4Q real estate numbers: Bull City homes still selling, but location really matters

The Herald-Sun noted last week that housing sales were off by 39% in the fourth quarter compared to the similar period in '07, with a deterioration in the number of homes sold on the lower end of the market said to be helping to buoy median prices.

We wanted to delve into the subject more this week, and fortuitously had a chance to look at the Triangle Area Residential Realty report for 4Q 2008. The full report is available for purchase from T.A.R.R., but let's take a look at some of the highlights and lowlights.

There's certainly some pain to go around the Triangle in the last three months of '07. Home closings were off by a third, with home showings off more than 40% from 2007 levels. And the average days on market for homes that actually closed in the quarter rose from 84 in 2007's 4Q to 111 this year.

Yet the results aren't uniformly bad across the county. In fact, the T.A.R.R. report notes, some popular neighborhoods like Woodcroft, Grove Park and Hope Valley Farms continued to lead overall closings, and saw selling prices averaging almost 97% of original list.

To that end, one of the most fascinating pieces of data in the T.A.R.R. report relates to where in Durham houses are selling -- and where they're languishing.

The number of interest there is the number of months of supply available on market -- calculated by taking the total number of homes that are listed in a submarket at a particular price point in the fourth quarter (total inventory) and dividing by the number houses in that location/price point that sold in '08 to estimate the months of supply.

A word of caution on this summary: things got much worse in the fourth quarter, yet this number looks in part at annual sales in a category, meaning the actual number of months of supply may be higher. (Plus, the months of supply would be the time the market would need to clear if no new inventory were added.)

At a high level, the number of months' supply doesn't vary that much across the report's four Durham districts -- six months' supply in south and east Durham, seven months' in central Durham, and nine months' in north Durham.

Within individual price points, though, those numbers vary drastically.

For instance, when you look at the location and price points that are likely to move most quickly -- those with the lowest months of supply numbers across all of Durham -- there's a clear bias towards homes in the $150k-300k price point in the popular south Durham and central Durham neighborhoods.

In south Durham, there's a below average months of supply of homes under $300,000. In central Durham, which includes neighborhoods like Duke Park, Watts-Hillandale and the like, a similar 3-5 months of supply range covers homes from the $150k mark to a half-million in price. Taken together, these ranges are the best in the county.

The picture is significantly uglier in north Durham. There, it's 6+ months' supply for the sub-$300k price range. Yet the numbers get much worse above the $300,000 mark. There are over fifty listings above a half-million dollars in north Durham as of the fourth quarter, for instance, yet fewer than a dozen homes sold in that price range in all of 2008.

South Durham had a similar number of $500k+ homes listed in the fourth quarter, yet almost fifty such homes sold throughout 2008 -- five times the level as in north Durham.

The $300k-500k price point in north Durham also has a 1-2+ year supply of homes in that price point, versus less than six months' worth in central Durham and about eight months' worth in SoDur.

East Durham (which includes new developments like Grove Park and Brightleaf at the Park) sees about 6-9 months' worth of supply across all price points, with almost no listings above the half-million dollar mark.

Find out more or purchase the report from the folks behind the T.A.R.R. Report at their web site.

Comments

[GreenLantern]

I can tell you that Grove Park's prices are at least near 1997 levels, and that homes have been listing for at least six months. Your report seems fairly accurate. Single-story homes and those along the lake are most in demand right now, mostly from empty nesters and retirees. Ravenstone and Brightleaf have halted new construction, but the 300K+ homes look to have been closed on recently. With the new elementary school in an attractive, upper income district, those two developments seem to be attracting more people with children. The number of people looking for homes in GP seem to have gone up recently, but things are still very slow.

Things would be much better if we had retail like a Kroger and/or Home Depot approved without further delay for Brightleaf Commons.

[Steve Nicewarner]

Most of the data in the Herald-Sun supports what I've been saying for sometime -- that prices in the Durham are relatively firm, but it is taking significantly longer to sell homes at those prices. People still recognize the value of those homes, but it is harder for them to find financing. From this point, one would normally expect prices to drop as sellers get tired of waiting, but local sellers have been pretty stubborn. Who knows, they might bull their way right through the credit crunch entirely.

And for a copy of the TARR Market Trends report you can go to http://www.durhamrealtors.org/pdf/markettrends4Q08.pdf compliments of the Durham Assoc. of Realtors

[Jay Zenner]

I follow the luxury market($700K +) in Durham pretty closely using MLS data. Durham's luxury market has been in the doldrums for years averaging about 34
sales per year which includes a few every year in The Oaks that are in Durham County but have Chapel Hill addresses. Durham's market share in this segment of the four counties I look at (Durham, Wake, Orange and Chatham)actually increased by 1% to about 6% in 2008 but that doesn't compare so well with it's overall share of about 18%. The change was in the other three counties, all of which had sales drop dramatically. Durham's inventory in this segment was also down. During the past few years Durham has consistently had about two and a half years worth of inventory on the market in this segment or about 85 homes. It's now down to about 70 but not because of sales. A number of homes that didn't sell were taken off the market and others were reduced to less than $700K. So now there's only 2 years worth of inventory. The full report is at www.durhamluxre.com along with a lot of my ramblings about the reasons for this situation and what needs to happen to turn it around.