Cheap Mortgages, Strong Economy Power Sales in Durham, N.C.

A strong North Carolina housing market is keeping Morgan Edwards Whaley and her husband, John, busy buying homes around the “Bull City” of Durham that they plan to resell after extensive renovations.

The Durham couple closed Friday on their latest investment, a 2,200-square-foot house on Buchanan Boulevard that is one of 12 houses in the Trinity Park neighborhood that Duke University recently bought and is reselling to take off the rental market, according to the Herald-Sun.

On the same day, the couple put another Duke house under contract, this one a 2,470-square-foot house with a list price of $230,000.

The Durham couple will spend $100,000-150,000 to fix up the two homes before putting them back on the market at $350,000 or more.

It was Durham’s robust housing market that gave the couple the confidence to start their business endeavor two years ago, and they’re counting on the market to stay strong in order to make their flipping efforts pay off. It did just that in the third quarter, when both the closing prices and number of homes sold in Durham County increased.

In Durham County, 460 new homes were sold during the third quarter. That’s a 14 percent increase compared with the third quarter of 2005.

Likewise, existing home sales grew by 13 percent to 1,093. Total home sales hit 1,553 during the three-month period from July through September, up 13 percent from a year ago.

Sale prices grew too, although modestly. Bolstered by low North Carolina mortgage rates and steady demand, the median price of a new home sold in Durham during the third quarter was $196,500, up 1.3 percent from the $194,000 median price homes sold last year during the third quarter.

The median sale price of existing homes rose by 1.5 percent to $167,500 during the quarter. While housing markets around the country — and some in the state, such as Wilmington where home sales are off 25 percent — are sinking, Durham and the Triangle just keep chugging along, powered by a strong economy and mortgage interest rates that are still relatively low.

“The Research Triangle Park is a great place to be in the real estate business,” said Marie Austin, owner of Marie Austin Realty Co. in Durham. “There are a lot of buyers and sellers in this market.”

But there were warning signs of a slowdown.

The number of permits issued to home builders Durham dropped 28 percent to 337 during the quarter, and the number of home lots sold also dropped by 27 percent to 330.

“It’s flattening out,” said Carl Van Horn, a research analyst. “Whether there will be this huge decrease like other markets, I don’t think that’ll happen in the Triangle. Over the next six months or so there’ll be a softening, but I don’t think it’ll be too dramatic.”

It certainly has been dramatic in other parts of the country, where some markets have seen 40 percent drops. Nationally, existing home sales are expected to fall 8.6 percent this year while new home sales are likely to drop by 17 percent, according to the National Association of Realtors.

One reason Van Horn doesn’t expect a big drop in the area is that the investment entities that have pushed up prices along coastal areas and in higher-end markets don’t have a big presence in the area.

In Durham, the increase in home prices has been slow and steady, unlike Wake and Orange counties where prices have jumped during the past five years and thus may be more susceptible to a correction.

During the five-year period from 2001 to 2005, median home prices jumped 40 percent in Wake County, from $182,000 to $254,000; 34 percent in Orange County, from $273,000 to $365,000; and 16 percent in Durham County, from $167,000 to $193,000.