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07 June . 2011

Triangle Real Estate Market - Just the Facts

Hello and welcome to the View from the Porch Housing and Mortgage Blog - I'm Jeremy Salemson, Chief Executive Officer of Corporate Investors Mortgage Group, Inc. We're a boutique Mortgage Bank helping homeowners achieve their dreams throughout the Triangle and North Carolina. In addition to writing this blog, I also write a weekly Blog for WRAL.com titled Today in Real Estate


Each month here at View from the Porch, we'll be giving you simple insight into the relatively fast moving and complex world of housing and mortgage banking. We want this blog to be your source of up to date housing data for the triangle - a tool for you to use to make informed housing decisions.  So let's get right to it!


The two topics on most minds right now are the economy and jobs - both of which seem to have stalled across the nation. The latest unemployment report from last Friday gave us a dismal unemployment rate of 9.1% - indicating that only 54,000 new jobs were created in the month of May - a significant departure from the 232,000 jobs created in April. Consensus estimate for new jobs was considerably higher than the released data.  So quite often, when economic data like the jobs report deviates from consensus estimate, there is generally some movement in the Treasury Markets which can then lead to volatility in the Mortgage Interest Rate Market.  Treasury prices and yields have an inverse relationship - meaning that as Treasury prices increase, their yields decrease and vice-versa.  Typically, mortgage interest rates tend to follow the direction of yields- which is why we use the 10 Year Treasury Yield as a daily directional indicator for Mortgage Rates.


Speaking of the slowing economy, housing is currently facing many headwinds - foreclosures, fewer qualified borrowers, tighter underwriting guidelines, property valuation concerns, higher commodity prices, etc… BUT - there is a silver lining in all of this mess.  Home inventories are strong, giving buyers a great choice in the marketplace and Mortgage Interest rates are at historic lows making homes the most affordable they have been in some time.


Here in the triangle, we're much better off than many parts of the country. The Triangle unemployment rate just dropped to 7.7%. We have strong economic fundamentals in the form of a diversified business climate, state government, a  well-educated borrower base, three major universities - and most importantly for housing - a seasoned group of realtors who know how to price homes well. The triangle didn't experience the fluctuations in appraised values as did many other parts of the nation - (i.e. Las Vegas, Miami) - and because of that, home prices and values have remained relatively steady. Now that's not to say that we haven't experienced pain throughout this housing bear market - but we're in a much stronger position than most in the US. 


Speaking of home prices - the S&P Case/Shiller Home Price Index - which takes a snapshot of home prices in the top 20 Metropolitan areas throughout the country, was released last week and indicated that home prices nationally are at the lowest levels that we've seen since 2002 - and are down 5.1% from the same time last year. This report gives substance to the term double-dip, as it relates to US Home Prices. This is always a tricky report to digest in that we know when it comes to home prices - it's truly the local economic fundamentals which drive values and therefore national readings often do not equate with what is occurring here in the Triangle -and more specifically - what is actually happening in YOUR neighborhood. 


We're seeing some variance throughout the Triangle as it relates to Median and Average sales price. According to the Triangle Multiple Listing Service, Median and Average Sales Prices have increased slightly across the Triangle - but certain areas like Orange and Durham Counties have experienced much higher increases in those categories - reinforcing the notion that supply and demand take on their own personalities within a regional sector.


So with all of this negative national news - one would think that now is certainly not the time to be buying real estate.  Au contraire my friends - now is exactly the time to be considering purchasing a home if you're in the market and you are one of those eligible buyers. Eligible being defined as an individual or couple who can qualify within today's mortgage guidelines - and where it actually makes sense for you to do so. 


Each month we'll watch a variety of economic reports - Consumer Confidence, Consumer Price Index, Retail Sales, GDP Numbers, Weekly Jobless Claims, ADP Employment Reports - you get the picture - to see what the data looks like in terms of growth or contraction - how it stacks up to consensus estimates - and how the markets react to that data. Sometimes it's not just the raw data which matters - but the language around such data which can provide insight into the all important psychological component for both for the markets and consumers. 


Well that's all for now - July will give us further clarity on economic data and home trends. If you have any thoughts on topics you would like see covered, please email me at jsalemson@cimginc.com. We want to be your source for up to date data for this very exciting and always changing industry that we all call home.


Happy House Hunting!


tags: Homes

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