September
2008 brought us the onset of the 2nd most dramatic financial crisis
seen my modern economics. While the
catalyst for the crisis was firmly rooted in real estate, and mortgage failures
in the largest markets in the Country, Raleigh has constantly remained, if not
unscathed, at least on its feet.
According to
analysis by Moody’sEconomy.Com: "About two-thirds of the country’s 381
metropolitan areas are in recession and another one in five is at risk." Raleigh is one of the few growing
markets. We have escaped the
bubble. Despite this, we have seen a bit
of a slow-down, particularly in areas that cater to first time, or sub-prime
buyers.
The
Breakdown
Triangle-Wide Statistics
While the total number of homes has decreased with the market
slow-down, the average sold price/list price percent has remained almost
constant. This is an indication that the
homes that sell are not listed above market value - an excellent sign of market
strength.
What
Saved Us?
Transplants
One of the primary factors that saved this region has been its steady
draw of transplants. The influx of
buyers from weaker markets has effectively offset the majority of the
homebuyers who are currently unable to obtain a mortgage due to the recent loss
of subprime lending.
A Stable Market
4-5 years ago, when California, Florida, and the Northeast saw
double-digit appreciation, the Triangle was the reluctant tortoise in the race
- earning a meager 3-5 percent annual appreciation rate. We had no bubble that could be burst. We didn’t even have a hill we could roll back
down. We were the slow and steady, and
are now winning the race.
Fewer Adjustable Rate Mortgages
The Triangle also saw fewer Adjustable Rate Mortgages (ARMs), than the
bubble markets. In those areas, buyers
were in a feeding frenzy, buying up property and flipping it as fast as a line
chef at an IHOP. Many didn’t expect to
have the property when the loan adjusted, others assumed the property values
would continue to rise at such a rate that they could simply refinance. When this didn’t happen, they were stuck with
property at an interest rate they couldn’t afford, and they were foreclosed on,
punctuated by a loud POP. Fewer ARMS =
fewer foreclosures = greater market stability.
Conclusion
So the big question is, what are the indications for the future of the
Triangle Market? In the worst of the
crisis, Raleigh has been fairly flat. As
the market begins to readjust, we should return to the slow-steady growth that
has kept our economy healthy. The good
news is, there are excellent properties currently available for a reduced
price, making this an excellent time for long-term investing. If your credit is good, you may want to
consider buying a foreclosure and using it for a rental. After all - there are many great folks out
there who would have been buyers a year ago, but would make great renters. Let them pay off your mortgage while you
build equity!
Rosie Bolin has been in Real Estate Management for four years, and is
the managing broker for Insider Realty. Feel free to
contact her with questions - Rosie@RosieBolin.Com
