market decline and the surge of people trying to close prior to the old tax credit deadline [on November 30]. The numbers are in, so let’s see how well my crystal ball worked.

For all of Durham County there were 1,774 homes listed for sale as the ball dropped – almost the same as at Thanksgiving. 179 sales closed in December meaning that it would take 9.9 months of Decembers to work through the current housing inventory. This is a big, if expected, step backward from last November’s 7.8 months of inventory.

For the 27713 zip code there were 286 homes listed at the end of December – a 12% decline. Only 36 homes sold during December leaving the
adsorption rate at 7.9 months. Again, this is a drop from November’s rate of 5.0 months. Apparently fewer people than NAR predicted fit a new home under their Christmas trees.

Here’s a look at the communities we’re tracking. If you would like to see data from your community, please let us know in the comments.

The communities above account for almost two-thirds of the total sales in the 27713 area code. This isn’t too surprising — when sales are down they tend to group around the larger, more “solid” subdivisions such as Hope Valley Farms, Woodcroft, and Parkwood. When sales improve you start seeing other places — Penrith, Villages of Cornwallis, Colvard Farms and the like.

What does the crystal ball say for January? I expect sales to still be depressed for January, as the cold tends to keep potential buyers indoors: not quite as down as December, but close. I believe the numbers will start to turn in [late] February as the combination of warmer weather and the imminent end of the home-buyers tax credit will spur people back into the marketplace.

[Data for this post was pulled from the Triangle Multiple Listing Service on January 1 at about 9:00 AM -- I might have been the only person awake . . . . ]

One of the signs that an economy is starting to turn around is the opening of new traditional businesses. There are always people who decide to “strike off on their own” when they are laid off, but they tend to build businesses around a consulting model. When people start opening capital intensive businesses, however, it shows a bit more faith in the economy, which is an optimistic sign.

The new Panini Warehouse in Morrisville

The New Taco Loco in Morrisville

I mention this because I was at Prime Outlets At Morrisville earlier this afternoon. If you have been a Triangle shopper for any length of time, you know that Prime Outlets is a very pale shadow of Southpoint Mall or Triangle Town Center, or honestly, a well stocked Target. It’s vacancy rate hovers around 50%, and a good number of the tenants that are there aren’t traditional mall tenants [there is a church, for example]. Imagine my surprise when I saw that there were two new restaurants in the food court. Restaurants can be a huge initial investment for the kitchen, so seeing two startups, especially in a space not known for being the hot spot, is a cause for hope.

Best of luck to both Taco Loco and Panini Warehouse in their new location!

On Christmas Eve the Treasury Department announced that it was lifting the caps that limited the amount of available capital for Fannie Mae and Freddie Mac. Prior to Christmas Eve, each company was limited to $200 Billion of capital from the Federal government [read taxpayers]. the decision was, in the opinion of the Treasury, “necessary for preserving the continued strength and stability of the mortgage market.” Now, and through the end of 2012, the Federal government [again, that's you and me] are guaranteed to cover all losses of the two companies. You can see more of the details in this Wall Street Journal article.

What does that mean for you and me? In the short run, this will probably help hold mortgage rates down. With unlimited reserves, Fannie and Freddie will almost certainly be more aggressive in buying mortgages. This increased demand will encourage lenders to increase the supply of mortgages, which they do by either lowering rates [to encourage more good borrowers back into the market], or loosening standards [to attract more borrowers from the edges]. This is good news for borrowers, especially people looking to take advantage of the extended and expanded first-time home buyers credit.

The long run, however, is more concerning. To get access to all this new capital, Fannie and Freddie had to give the government preferred stock paying 10% dividends [preferred means the dividends are guarenteed no matter what]. They each also gave the government warrants that allow the government to purchase roughly 80% of each company. So, in effect, the Federal government owns Fannie Mae and Freddie Mac. And the Feds track record for running anything isn’t too great.

Hopefully we will have the best of both worlds — a well capitalized secondary mortgage market and a Federal government dedicated to allowing Fannie and Freddie to operate as somewhat  independent entities. We will certainly see what happens over the next few months.