Real estate officials across the country complain of slow home sales and falling housing prices. The red hot real estate market cooled considerably in the past year, they claim.
Not in Hickory.
The local residential real estate market remains fairly strong and is improving.
“Our market is actually pretty good,” said Donna Austin, a mortgage broker with Coldwell Banker and president of the Catawba Valley Association of Realtors. “Homes are holding their value.”
Homes are selling at nearly 97 percent of their listed price, she said. That’s during a time when many areas across the country experienced a 10 percent to 20 percent drop.
Other areas are experiencing record foreclosures and a surplus of homes on the market.
In the Hickory, North Carolina housing market, the surplus occurred within the past three or four years.
“Everyone was hearing how great the market was and sellers couldn’t understand why we couldn’t sell their houses,” said Diane Cline of Diane Cline and Associates in Hickory.
“We’re pretty much stabilized now,” she said. “I think it’s about an even playing field right now.”
The market’s strength is felt throughout price ranges, Austin says.
“From a small lot to million dollar homes, I don’t see any noticeable slow down,” she said. “I’m not seeing a real lull in any particular price range.”
Just last week, Austin’s three-person team sold homes with prices of $55,000, $109,000, $239,000, $312,000 and $450,000. Those from all classes, therefore, are applying for a North Carolina mortgage and being approved.
Analysts say the market’s strength comes at a time when more homes are available than ever before.
Dee Blackwell and Taylor Dellinger, mortgage loan analysts with the Western Piedmont Council of Governments, estimate about 10,000 homes are for sale now, more than ever before.
“The strong market says a lot about what quality of life issues means for this area,” Dellinger said. “I think many people find this area very attractive to live in.”
Kevin Spencer, owner of Realty Executives in Hickory, believes that number is hugely inflated. But he acknowledges many homes are on the market “though not more than we should have given the population growth,” he says.
Major development to come?
If there isn’t a surplus now, there could be in the future. A study performed by the WPCOG found 24 potential major housing developments in Catawba County with more than 6,000 potential lots.
River Oaks, located on Lake Norman, just north of the town of Catawba, will contain 2,000 home sites; Key Harbor in northern Sherrills Ford is second in number, with 1,400 planned units.
Austin and Spencer are confident the market can handle the influx.
Much of the development will cater to out-of-the-region people, whether it’s Charlotte housing market commuters looking for housing in southeastern Catawba County or northern retirees looking to settle in the foothills.
Spencer says a significant portion of his business is “tweeners” - retirees from the north who are leaving the Florida housing market due to hurricanes or to be closer to family.
“They love the accessibility to the mountains,” he said. “Those people also have money and they are buying nice houses.”
But Blackwell and Dellinger say the development will at least create many questions, such as what occurs in 15 or 20 years when retiring baby boomers begin to die off.
“We’ll have this huge surplus of housing,” Blackwell said. “And who will be able to afford the housing?”
SOURCE: The Hickory Record
Raleigh Realtor Gary Hooker already has lost three sales to first-time home buyers since lenders this month began cracking down on easy mortgage money.
However, his real worry is the effect that tougher restrictions on subprime borrowing may have on the Triangle’s unsteady housing market.
“I don’t think we’ve scratched the surface how it will turn out,” said Hooker, owner of United Real Estate and Investment Group.
Facing record defaults, North Carolina mortgage lenders who make subprime loans — made to buyers with poor or limited credit histories — have tightened guidelines. The effect may delay the industry’s recovery until sometime next year, said Moody’s.com economist Michael Helmar.
“It’s a big deal,” he said. “It’s coming at a time when all regions need it the least.”
Although 2006 was a record sales year, Triangle home sales have been sputtering largely because people having trouble selling their homes in other parts of the country couldn’t buy homes here. Fourth-quarter sales were down 7.6 percent compared with a year ago.
Before the bust, subprime loans helped fuel a nationwide housing boom as borrowers who couldn’t be approved for conventional loans bought homes with no money down and negligible interest rates. Up to a quarter of the homes sold in North Carolina in 2006 were bought with subprime home loans, according to industry estimates.
Today, those loans are being blamed for a record number of foreclosures in the Triangle and the state last year.
This week, the Mortgage Bankers Association reported that delinquency rates for mortgage loans and loans in foreclosure rose during the fourth quarter in North Carolina, compared with the previous three months. The state ranks 15th in the number of delinquent loans and 21st in inventory of homes in foreclosure.
Although about a dozen subprime lenders have closed in the past two months, there still are dozens of companies issuing the loans, albeit with tighter guidelines. Hooker said his clients weren’t able to get mortgages because they could not meet a new requirement for a 5 percent down payment.
Also this month, Advantage Lending in Raleigh said it has turned away about 10 customers because of tighter credit and down payment guidelines.
