The Durham real estate market is in a complicated situation – key indicators seem to indicate that the market is recovering, but the lingering effects of the recession continue to plague some hard-hit areas in the North Carolina City. According to an April 7, 2010 article in the News Observer, “Foreclosure filings in the Triangle slowed some in March but total filings for the first three months are still up 56 percent compared to the same period last year. Filings in Durham, Johnston, Orange, and Wake counties totaled 2,386 through the first three months of 2010, the N.C. Administrative Office of the Courts reports.” The piece continued to state that “Triangle filings have been up 72 percent compared to last year through the first two months. The four-county region accounted for 14 percent of the 17,552 foreclosure filings in North Carolina through the first three months of the year.”
This gradual recovery for Durham real estate, along with some concerted government relief efforts, however, has not been enough for some families. According to an April 11, 2010 article in the Charlotte Observer, “Recent changes to the federal foreclosure-prevention program were billed as helping the unemployed, but in the long run, they actually make it harder for people without jobs to keep their homes.” The piece, composed by Stella M. Hopkins, continued to note that “When the new rules go into effect, unemployment benefits will no longer count as income for determining whether a person qualifies for a long-term reduction in their mortgage payments. So for people with no income other than unemployment, there will be no loan modifications – the chief tool for preventing foreclosure.”
Some other North Carolina markets, which are in many ways similar to Durham homes for sale, have been seeing an increase in recent sales volume, according to an April 14, 2010 article in the Tidewater News. This piece, written by Gwen Albers, found that “Sales of existing homes in the Isle of Wight and Southampton counties and City of Franklin more than doubled from February to March. Nine homes were sold in February and 22 in March.”
In North Carolina you can find the city of Durham, which is Durham County’s seat, extending into Orange and Wake Counties. The population of the city currently sits at around 218,000, making Durham the 5th largest city in all of North Carolina.
Durham boasts many large and well respected educational institutions, including North Carolina Central University and the world renowned Duke University. It is also home to numerous historic sites and natural pieces of land, such as the Research Triangle Park. If you are only looking to visit, there are also plenty of hotels which offer very reasonable rates.
Durham Marriott Convention Center, situated at 201 Foster St, Durham, NC 27701, is one of the best hotels in the area. It sits in the middle of the downtown district and is only two miles away from Duke Hospital, Duke University and North Carolina Central University. Conveniently, the Raleigh Durham Airport is located only twenty minutes up the road, while a stones throw away from that is the American Tobacco District, which has recently been renovated.
Besides the hotel’s great proximity to various businesses including Duke Corporate Education & Intersouth Partners and McKinney Silver, visitors are also able to take some time out for relaxation at the close by Durham Bulls Athletic Park, The Carolina Theater or the YMCA, which has both a gym and an indoor swimming pool.
The Durham Marriot has a 3 star rating and is a smoke free hotel which provides its guests with wireless internet, a business area, a top notch shuttle service, places to sit and relax, a free car park and, in some rooms, plug in panels. You will also have access to the Concierge Lounge where you can enjoy some Hors d’euvres, drinks, snacks, desserts as well as a nice Continental breakfast.
The Millennium Hotel in Durham is as unique as it is beautiful, and only a short walk away from Duke Medical Center and Duke University. Close by you will also find the Museum of Life and Science, the University of North Carolina and the Durham Bulls Baseball Athletic Park, which is a must see for any baseball fan.
The hotel has 316 guest rooms and suites, as well as a whirlpool, an indoor swimming pool and a fully equipped gym. There are also some fabulous eateries onsite, including Bel Gusto which gives guests a taste of Italy, and the Varsity Lounge, offering you various cocktails and light snacks in a cozy and laid back atmosphere.
The Millennium is open to all variety of social events and gatherings, as well as business functions. They are able to provide you and your associates with conference and meeting rooms, two spacious ballrooms, a fabulous library as well as an Alumni Room. They are well equipped to accept handicapped guests, and provide concierge services, fast, wireless internet access, exhibits in the lobby and access to catering services as well as AV equipment.
Rooms here include a choice of king sized beds or two standard single beds, pay TV including movies and satellite TV, as well as equipment for ironing, a free newspaper, and coffee and tea makers. You will have the option of a smoking or a non smoking room, which is a valuable option for a lot of travelers, especially in the cooler months.
