Wilmington NC Real Estate Market Statistics: December’s 2008 Market Snapshot by Price Range | Part 2

It is no surprise to anyone that the housing market is hurting right now and that our economy as a nation is in a pickle.  We are all hoping for the best and I think most of America’s eyes are watching to see what is going to happen in 2009.

Getting a Grip on Local Real Estate Markets

At the core of our economy’s challenges is the credit crisis which fueled the housing bubble and is now at the foundation of the housing bust.  Foreclosures have caused prices to plummet in many real estate markets across the country.  But unlike Wallstreet, Mainstreet is always local.

There are many similarities in local markets across the nation that are the result of national economic trends.  Yet, local real estate markets still have their unique local economies that can be above or below par, thus bringing varying market dynamics that can elude the seeming consensus on our national media headlines.

Headline Knowledge vs. Research Based

I am of the opinion that the housing market is not as bad as the media makes it out to be (most of the time) and yet is probably worse than the average real estate agent would tend to think.

From a consumer standpoint, I believe in taking a research approach to real estate and understanding the market.  This is in contrast to having a headline understanding or a blind…just believe whatever a salesperson tells you approach.  I operate my real estate sales business as a consultant to my buyer and seller clients and a big part of my job is to gather information for my clients that helps them to make the very best decision with the best possible information.  And that is why this blog, The Wilmington Search, exists – to educate and inform you from a consumer standpoint.

This Current Housing Market is NOT Hurting Everyone

So, who is hurting right now in this housing market downturn? Those affected the most are those who need to sell right now and must confront the downward pricing trend, and those who cannot get a mortgage right now.  The latter I think is ok, because I personally believe it is healthy to get back to lending standards that protect the bank AND the consumer.  We need both bank and consumer to be healthy and don’t benefit as an economy when we lose either, which is the current battle we are in now.

For those who would say, “Well I have lost equity/value in my house in this market”, I would say:

1. Equity is not realized until you sell or tap it via a HELOC (home equity line of credit).
2. Previous home values were clearly inflated due to easy flow of credit that is no longer possible.  The market dynamics have changed, erasing a previously perceived value.
3. Real estate fundamentally has always been a long term investment.  Banks have confused that idea over the last few years, but real estate cannot be seen as a liquid asset.  It is not.  Therefore, I believe homeowners must move back to a view of real estate as a long term investment. If you hold, you will not realize a loss during this current market.

Alright, enough of my ranting…

Carrying on with yesterday’s post, today I want to finish breaking the Wilmington NC real estate market down by price ranges.

Solds

The numbers in this graph reflect the last 6 months of sales activity.  Solds are those homes that were previously on the market, went pending, and then finally closed and now have new homeowners.  There is a clear bell curve in the Wilmington NC real estate market in terms of sales.  The majority of the buyers are located in the $125,000 to $300,000 price range with the most concentrated amount of homebuyers in the $200,000 to $250,000 price range.  In this graph, you can clearly see the opportunity for buyers in the luxury end of the market.  Luxury home sales in Wilmington NC have slowed down considerably over the last two years.  This is in line with recent national data showing that luxury retail sales have slipped dramatically in the last few months.

MSNBC:  Holiday outlook grimmer after dismal Oct.

….Luxury stores were hit hard as affluent shoppers cut back on designer clothing amid rising layoffs on Wall Street and shrinking bonuses. Nordstrom posted a 15.7 percent drop in same-store sales, while Saks Inc., which operates Saks Fifth Avenue, recorded a 16.6 percent drop. Saks also said it expects a “significant” decrease in profit margins for the third and fourth quarters as it ramps up discounting….

Inventory Levels

Inventory Level is really where the rubber meets the road in terms of market indicators.  Looking at the rate of home sales over the last 6 months and what is currently on the market, will show us how many months it will take to absorb the current inventory.  See my explanation on inventory levels to learn more of what I am talking about.  With the current rate of home sales, it will take years to sale the current inventory of luxury homes in Wilmington.  Years!  This is where we have to understand local markets.  In the lower end of the price scale, we are in a buyer’s market. But we are not in a lost-beyond-all-measures type of situation in Wilmington NC right now.  As you move into different price brackets, it is important to understand that real estate market dynamics vary radically.  I will be posting my 2009 forecast on our local market before the year is up, so stay tuned.

List vs. Sales Price

This is always an interesting graph to analyze.  Unfortunately, it is difficult to gauge each individual number with these graphs online.  But, for my clients, I do provide this data in a spreadsheet where we can see each number individually.

Three things I want to note on this graph:

1. The greatest room for negotiation seems to be in the lower end and the higher end of the local real estate market.
2. The list price that this data pulls from does not reflect what price properties originally come on the market for.  In other words, the percentage difference between list to sales price would be greater if we used the original list price as opposed to list prices that have been reduced.
3. Negotiating a sales price is a case by case basis.  I have clients who look at this graph and will tell me, “Well I know so and so got this much off the list price.”  The above graph gives you an overall sense of the market, but it doesn’t mean every sale is going to match the average of that particular price range.  Remember, it is an average.

Average Days on the Market

For the homes that have sold in the last 6 months in Wilmington, here we can see the average days the home was on the market until an acceptable offer came through.  As the price range increases, so does the selling time increase.

If you enjoyed getting a chance to see the market broken down like this, you may enjoy being able to see the data spelled out on a spreadsheet.  Here is a sample of the Total Market Overview.  This is key market report I use when working with both buyers and sellers.  It is updated several times throughout each month so that we are up-to-date on where the market is.

Well, I hope this post has been helpful.

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Walt Dowdy

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