News

Home Prices: Now for the Good News

By Brad Reagan and Elizabeth O'Brien

Oct 20th, 2008

When the headlines about the housing market are apocalyptic, the last thing a homeowner wants to do is sell. But a funny thing happened to Jeff and Jennifer Boyd when they put their three-bedroom house in Philadelphia's Graduate Hospital district on the market this summer: They turned a profit. Just 45 days after the listing went up, a buyer snapped up the property for $555,000-$29,000 more than the Boyds paid in 2006.

"We were pretty hesitant, knowing what the market is like," says Jeff. "But a few weeks later, it was gone."

Here's a surefire way to start an argument: Suggest that the housing market has reached bottom. To be sure, the near-term outlook is still grim, and nobody is forecasting a rapid nationwide rebound. But there are signs that the overbuilding and speculative pricing that inflated the bubble are working their way through the system.

In October 2005, near the peak of the boom, the median sales price for a U.S. home reached 7.3 times per capita income; by this May it had fallen to 5.7, in line with historical norms. Nationally, the rate of decline in sales is slowing, and in some regions sales numbers have actually perked up.

"The indicators are starting to look better," says Adam York, an economic analyst with Wachovia.

Why the disconnect? For starters, the national sales figures that get so much attention-and remain depressing-are brought down by boom-and-bust markets like Las Vegas, Miami and Phoenix. David Berson, chief economist with mortgage insurance firm The PMI Group, says that if hard-hit states like California, Arizona, Nevada and Florida are taken out of the statistical mix, the picture is much more promising. According to PMI's "risk index," which estimates the odds of prices falling in a given market, at least 65 percent of the nation's 386 metro areas have less than a 10 percent chance of seeing lower prices two years from now. What's more, the government's sweeping bailout of the financial sector could boost the housing market by making borthe rowing easier for buyers.

We dug into those numbers as well as other forecasts and analysis to determine which markets are in the best shape for a rebound. We also talked with housing experts to learn which kinds of neighborhoods and suburbs are thriving. Our search led us to 25 metropolitan areas that look particularly promising, and there are more than a few surprises. Here, we profile one of the best-looking markets; for the full list of 25, see November's issue of SmartMoney magazine.

Raleigh

North Carolina’s capital seems to have gotten a free pass where the housing slump is concerned. Prices have been buoyed by job growth in the Research Triangle, home to dozens of tech firms. Total sales in the first quarter of this year were the fifth highest on record. In some cities, suburbanites stung by gas prices are moving downtown in favor of walkable neighborhoods. But not in Raleigh. “People move here to get away from that type of living,” says local market analyst Stacey Anfindsen, only partly in jest. Although downtown Raleigh has added hundreds of condos and lofts, the real growth has come in suburbs like Cary, Morrisville and Apex, all on the western side of Raleigh, where home prices have risen steadily.

The subdivision of Preston, where prices are up 3.5 percent over last year, reigns as the area’s übersuburb. The northwest Cary neighborhood was bankrolled in the 1990s by Jim Goodnight, founder of software giant SAS, and supersizes the standard suburban amenities: Most lots are at least a quarter-acre, double the size of newer developments, and prices approach $500,000. Parents can choose from a roster of lauded private and public schools. John Minicucci, a technology analyst, moved his family to Preston in May after stints in New York and Vancouver, B.C., and chose the neighborhood in part because it is already built out; it doesn’t run the risk of being flooded with discounted properties because of overbuilding. “Since this area didn’t really experience the boom, it won’t be as susceptible to tanking,” he says. And he’s loving perks like abundant tee times. Like more than 60 percent of Preston residents, Minicucci belongs to the local country club, which hosts 54 holes of championship golf, two tennis facilities and three swimming pools.

http://realestate.yahoo.com/promo/home-prices-now-for-the-good-news.html

Commercial growth following residential in west Cary

By Beth Hatcher, Staff Writer

Not only are town officials watching the lightning-quick growth in west Cary with a keen eye, so are the big-box chain stores that follow the surging numbers of residents.

All are potential customers, and a theme from the “Field of Dreams” movie tends to hold true in the retail world as well: “If you build it, they will come.”

Big growth doesn’t happen, 25,000 to 45,000 newcomers are expected in west Cary, without attracting the attention of national retailers, well-known names like Wal-Mart and Harris Teeter.

A Harris Teeter store near the massive Cary Park development near N.C. 55 is an example not just of the scope of west Cary’s commercial growth, but its “new suburban” style.

Nearly all the new commercial development in west Cary is in mixed-use projects that include residential and commercial space, said Dan Matthys, a planner with the Town of Cary.

Cary Park, one of the first large subdivisions to break ground west of N.C. 55, includes about 120,000 square feet of commercial space.

