The Real Estate Crisis
Should North Carolina be on Red Alert?
If you are a real estate investor or homeowner in North Carolina, fear not the wicked combination of headline stories and special reports that are painting a terrifying picture of a housing bubble and saying that our real estate markets are in a scary state. In truth, there are very few measurable signs that our home values are spiraling down at the same frightening pace as many markets across the nation.
In fact, the majority of our state’s housing markets are showing continual signs of profitable growth with only a few signs of natural market adjustments.
It’s good news to homeowners that there is little evidence to support the national predictions that median home values will plummet in North Carolina this year. Though, many grave media reports have cited a host of contradictory reports to predict widespread doom, gloom and devastating drops in home sales in our state. Without regard to accurate studies of our state’s consistent pattern of economic growth, many national reports are forecasting a housing recession and concluding that the sub prime lending crisis is tightening credit, causing a spiraling rate of home depreciation and wreaking havoc on real estate markets throughout the United States. What’s worse, many of these reports might lead you to the foregone conclusion that ALL of the real estate markets throughout the U.S., including North Carolina, are not likely to recover any time in the near future.
More accurate, locally focused studies demonstrate the extent to which North Carolina is not experiencing the widespread “real estate collapse” that has so decimated other states like California and Florida. In general, the current demand for home real estate properties in our state is trending higher than anywhere in the country. While oversupply due to speculation is driving down the prices of homes in some coastal areas of our state and the pace of new home construction has slowed, the demand for existing homes is remaining steady as we continue to offer a multitude of new jobs in our state. While unemployment in our state has increased slightly, North Carolina’s rate is still considerably lower than the rest of the nation. We’re still attracting a host of educated workers from other states. The latest U.S. Census figures show that North Carolina ranked number 2 in new residents and number 1 in percentage growth in 2007. Most importantly, as a result of this steady growth, Tar Heel homes are reported to be selling at rates of appreciation that are only slightly down from the rates we’ve seen for the last several years. Slower growth, but growth nonetheless.
Even better, many credible forecasters are pointing out the extent to which there may again be a return to a sharp demand for real estate properties in North Carolina by the end of the third quarter of 2008. So says Dr. Mike Walden, Ph.D. He’s the William Neal Reynolds Distinguished Professor of Economics at North Carolina State University. Dr. Walden has studied all of the market adjustments, surges and downturns that have affected our state for the last thirty years. He believes that it’s truthful to report that unlike markets in other states; nearly every housing related statistic in North Carolina will continue to rise beyond the current temporary re-adjustment phase as our state returns to the record pace growth patterns. He thinks our state’s economic diversity combines with other attractive factors to drive future growth. Such growth will in turn continue to raise the demand for properties in our state. He believes that everything related to property sales will therefore start trending upward on a steady, but sure basis this year.
“I have consistently studied the statistics gathered by the Office of Federal Housing Oversight. And, I can confidently point to a host of other studies to predict our state’s continued economic growth through at least the year 2030,” Walden says with no hesitation in his voice.
In the mean time, Standard & Poor's/Case-Shiller home price index currently has Charlotte topping its list as the nation’s top real estate market. The Queen City is said to be one of only three real estate markets in the country where home prices are presently rising. Likewise, Veros Real Estate Solutions (an industry forecasting service) recently rated the Triangle Area among the 4 “Hottest Real Estate Markets” in the U.S. According to the latest Pending Home Sales Index (a leading indicator for the housing sector) the number of home sales contracts signed in North Carolina in October 2007 increased .06 percent to an index of 87.2. This upwardly revised measurement nullifies the vast majority of negative reports of a housing downturn in North Carolina that were so ever newsworthy in recent months. And, a number of analysts are currently reporting that things are looking nearly as positive in other metropolitan and outlying areas of the state.
What's the bottom line? Despite what's happening at the national level, the North Carolina housing market will feel the effects later, with less severity and can expect a quicker recovery than the other markets across the country.
Find out what all of this really means to you, in plain english.
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