Mark Timberlake, a mortgage broker at Allied Home Mortgage Capital in Cary, said two potential buyers left empty-handed when they found out they needed big down payments to buy investment homes. Before, he said, they could have borrowed the full sales price. Now they need 10 percent up front.
“There are … people who were able to qualify for loans in the past few years who aren’t going to be able to get loans,” said John Crawford, a mortgage banker in Greensboro and president of N.C. Mortgage Professionals, an industry employee group. “But if it hurts the mortgage industry, it will hurt the housing industry and it will trickle down to a lot of other industries.”
SOURCE: The News & Observer
A Raleigh, N.C., business owner and a home builder have been sentenced for their roles in a North Carolina mortgage fraud scheme, the U.S. Attorney’s Office said Wednesday.
U.S. District Judge Malcolm Howard on Tuesday sentenced James Thomas Davis, 56, of Raleigh, to 16 years and 8 months in prison. Davis called himself a real estate consultant and was involved in a mortgage fraud scam involving new homes in Raleigh, Garner and Wake Forest.
Davis owned Easy Financial Services and Eagle Investments Club.
Howard also sentenced David Layton, 55, a Raleigh-based residential home builder, to four months in prison, said Layton’s attorney, Jack O’Hale of Smithfield.
Federal investigators have said Davis would approach home builders who had new properties on the market and offer them more than the listing price.
As part of their illict arrangement, the home builders would agree to let Davis pocket the difference between the asking price and the inflated offer.
Davis would seek investors to act as borrowers on mortgage applications, which would falsely state that the investor planned to live in the home.
Davis would then recruit renters who didn’t have good enough credit to qualify for a mortgage themselves. They would live in the homes in a “rent-to-own” plan and pay Davis a large down payment and low rent.
The scammer used a pyramid-type scheme, seeking money from new renters and investors to cover the difference between the home mortgage loan payments and the monthly rents to keep the scheme going.
Ultimately, when all was said and done, the mortgage lenders foreclosed on the homes, the investors’ credit was ruined, and the renters lost the down payments and place to live, according to investigators.
Layton admitted conspiring with Davis to make and use false documents at real estate closings. Last year, a jury convicted Davis of conspiracy and fraud charges.
SOURCE: Raleigh News & Observer
Those “for sale by owner” signs in neighbors’ yards will determine the direction of both North Carolina’s economy and the state’s cash flow, legislative economists told state lawmakers Tuesday.
“The real estate slowdown has finally arrived in North Carolina,” said Barry Boardman, economist for the General Assembly’s fiscal research division, during a briefing for legislators.
According to the Charlotte Observer, the area’s real estate conveyance tax collections went from 21 percent growth in January through March of last year to 2.2 percent growth for July-December.
But the National Association of Realtors tells the Observer that North Carolina has good reason to be optimistic, as a slowdown in the Tar Heel State won’t look like steep drops in some other states.
Sales of existing homes in North Carolina defied national trends in 2006, increasing 3 percent overall compared with 2005 sales, according to statistics recently released by the N.C. Association of Realtors.
The average existing home price statewide also was up: 2 percent in 2006 to $214,952, according to the association. Charlotte mortgage demand remained high, as the city showed 13 percent sales increases, while agencies in coastal N.C. areas reported drops, mostly due to declines in second-home sales.
The North Carolina housing market is the biggest uncertainty as far as the state’s finances are concerned over the next year. The severity of the real estate decline will sharply influence the overall economy and the amount of overall tax dollars flowing into the state.
Real estate will drive the economy for three reasons:
- North Carolina’s market has been holding up better than other parts of the country. That continued growth was offsetting damage from rising energy costs and rising rates on mortgage loans.
- Housing sales affect not only the construction industry, but other businesses altogether, such as furniture and appliance sales.
- Lastly, property sales, home loan refinancing and home equity loans all gave consumers huge amounts of money to pump into the economy.
The good news for the state is that economists projected very conservative growth this year and, with the exception of resort property and new urban mansions, North Carolina hadn’t experienced the sort of real estate bubble seen elsewhere. It doesn’t have as far to fall.
Charlotte already is showing signs of a potential rebound. Contracts and closings rose in January over the previous year after two months in which one or the other indicator fell, and North Carolina mortgage rates are low - and demand is at high levels - throughout the city.
The number of existing homes sold in the Triad and across the state increased in 2006, according to data from the N.C. Association of Realtors.
Last year, 17,669 existing homes were sold in the Triad, up 7 percent from the 16,520 sold in 2005. The average home price rose 2 percent to $177,689.
Across the state, sales rose 3 percent, with 139,676 closings in 2006. Home prices statewide also rose an average of 2 percent to $214,952. This didn’t appear to slow down North Carolina mortgage activity, fortunately.