Cary Park developer Frank Bridger has seen the mixed-use trend as well.

“You see more amenities now,” said Bridger, who acted as the project manager for Cary Park. 

For example the 5,000-residential-unit Amberly development, which straddles Wake and Chatham counties just a stone’s throw from Cary Park, could include up to 280,000 feet of commercial space, according to Town of Cary documents.

These commercial spaces, Amberly’s looking for things like a grocery store, gym, medical offices and restaurants, will provide not only shopping but also jobs.

“The idea of living and working in the same area has forever been appealing to most people who have ever experienced a long commute,” said Beth Hoggard, an Amberly sales agent.

Alston

Town planners have long seen what was in store for west Cary, and planning began years ago. The Alston Activity Center is a Town of Cary-given name to the interchange of the newly completed I-540 and N.C. 55.

Knowing that the area would be ripe for commercial development, town officials took the helm in governing development by creating the Alston Activity Center Plan, a guide for approximately 1,000 acres around the interchange.

The town-initiated plan governs things such as uses, densities and even building facades.

The plan hasn’t been without some controversy.

While town officials wanted a plan that would help steer growth positively around the interchange, some developers felt the plan was too limiting. The plan at first was much more specific about its guidelines. Officials have since made some changes.

Controversy or not, that hasn’t stopped developers from wanting to build in the Alston area.

A sampling of the plans there:

>Parkside Town Commons- this mixed-use development would include 590,331 square feet of retail, 226,301 square feet of office space and 495 multifamily units.

>The Alston Town Center will include 317,880 square feet of retail and 36 live/work units (work and residential space in one location).

>Panther Creek Commons will include 27,200 square feet of retail.

Park West Village

A little further down the road another mixed-use development could also change the face of west Cary, though technically it’s in Morrisville.

Morrisville commissioners recently approved plans for Park West Village, which calls for shopping, apartments, a hotel, a cinema and office space on 100 acres in the the southwest quadrant of the Cary Parkway and N.C. 54 intersection.

1st Carolina Properties in partnership with Casto Lifestyle Properties will develop the “Live, Work, Play” project, which will include approximately 750,000 square feet of retail, 50,000 square feet of office, a 140-room, five-story hotel and up to 321 apartment units.

Commissioners narrowly approved the property in a 4-3 vote amid much controversy in the town, including residents’ concerns about additional traffic and storm water runoff issues.

Commissioners, though, felt comfortable with the developer’s plans to widen N.C. 54 from two lanes to four lanes from the intersection of Cary Parkway to Weston Parkway.

http://www.carynews.com/front/story/8461.html

How will Apex grow?

Business people, town officials and residents discuss ways to attract commerce

By Wendy Lemus, Staff Writer

Like many Triangle communities, the once small town of Apex is asking itself how it’s going to deal with the growth that just keeps coming.With cities elsewhere struggling to keep jobs and people, that’s not a bad problem to have, said Apex Mayor Keith Weatherly.

“It’s often said we’re in the catbird seat here in Apex; we can be very choosy on econonic development issues,” said Weatherly, speaking at an economic development summit at the town’s community center Thursday.

The meeting was the first such joint venture between the town and the Apex Chamber of Commerce. Several residents, local business people and town officials attended.

Apex officials, aware that growth has its own set of problems, sought input on priorities as it tends to those growing pains.

The town’s ratio of residential to commercial, 81 percent to 19 percent, is too skewed toward residential, said Apex Planning Director Dianne Khin. “The main reason to have a more balanced split between nonresidential and residential uses is for tax base purposes,” Khin wrote in an e-mail. “... By having more nonresidential tax base, it essentially subsidizes the residential taxes so that citizens’ property taxes can be kept as low as possible.”

The goal, said Khin, is 60-70 percent residential and 30-40 percent nonresidential.

How to get there?

Community members brainstormed items the town should put priorities on.

Road improvements, utilities expansion and a “unified economic development vision” for the town were at the top. Other priorities identified included readying “certified sites” for prospective businesses to move in more quickly, making improvements downtown, finding more commercial land for office parks and businesses, maintaining Apex’s “small town” character and streamlining the town’s development process.

Most in the room were not surprised that road improvements led the list.

Kent Jackson, Apex’s director of construction management, said the town is making progress on the Apex Peakway. It’s also working on improvements at key intersections, Salem Street and N.C. 55 and Lake Pine at U.S. 64.

Public Works Director Tim Donnelly noted the large recent but necessary expenditures , $73 million for the Western Wake Regional Wasterwater Treatment Plant, $70 million for an electric utility substation and $12 million for water treatment plant expansion. “Those things have to occur for economic development” to happen, Donnelly said.

He encouraged attendees to get behind the wastewater treatment plant project because he said Apex is running out of sewer capacity.