Situated at 2516 Guess Rd Durham, NC 27705, you will come across the Holiday Inn Express Durham. A pet friendly place to stay in the downtown area, the cost to keep your furry friend here is only $10 a day, although it should not weigh more than 25 pounds. It is located close by to educational institutions such as the University of North Carolina, the North Carolina Central University, the NC School of Science and Mathematics as well as the world famous Drake university. You can check in any time from 3 PM, while check out is at 12 noon.
The Holiday Inn has 79 nicely equipped and comfortable rooms available, with free wireless internet access and a choice of hot breakfast foods, including cinnamon rolls. You will also be able to make use of a shuttle service should you need or want to get to one of the local hospitals.
Because the hotels are all conveniently situated nearby to educational institutes in the area, parents will have no problems when it comes time to visit their children who are attending local colleges, or who want to take a look at the campuses here while deciding on the right school for them. If you are planning a trip here, it is important to call ahead and make reservations with your hotel of choice, as the area can be quite busy at certain times of yeah.
When it comes to the most scenic and picturesque places to live in the United States, central North Carolina is very high on the list. Durham is located almost dead center of North Carolina. With a population of around two hundred and fifty thousand residents, it still manages to provide a very warm and welcoming small town atmosphere. Durham is part of the Research Triangle and boasts both the North Carolina Central University and the prestigious Duke University. If you are looking for a career in medicine, then Durham is a great place for you to find a job, as it is known as The City Of Medicine. Healthcare is one of the key industries here, with over 300 medical or health oriented companies and medical practices in the area.
Another strong draw bringing people into Durham is the fact that the community on the whole is very highly educated, as well as displaying a dedication to development and research; which is no surprise as the town is situated at the center of the Research Triangle, which connects North Carolina University, North Carolina State University, and the prestigious Duke University. There are plenty of large scale technology companies in the area who enjoy the benefits of the spectacular skill sets many of the locals possess here. If you are looking to be part of a unique and special community that places a high value on personal development, Durham is a good place to start your career.
If you are considering relocating to North Carolina, you might be wondering what the real estate market currently looks like in Durham; at the moment, it is appreciating steady growth. Plenty of houses are being built constantly in Durham, and there are also some beautiful older homes available to buy. The median price for a house here is roughly $200,000 – which is a very reasonable price considering the fact that the average yearly income here is higher than most other locations in the United States. These homes vary greatly in size and style, with many situated on large lots with plenty of land – if you are looking for a new start in life in a town that ensures great opportunities both personally and professionally, then Durham could be the perfect place for you!
Durham, situated in North Carolina, is the county seat for Durham County. It’s widely thought of as the cornerstone for the Research Triangle area in the state, as well as being recognized as the 4th greatest city in Carolina when it comes to population. In 2005 the population for the city was recorded as 1,509,560 and has continued to enjoy consistent grow since then.
Durham was established back in 1853, when the state needed a place where a railroad depot could be setup. A county physician named Barlett S. Durham had both his home and his medical practice set up along the railroad’s route, and decided to donate some of his land to the depot, which is why it was named Durham Station.
Before the Civil War, Durham grew quite slowly; however once the war came to a close the population started to grow quickly, with the city receiving its official charger in 1869. The growth spurt the population enjoyed was largely thanks to the tobacco industry, which in this time was thoroughly thriving.
Before long, tobacco turned into the legs of the table that was the economy in Durham, although soon textiles were also playing a large part. Because of the fast growth of a city in this time, most of the residential and commercial buildings in Durham date back to the years falling between 1890 and 1930.
Before long, a vibrant African American community had also developed in Durham. Interestingly, some of the greatest businesses to be owned by African Americans have roots in the city, dating back to the 20th century. Some of the better known businesses include Mechanics & Farmer Bank and the North Carolina Mutual Insurance Co. Parrish Street, the same place many of these companies were situated, and soon became affectionately nicknamed the Black Wall Street.
Durham is still home to a diverse mix of individuals of different ethnicities. It is also home to the North Carolina Central University, the Durham Technical Community College and the world renowned and respected Drake University.
The Triangle Multiple Listing Service has published the newest market stats, based on MLS activity. If you don’t want to read the fine details, I’ll summarize: there isn’t much good news here.
Still with me? OK, let’s dive in…Durham is feeling the effects of the housing downturn, as is the rest of the Triangle. The downtrend is now hitting segments of the market that we hoped would not be affected.
