Abacus Says: Raleigh Housing Market Weakening?

AbacusWeakening perhaps but still healthy.
Periodically we should study statistics.  I’ll try to visit statistics on at least a monthly basis. More often takes the fun out of it.

Right or wrong, much of yesterday’s stock market sell-off was attributed to bad economic reports on the nation’s housing market.  Interestingly, stock market analysts can always find a reason for what the market just did.  They are less proficient at telling us what the market is going to do.

So, it seems a good time to take another look at Raleigh stats.

Here are updated graphs for 4 central Raleigh areas.
In the local real estate world, these are known as Area 1 – Inside the Beltline, Area 2 – North Raleigh, Area 3 – SE Raleigh, and Area 4 – NC State or SW Raleigh.  Effective next month these 4 areas have been renamed by TMLS.  They will all be referred to as simply “Raleigh”.

I’ve added a new graph this month – Number of Showings.

Raleigh Number of Homes Sold Jan - Sept 2007Number of Homes Sold:
A downward trend since mid year in all 4 Raleigh real estate areas.

Raleigh Average Home Prices January - September 2007Average Home Price:
Less of a downward trend than seen in the graph above.  SE and SW Raleigh seem to be holding their own.  Inside the Beltline and North Raleigh indicate a fall in average price.  It should be noted that there were a couple of abnormally expensive homes sold Inside the Beltline during May and July which skewed the stats a bit.

Raleigh Days on Market for Januany - September 2007Average Days on Market:
Mixed results, but overall it seems to be taking a little longer to sell a home.

Raleigh Number of Home Showings for Jan - Sept 2007Number of Showings:
This new graph is a good indicator of overall buyer activity.  A decrease in number of showings indicates less buyer activity.  As you can see, showing numbers are dropping.

Though these statistics may indicate a chink in the Raleigh armor, it’s important to remember that these are short term stats.  I still see plenty of activity.  Raleigh remains one of the healthiest markets in the country.

Abacus Says: All Signs Point to Yes

AbacusThis week I’ve been buried in market stats.  It’s important to understand what’s happening around you in the real estate world, but market statistics will drive you goofy.  Due to the amount of press the Housing Market has been getting, I’ve received lots of questions about the health of the local Raleigh market.  My intuition is probably sound, but that’s not always good enough.  So, I immersed myself in numbers and barely survived.

Today the N&O ran two Associated Press articles about the national housing slump with focus on the sharp drop in home sales during August.  Those articles catalyzed this post.

It is possible to cherry pick data in order to support any pre-formed conclusion.  Admittedly, the stuff I’ve been studying is a bit conflicted, but I didn’t cherry pick my way through it.  Though things change from one neighborhood to the next, the Raleigh area housing market is generally healthy.

The three graphs below show a small piece of the 2007 Raleigh housing market puzzle.  As mentioned, more and different data is available, but the stats graphed here are pretty good indicators.

The graphs focus on four Triangle MLS Areas in and around downtown Raleigh:
Area 1 – Inside the Beltline
Area 2 – North Raleigh
Area 3 – SE Raleigh
Area 4 – SW Raleigh (the area south of NC State University)

Graph - Number of Homes Sold in Central Raleigh - Jan through Aug 2007 Number of Homes Sold: Area 2 (North Raleigh) is the clear leader with an average of 218 homes sold per month.  Average number sold per month for the entire Triangle MLS region is 3113 (not shown on graph).

Graph - Average Price of Homes Sold in Central Raleigh - Jan through Aug 2007Average Home Price: Area 1 (Inside the Beltline) wins this category with an average price of $362,000 per home.  Average 2007 price for the entire Triangle MLS region is $238,000.

Graph - Days On Market for Homes Sold in Central Raleigh - Jan through Aug 2007Average Days on Market:  North Ralegh takes the prize again with an average of 49 days on the market for sold homes.  Average for the entire Triangle MLS region this year is 80 days on the market.

What about the important trends?  We are only looking at 2007, so long-term trends can’t be seen.  Looking at the short-term, nothing alarming stands out.  The big national drop in August home sales is not reflected locally.  The major short-term change is a reduction of Days-on-Market (which is not unhealthy).

Who’s In Charge – Buyers or Sellers?

To start, let’s expand a little on the tight statistic used in my all important first post (number of active listings in TMLS: 16,000+).

One year ago there were about 2,000 less active TMLS listings (14,000+).  However, the average sales price was approximately $20,000 lower.   Average sales price in mid 2006 was just over $230,000.  Average price in mid 2007 is around $250,000.  So, in the past 12 months we’ve seen a large increase in the number of homes on the market (15%) combined with a significant increase in average price (9%).

Here’s the question.  Does this indicate a Buyer’s Market or a Seller’s Market?  Ignoring the differences between specific neighborhoods, I argue that Raleigh and the Triangle area is a Seller’s market.  Some folks may disagree.

Here’s the correct answer  –  Who cares.
If you need or want to sell your house – Sell it.
If you want to buy a house – Buy it.
Don’t worry about market timing.

House Photo

Granted, it’s interesting to discuss the advantages of today’s market from both buyer’s and seller’s standpoint.  It’s also interesting (to a certain extent) to mull over how things may change next year or what affect the next spotlighted government report will have.  However, I counsel clients against basing decisions to purchase or sell on any of that stuff.

Market timing doesn’t work well in the stock market and it doesn’t work well in the housing market.  You’ll drive yourself (and those close to you) nuts if you get wound up in whether buyer’s or seller’s will have the advantage in the future.  Everyone’s crystal ball is murky.  If an expert tells what is going to happen next month, go talk to someone else.

There are plenty of other more important factors to consider.  In making the decision to buy or sell a home, be guided by things like your desired lifestyle and current financial situation.  Don’t worry about market timing.  You’ll be happier in the long run.