One thing Apex will need to face if it wants to increase its business sector is the potential for offering taxpayer-financed incentives. Holly Springs recently gave Novartis a multimillion dollar package to put a vaccination plant in town.

In a “pros and cons” format, Ernie Pearson of the Sanford Holshouser Business Development Group was invited to speak on the matter along with Justice Robert F. Orr, who is currently running for governor.

Pearson said incentives “are now a routine front-end question” for businesses looking at new locations. “This is somethng we gotta do to compete,” he said.

Orr’s word of advice was “just say no.” He likened incentives to “governmental subsidies of selected businesses ... a process that is fundamentally unfair.”

Weatherly asked the guest speakers about public disclosure in the process of recruiting businesses. Often negotiations are done behind closed doors, with companies demanding not to have their names announced until a decision has been made.

“People paying taxes have a right to know” what’s going on, Orr said.

Pearson said all his dealings with companies and governments have complied with open meetings and public records laws. Apex, Pearson said, “won’t face the reality until you’ve got a company [looking] anyway.”

Other action

Also at the Economic Development Summit in Apex:

>Apex has had the largest extraterritorial jurisdiction ever granted in Wake County, nearly 9,000 acres largely to the west and south. (See map: apexnc.org/docs/ plan/etjRequest.pdf.) The town will do a six- to eight-month study to look at land uses, transportation routes and potential areas for parks and schools. It has been 29 years since Apex had a comprehensive ETJ request approved by Wake County. ETJ gives a municipality the right to apply its zoning and subdivision ordinances to nearby properties that are not within the municipality and not incorporated in another municipality.

>Phase four of Beaver Creek Crossing has been approved. This phase is located on the north side of U.S. 64, across the highway from the movie theater. It will include 242,000 square feet of retail, 40,000 square feet of office, 18,000 square feet of residential and 46 townhomes.

>Broadstone Station, northwest of the U.S. 1 and N.C. 55 intersection, has been approved and will include 350,000 square feet of retail, 90,000-square-foot hotel, 40,000 square feet of office and 288 multifamily homes.

http://www.carynews.com/news/apex/story/7147.html

Sales of existing homes show slight gain in May

By Martin Crutsinger, AP Economics Writer

WASHINGTON - Sales of existing homes rose slightly in May, only the second increase in the past 10 months. Prices, however, kept plunging and analysts said the large number of unsold homes indicated the prolonged slump in housing was far from over.

The National Association of Realtors reported Thursday that sales of existing single-family homes and condominiums edged up by 2 percent to a seasonally adjusted annual rate of 4.99 million units in May. Even with the small gain, it was still 15.9 percent below the depressed levels of a year ago.

The median price of an existing home sold in May dropped to $208,600, 6.3 percent lower than a year ago. That is the point where half sell for more and half sell for less. It was the fifth biggest year-over-year price decline in records that go back to 1999.

Existing homes sales account for the bulk of the housing market. The report followed news Wednesday that sales of new single-family homes fell by 2.5 percent in May. That was the sixth drop in the past seven months and pushed the annual sales pace down to 512,000 units.

The two-year slump in housing has dragged down the economy and rising levels of foreclosures are dumping even more unsold homes on the market.

Given the weak economy, many analysts said they were not looking for a turnaround in housing for many more months. "Plunging prices and massive inventory are huge disincentives to home buying," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Economists said that falling consumer confidence, rising job layoffs and higher mortgage rates were standing in the way of a housing rebound. Freddie Mac, the mortgage company, reported on Thursday that mortgage rates rose across the board in the past week. The 30-year mortgage climbed to 6.45 percent, the highest since last September.

"We do not expect residential real estate markets to turn around soon," said Stuart Hoffman, chief economist at PNC Financial Services. "In a sea of weak data, home sales will remain an anchor, not a life boat."

The existing homes report found a 5.5 percent increase in the Midwest, followed by gains of 4.6 percent in the Northeast and 2 percent in the West. Sales in the South dropped of 0.5 percent.

Economists with the Realtors noted that for the past few months sales have rebounded in areas hit hardest by the housing bust. Examples included Sacramento, the San Fernando Valley and Monterey in California; Sarasota, Fla.; and Battle Creek, Mich.

"Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," said Lawrence Yun, the Realtors' chief economist.

Yun said foreclosures and short sales, when a home is sold for less than the value of the mortgage, are a larger portion of the current housing market, particularly in California, and are depressing home prices.

The inventory of unsold homes dropped by 1.4 percent to 4.49 million units in May. That is a 10.8-months supply at the May sales pace, down from 11.2-months in April. That still exceeds the seven-month inventory that is typical.

http://www.newsobserver.com/1566/story/1120999.htm