February Home Sales
Sales in February were down almost 27% compared with February 2007. That puts Durham in the worst position of the major Triangle counties:
Durham County -26.7%
Johnston County -3.2%
Orange County -16.7%
Wake County -15.6%
Breaking sales down by price groups offers some explanation as to why Durham is down so much more than other areas. 81% of the February sales in Durham involved properties priced under $250,000. First-time homebuyers typically buy in the sub 250k price range. Some of these buyers have had their financing options severely curtailed by the issues in the mortgage market. Others sense that aggressive price reductions are on the horizon, and want to see how much lower the market will go.
In contrast, 47.5% of buyers in Orange County and 36.4% of Wake County buyers paid more than $250,000 for their homes.
Johnston County shares Durham’s price spread – 84% of their sales were in the under $250,000 range. Johnston has become a preferred bedroom community for workers in Raleigh and RTP – before recent events, it overtook Durham’s position as the Triangle’s second most active new construction market. This may be why its decrease in sales is minimal.
I was surprised when I opened the latest market update from Stacey Anfindsen, the real estate analyst for the Triangle MLS. Mr. Anfindsen has been realistic about the excess inventory in the market and the need for price drops. However, he forecasted that the strength of the Triangle job market, low interest rates, and relatively affordable housing stock would shield us from the worst of the fallout.
The sub-title of this month’s report: “Is there any good news?”. Which usually means there isn’t.
First line of the report: “Our local market seems to have finally fallen prey to the conditions seen nationally. While year end numbers were fairly positive, 2008 has not gotten off to a good start.”
The new numbers are a bit of a blindside. Up until the end of 2007, the market remained pretty balanced, even though there were a lot of homes for sale. Sales prices continued to rise. There was a five month supply of homes on the market – wonderful, given that a 6 month supply is considered a perfectly balanced market. And again, interest rates were comparatively low. While the subprime market was tanking, we were blessed with a well educated and well compensated workforce that could still access financing.
But at the start of 2008, the market changed. Sellers came in; buyers pulled out. Durham now has an 11 month supply of homes on the market (compared with 10 for the Triangle as a whole). Durham has three big trouble spots right now: homes priced over $250,000 (13-18 month supply), condos (34 month supply), and townhomes (19 month supply).
The Senate is currently considering a $15 billion dollar housing relief package to assist homeowners and local governments in battling the depressed housing market. Although a final deal is still being negotiated, here are the current major points and how they might impact the local market:
New FHA guidelines. Will it help Durham? No
The government is advocating an increase in the amount buyers can borrow under the FHA program. The required downpayment on an FHA backed loan will increase from 3% to 3.5%. FHA backed loans are not typically credit score driven, although they do have underwriting standards (like no collections on your credit or no late payments in the past year). Many buyers opted for subprime solutions because the FHA guidelines would have required them to delay their purchase while addressing their bills and credit. Today, even with a more generous loan amount, that same buyer will still have to work to meet the guidelines – they won’t be running out to buy a house tomorrow. FHA backed loans are a small segment of the market here – I don’t expect this provision to have a major impact.
Bonds for refinancing. Will it help Durham? Maybe
The states get $10 billion dollars in tax-free municipal bonds. The proceeds can be used to help homeowners refinance. Usually, this type of government aid is limited to first-time homebuyers and homes in distressed areas. I have seen some wonderful first-time homebuyer programs come out of government subsidies. If the same opportunities were offered for people wishing to refinance, that would be great. The challenge: the best first-time homebuyer programs require that buyers clean up their credit and attend homebuyer education courses BEFORE they get the money. How do we ensure that subprime borrowers get that framework for success in a refinance?
Tax credits for buying distressed properties. Will it help Durham? Yes
I’m not a tax policy wonk, so I’ll play this one at surface level. There will likely be a rise in newer foreclosures and short sales that are in good condition. Buyers of these properties will probably get them at a discount. Add on a 7k tax credit, and it’s even more of an incentive. Who doesn’t love to save money?
Property tax deductions for non-itemizers. Will it help Durham? Yes
Again, another no-brainer. As the spouse of an accountant, I never realized how many taxpayers don’t itemize on their tax return. Some of us comb through every gas station receipt looking for one more write-off. For those that speed through your return in 15 minutes at the local storefront tax prep place, you could claim an easy deduction for your property taxes – $500 for single filers, $1000 for couples filing jointly. In a year where many have seen their tax assessments rise, this would be welcome news.
