We are busier this spring than we have been for years.
Homes are selling, we are seeing buyers coming from out of town to take advantage of the wonderful lifestyle of Chapel Hill/Carrboro and the surrounding areas. There is no doubt that the housing market is healthier than it has been for years.
This graph from the Triangle MLS tells the story very clearly:
- Source: www.trianglemls.com
These statistics show Triangle-wide sales including not only the Chapel Hill/Carrboro area but also Wake County including Raleigh and Cary and their suburbs.
Are prices going up?
For all the talk of appreciating prices and bubbles, it doesn’t look like we are anywhere close to that.
You can see from these statistics that average prices are still continue to fall, although the drop rate is slowing. And because real estate is local, some neighborhoods are appreciating more quickly than others. Neighborhoods where there is a backlog of unsold homes will take the longest to recover. In addition, the average sold price statistic sometimes reflect the fact that it’s the more expensive homes that are selling. For example, in Orange County which contains Chapel Hill and typically has the highest median sales price, more homes sold between $400-600,000 than any other price point. In Durham that sweet spot is $200-300,000 and in Cary it is the $300-400,000 price range.
So is real estate back?
For years I have cautioned against buying the most expensive house you can afford, despite the “expert” advice to the contrary. To me, owning a home is one part of the American Dream – a place where you can feel safe and comfortable and enjoy your relaxation time with your loved ones. But there are other aspects of life that deserve attention: travel and entertainment, for example. When every dollar you make is tied up in your mortgage payment you are working for your house instead of having your home support you and your life.
I watched a very interesting documentary called “The Flaw” that’s running on Link TV. I highly recommend it – you can watch it on Netflix, purchase it on Itunes or rent it on Youtube. This is probably the tenth documentary I’ve watched on the banking crisis and its relationship to housing, but this one is focused almost entirely on the housing market. There are some political points that you may or may not agree with, but the fundamental analysis by noted economists including Case and Schiller, the noted housing experts, demonstrates that home prices were substantially stable when adjusted for inflation until the very late 1990s, and that this rise corresponded to a drop in wages caused by a wide range of factors. The burst of the stock market bubble in 2000 wiped out a great deal of wealth in the US, and homeowners turned to their homes to replace that wealth. ”The flaw” as described in this film was the idea that home prices would continue to go up indefinitely, supporting a lifestyle that with falling wages was unsustainable.
So when we ask the question “Is housing back,” it’s a complicated question. Can the housing market ever return to the frenzy of the early 2000s when basically free money kept the housing market churning and prices increasing? And really, do we want it to?
But I think it’s safe to say that we have turned the corner and are returning to a normal, healthy market that is driven by a normal progression of home purchases: young people purchasing their first homes, enabling young families to move up into larger homes, enabling older families to move into their dream homes, enabling retirees to downsize.
So yes, housing is back!