In the Triangle, home sales and home prices both rose 5 percent during 2006, with 36,409 homes selling at an average price of $227,155.
In the Charlotte housing market, sales rose 13 percent, with 43,389 closings. Home prices rose only 4 percent over the year, to an average price of $221,130.
This is good news. Sellers are still seeing slight profits on their properties, while prices are not out of the range of home mortgage loan applicants. Such a trend can only bode well for the future of this region’s housing market.
Every time Bill Borter interviews for an opening at his Matthews office, he gets a snapshot of the health of the mortgage-lending business: Job candidates tell the Charter Funding local branch manager of being laid off by larger mortgage lenders or losing their contract work.
That’s a far cry from the recent boom of the mortgage industry, when mortgage interest rates tumbled, the housing market explode and mortgage companies plumped up to handle all the resulting business.
Now, nationwide, the always-elastic mortgage industry is shrinking as the housing and refinance markets weaken, says Tony Plath, associate professor of finance at UNC Charlotte’s Belk College of Business. Layoffs, consolidations and closures have rippled through the industry.
However, despite Borter’s anecdotal evidence of layoffs, local mortgage bankers and brokers say Charlotte’s industry remains comparatively healthy.
“All the factors that undergird the mortgage market are good here,” Plath says. “But 2007 is going to be slow. If they have a flat year, they will have a good year.”
In the Charlotte housing market, home sales have flattened and even fallen in recent months, but remain relatively steady compared to once-hot markets that have now turned cold.
“We do expect the mortgage industry even in this market to see a slowdown because of the lack of refinances and tightening of finances for subprime lenders,” says Charles Myers, president of Myers Park Mortgage.
He says defaults and forced buybacks of home loans that failed to perform have cut into profit margins. Additionally, he says, fewer loans are being made.
Nationally, mortgages for home purchases are expected to fall about 8% last year from 2005 when final figures are tallied, according to the Mortgage Bankers Association, an industry trade group.
The number of mortgage refinancing applications are expected to drop even more, by 28%, as interest rates creep up. Total originations are expected to drop 18% from 2005.
The trade group predicts mortgage originations will fall another 10% this year.
Myers said the competition is so fierce that lenders are willing to lower their margins to keep their doors open. That can put companies in trouble quickly, he adds.
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The influx of newcomers to Western North Carolina has boosted both the local housing market and the overall economy, the Asheville Citizen-Times reports.
Harry M. Davis, an economist at Appalachian State University, was among a group of panelists who spoke Tuesday at the state Chamber of Commerce’s annual economic forecast session.
“Asheville is doing well because it’s along the metro corridor. That’s where the growth has always been. The beauty of Asheville is that’s where a lot of people go for second homes and to retire,” Davis said.
But the increase in newcomers has caused the overall housing demand, and subsequently the accompanying North Carolina mortgage costs, to soar.
The region’s population is expected to grow as much as 5.1 percent by 2009, while this sector of the North Carolina housing market could increase by as much as 40 percent during that time.
According to a 2005 study by the Asheville Regional Housing Consortium, a regional affordable housing advocacy group, that could pose problems for many long-time residents priced out of their own market.
“Asheville, just like other areas of the country, will have to come up with some innovative ways to deal with affordable housing,” Davis said.
In related news, North Carolina will be among the 11 states that will see record job growth in the next few years, said Knight Kiplinger, a panelist and editor-in-chief of several financial publications.
“The vast majority of the country’s job growth will occur in just 11 of the 50 states in America. North Carolina is one of those states, joined in the Southeast by Virginia, Georgia and Florida,” he said.
The Tar Heel State had a gain of 133,000 jobs from November 2005 to November 2006. Unemployment stood at 4.9 percent in November. The Asheville area has yet to see the increased inventory that has started to bring down prices in inflated markets, so demand for housing is still high.
The cost of a mortgage loan is still remarkably less in Asheville than it would be elsewhere in the state, and throughout the Southeast, but markets can boom in a hurry. Now is the time if you are looking to make a move.
Perhaps this information will bring North Carolina mortgage applicants back to the region:
New home inventory has risen 20 percent in the Triad since last December, despite a sharp decline in building permits in recent months. The rise in inventory has pushed the region to the point where it’s saturated with new homes.
As a result, this is considered a buyer’s market, with builders often lowering prices or offering special incentives to move homes. For example, in several of its local communities, K. Hovnanian has offered up to $20,000 off the price of a home in recent months. And Pierce Homes has been offering special appliance packages in some of its developments.
Local inventory levels have remained relatively steady since MarketGraphics’ last report in September, with 31 fewer houses available in December than three months earlier.
That slight decline in inventory since September is likely the result of builders significantly slowing the pace of construction starting that month, said Mark DeWeese, president of Empire Homes .