Tax breaks for homebuilders and related businesses. Will it help Durham? Yes
Yes, a little. Durham hasn’t experienced the pace of new home construction and the influx of builders Wake County has. Of course, helping to keep the builders that are here solvent would be good, and a healthier market in Wake might mean a healthier market in Durham.
Rehab grants to local and state governments. Will it help Durham? No
Unfortunately, our local government has shown time and again that it lacks the experience and bandwidth to successfully undertake rehabilitation of residential real estate. To its credit, the city has reorganized its troubled housing department. But the new organizational structure has not been tested on a rehabilitation of any quantity.
More money for consumer counseling. Will it help Durham? No
Right now, lenders are working with delinquent borrowers on a voluntary basis, and they are not volunteering much in the way of helping homeowners keep their homes. If a homeowner has a mortgage that eats up 50% or 60% of their monthly income, you are not going to counsel them out of that situation. Only if lenders have the same motivation as borrowers will we get both sides to the table to find a meaningful solution. Right now, lenders are not set up to accept the intervention of counselors on a large scale – they don’t have the expertise in negotiating, they aren’t organized to conduct long term conversations with their clients, and they are bombarded with the task of handling borrowers who are already in the throes of foreclosure.
More information for borrowers. Will it help Durham? Yes, if…
Now this would be a great place to have a counselor. Loan documents that spell out in plain English the terms of the loan. A law (with teeth) that requires the lender to give those documents to the borrower a week before closing, and to not change them after that. A counselor that has reviewed the borrower’s spending habits, provided information and education, and is there to review the loan documents with the borrower. I’m thinking that the proposed measure provides none of the things I just mentioned (aside from loan docs in plain English), but at least it’s a step in the right direction.
So that’s the story. The market has too much inventory, and we have to work through it. The local market is not strong enough to overcome the pressure of the national market. The federal government is trying to figure out how to help without sending us into a decade long tailspin (Google Japan housing bubble for a cautionary tale). We’ll see what happens as we move into what is traditionally the most active three months in the Durham real estate market.
Inman News reports that a new website, FairClosingCosts.com, will launch in May. The site aims to allow home buyers to shop independently for providers of their closing services. The site won’t sell your information to vendors; instead, it will act as an “online Rolodex” allowing visitors to research and find contact information for vendors.
Most buyers go as far as choosing a real estate agent, lender, home inspector, closing attorney, and insurance agent. They then allow those service providers to choose the rest of their service providers.
In a best case scenario, everyone is looking out for the buyer’s interests, and selecting high quality service providers with fair and competitive pricing. In reality, buyers are often unaware of exactly who is doing what for them. This encourages vendors to form cozy business relationships of the “you scratch my back and I’ll scratch yours ” variety that serve the vendors more than their clients. There is a law that governs these “third party” vendor relationships – how vendors should disclose their relationships to clients, and whether vendors can pay each other for referrals (see RESPA).
It looks like FairClosingCosts.com wants to take it one step further, essentially allowing buyers to cut out the middle man, or at least check prices and keep them honest. I think most service providers are up front about these things anyway, but adding more transparency to the process can only help to avoid any miscommunication and cut down on abuse of the system.
Here’s a quiz. When you bought your last home, which of these services did you shop for, price, and hire yourself?
And the other shoe drops. Wachovia has just reported a $393 million first quarter loss, and plans to cut 500 jobs. Much of the loss is attributed to Wachovia’s expansion into the mortgage industry, just as this sector was about to collapse. I reported on Wachovia’s ill-timed acquisition of Golden West Financial and its flagship Pick-A-Payment loan product over the weekend.
The Pick-A-Pay loans were portfolio loans for Wachovia, meaning that the lender kept these loans in house instead of selling them to outside investors. Wachovia received the benefit of the higher interest rates on these loans, but also had all of the risk if borrowers defaulted. In their earnings report, Wachovia noted that the number of mortgage defaults on their loans nearly doubled in the first quarter. With the information I have, I can’t say what percentage of these defaults were Pick-A-Pay loans. It is noteworthy, however, that Wachovia is experiencing defaults with their Golden West portfolio, which is heavily invested in hard hit West Coast markets. The losses are enough that Wachovia is curtailing or eliminating the Pick-A-Pay loan in several of these markets.