Jim Allen Blog

Following is a marketing report written by Robert “The Mate” Terry, a buyer’s agent in The Jim Allen Group. His experience and knowledge of the Raleigh Real Estate Market prompted him to write the following article.

3rd Quarter Triangle New Home Sales Market Comment

By Robert Terry

After reviewing 3rd quarter market stats I thought it important to look at where we may be going with the Triangle new home real estate market.

The Triangle Real Estate Market Snap Shot

After a sluggish 3rd quarter nationally, home builders have seen an increase in inventories and pressure on pricing. New home starts are down, seller incentives up, days on market cycle increasing and what has appeared to be an increasing likelihood of recession for the economy as a whole.

We here in the triangle market have not been spared. We have seen an escalation in available inventory and the statistics compiled by the Triangle Multiple Listing Service (TMLS) suggest a softening of the market over the greater part of the participating area. It is not all doom and gloom however.

Recent remarks by Fed Chairman Bernake suggest that the Fed is poised to cut rates further to stave off any further erosion in the housing market and the Bush administration has indicated a willingness to support and work with lenders in the Mortgage Industry to stabilize the uncertainty for home owners facing resetting of Arm mortgage products which carry the possibility of default and foreclosure.

Recently with major financial institutions taking write-offs for bad debt associated with sub-prime mortgage exposure one could expect a calming effect on financial institutions as a whole, greater consumer confidence and a return to a reasonably stable economic outlook in general.

Short term recessions are generally not forecast by economists from an historical perspective, nor long term ones for that matter, but rather they only come to light after the economy moves through a recessionary period and later analysis indicate such a period in fact existed, GDP numbers are revised to reflect this old reality, and as has been the case in recent economic times we have already moved on to a new cycle of growth and a new reality….lucky us!!

All we can predict with any certainty is the past!!!

It only stands to reason given the recent revision of growth numbers downward by the Fed coupled with Mr. Bernake’s remarks in Charlotte recently, the economy is indeed in a low growth pattern perhaps even a slight recessionary period where further rates cuts are inevitable to support and be the catalyst to move the country once again into a growth phase.

How will all this affect us here in our region of the country namely the Triangle in the short run?

Further rates cuts by the Fed should bring buyers back into the market at higher price markets in other regions of the country. We have all seen the effect that sellers in markets other than our own have had with difficulty selling their current property enabling them to become buyers in our market. While these sellers may not see the equity appreciation they had perhaps hoped for, they still will in fact see a good return on their real estate investment should they have been a medium or long term occupant of their property.

These cuts will also see a return to the market of move up buyers locally as terms become more favorable and they return from a short stint on the sidelines waiting for any market adjustment downward.

With the continued strong underlying economic fundamentals and the benefits of job growth, stability, and life style quality here in the Triangle and surrounding counties, any period of economic slowdown should be short lived and a strong rebound can be anticipated due to the underlying pent up demand.

* This area is still one of the better places in the country to be in the construction and real estate development industry.
* Projections for the coming year show advancing new home prices and a strong break out in new home sales starting at the end of Q1 08 with a banner Q3 08 expected.
* These sales will be driven by strong growth in jobs and population in the reporting area.

While the last several months have been a testing time for all, it can be argued that the worst is behind us. Our office in particular has noticed an up tick in activity in several of our new home developments the last 2 weeks of November. We are hoping this is an early indicator of an improving climate for all in the new home construction industry.

If you have any comments use the first to comment link above or inquiries please contact Jim Allen or myself Robert Terry “The Mate “ at the North Raleigh Office of Prudential Carolinas Realty or at our website: www.JimAllen.com

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