The number of building permits was down 22.3 percent collectively in September, October and November when compared with a year earlier. The reduction in building permits grew each month, as companies held back admist reduced home purchase loan activity in the area.
DeWeese said based on preliminary data, permits are expected to be down in December as well, which should help keep the inventory levels from rising higher.
In all, there are expected to be between 500 and 600 fewer building permits in 2006 than the 12,090 issued in 2005. Through November, 116 fewer building permits had been issued than a year earlier, about a 1 percent decrease.
Even with inventory levels high going into 2007, DeWeese said the overall new home market will still be okay as long as the decline in permits lasts into the middle of next year to allow some of the existing inventory to sell.
Joe Nottoli, the Triad division manager for Ryland Homes, agrees that going into next year builders are going to have to significantly reduce the number of homes they build in order to keep inventory levels from rising even more; at least until demand for North Carolina mortgage loans returns.
“If builders think they can build 300 or 400 homes a year going forward and move them, they’re stupid,” he said.
Weakness in the “Triangle” area of the North Carolina housing market will continue through the middle of next year, the region’s builders were told Monday.
Although home builders are beginning to cut back on housing starts, tempered demand will take six months to reduce a large inventory of unsold homes, said Bernard Helm, president of Market Opportunity Research Enterprises, a Rocky Mount company that tracks Triangle residential sales trends.
“We will see some real, negative numbers in both new and resale home transactions, as they compare to a year ago, during the next six months,” Helm told the Raleigh News-Observer.
“We now have to wait for the market to find a way to absorb the excesses and imbalances and large inventory in a market short on buyers. I expect growth later in 2007, but not much.”
The home builders of the Triangle - which refers to the triple cities of Raleigh, Durham and Chapel Hill - represent one of the most important economic drivers, with ancillary effects on a range of businesses from bankers to furniture retailers.
Last year, when home mortgages were even hotter, closings on new and existing homes totaled $9.3 billion. The region’s sales have increased every quarter since ‘03, and probably will set another record in ‘06.
Michael Carliner, economist for the National Home Builders Association (NAHB), called the Triangle “perhaps the healthiest market in the United States.”
That’s because low North Carolina mortgage costs and a robust economy mean the Triangle is gaining jobs faster than the national average, bringing more potential buyers into the housing market.
In the Raleigh metropolitan area in October, the number of jobs was up 4.4 percent compared with a year earlier; and Durham had 2.2 percent more jobs. Nationally, jobs increased 1.5 percent.
“The underlying demand is growing as fast or faster than the supply, because people are moving here from other parts of the country and you didn’t have the speculation in other markets,” Carliner said.
The Triangle’s housing market has felt the slowdown largely because many people moving to the area are having difficulty selling their homes in distressed markets.
Production builders have begun slashing prices and offering incentives, while many a seller, facing stiffer competition, has reluctantly lowered his/her listing price.
In October, resales dropped for the first time in almost four years, 17 percent more homes had price reductions than a year ago and the inventory of homes for sale grew by 6.6 percent, with 14,538 homes on the market, according to the Triangle’s multiple listing service.
Metrostudy, which tracks residential trends in the Triangle, said there are fewer new homes on the market than a year ago and closings are running almost equal with housing starts, which indicates balance.
It took Maria Warren just three days to sell her house.
“I wasn’t really shocked,” she said.
But others would be. Cumberland County, N.C., is an exception in the nation’s sluggish market.
Some out-of-town buyers expecting a slow housing market are surprised at the competition for houses, according to the Fayetteville Observer.
Other buyers are expecting discounts. You don’t find builder incentives in a strong market, after all.
Fayetteville is breaking the national trend because of a large, transient population, said Jay Dowdy, president of All American Homes Real Estate. Also, many times a member of the military will take out a North Carolina mortgage with the extra money they earn while fighting overseas. Once the soldiers leave the military, they stay in Fayetteville and get a civilian job in the military.
However, sales of new houses did drop in the fall. Huff said the drop was limited to houses priced above $250,000. He expects the trend will reverse in 2007, when more soldiers are expected to return to Fort Bragg.
Meanwhile, home sales in the rest of the country continue to fall. In October, sales of new houses dropped 3.2 percent from September. It was the largest drop since July, when sales fell by 9.2 percent. At the current pace of sales, it would take seven months for the nation to exhaust its supply of unsold homes.
Any figure above 6 months indicates oversupply. The absorption rate for an existing house in Fayetteville is 3.7 months. That means it will take 3.7 months for the market to exhaust its supply of existing houses.
The average price of an existing house last month was $221,000. That’s more than $100,000 above the average in Fayetteville, one of the more affordable sectors of a North Carolina housing market that has risen sharply in recent years. The average price of an American house sold last month was $249,000.
The average in Fayetteville? Just $199,000.
