Self-Help Article in The News & Observer

Self-Help was featured in the Raleigh News & Observer over the weekend. Our mantra when selling homes and lending money is to use common sense and always look at the big picture. It's kept us afloat so far, and hopefully will allow us to continue to do good things for the people and communities that need our services. As an organization, we usually go out of the way not to blow our own horn, but I'm glad the N&O decided to do a story on us. I think it's good for people to know that not all lenders have acted irresponsibly, and that it is possible for a lender to succeed by caring about people as much as it cares about its bottom line.

A blurb from the article:

"One year into the credit crunch and mortgage meltdown, a Durham financial institution that banks on neighborhoods at risk is still doing business as usual.
How so?
Common sense, said Martin Eakes, co-founder and CEO of Self-Help, a Main Street nonprofit that has, according to its Web site, provided $5.24 billion to 60,130 homeowners, small businesses and nonprofit enterprises since it started the practice in 1984.
And it's still buying, rebuilding, selling and lending for and to just the sort of people in just the sort of places who are caught up in the sub-prime lending mess. Yet, with much of the country's banking, developing and real-estate industry in crisis, "Financially, we're doing fine," Eakes said in an interview this week.
Not that he doesn't feel depressed and keep his fingers crossed.
"So far, our borrowers are doing pretty well, but I'm anxious for them a little bit," he said; but, "I'm depressed for those communities we have helped to build up." "

See the full article at http://www.newsobserver.com/978/story/1180193.html.

For Sale in Durham - NC Sustainable Design Competition Winner

Self-Help is nearing completion of our sustainable design house at 1020 Kent Street. This home has really challenged us to think about how we create energy efficient, affordable homes. Aside from the fact that we've come out with a great house, we've also learned some things that we will be carrying forward into our future new construction.

I've posted some photos below, along with a list of sustainable design features. The interior is starting to take shape, and I hope to have lots of pictures soon. I think the interior will turn our to be very modern and stylish, in addition to being energy efficient. The cabinets and countertops went into the kitchen this week, and we'll also be putting in glass shelves for the kitchen. The kitchen will be a real centerpiece when combined with the stained concrete flooring in the living areas and the open design of the home.

Here's a short list of our sustainable design features:

• Location on a 0.11 acre infill lot in an urban neighborhood, with existing infrastructure and utilities. The location provides easy access to public transit, shops and services, and recreational and employment opportunities.
• A space-efficient 1180 square foot plan with 3 bedrooms, 2 baths and an open layout.
• Exterior walls that use 2 x 6 framing insulated with open cell sprayed foam insulation. The sprayed foam insulation will also be used in the ceiling, resulting in an air tight and highly insulated building envelope.
• ENERGY STAR qualified shingles that reflect sunlight, in order to reduce the cooling load.
• Passive solar design elements, including numerous south-facing windows, a generous roof overhang and a vegetated shade screen.
• ENERGY STAR certified 7/8" thick insulated LoE2 glass windows filled with argon gas.
• Extremely energy efficient 15.0 SEER-rated heat pump system.
• ENERGY STAR certified dishwasher, refrigerator, range hood, bathroom exhaust fans, and ceiling fans. Also, fluorescent and compact fluorescent bulbs will be featured in many rooms.
• Water conserving features such as low-flow faucets, drought-resistant landscaping, and a 55-gallon rain barrel.
• Vanguard MANABLOC manifold plumbing system to provide water quickly and efficiently, reducing water use and water heating costs.
• Indoor air quality improvements through the use of zero volatile organic compound (VOC) interior paint, low VOC exterior paint, well-planned moisture management and fresh air exchange, and a carbon monoxide detector.
• Stained concrete flooring in the main living spaces and tile flooring in the bathrooms for durability and improved indoor air quality.
• Universal design elements such as a wheelchair accessible entrance ramp and ADA compliant doorways, hallways and rooms.
• Recycling center built into the kitchen.
• Salvaged, reclaimed brick used to build garden planter, porch border and steps.
• Certification that the home meets or exceeds ENERGY STAR standards for energy efficiency, and SystemVision standards for comfort, durability, energy efficiency, health, and safety.
• A SystemVision guarantee that the heating and cooling portion of the homeowner's monthly utility bills will not exceed approximately $30 per month.

Besides the sustainability factor, the other great thing about this house is that it's priced at $120,000. We can also recommend state and city loan programs that significantly reduce the monthly mortgage payment.

Here are some pictures of the house. These are a few weeks old - the builders have been working so hard on site that it's a challenge to get in and take new pictures. That's a good thing, as they plan to finish the home in the next few weeks.

Map

View Larger Map

Sabbatical?

I haven't posted in a few weeks. Not that I don't have lots to talk about. I've been in transition to my new position on the real estate development team at Self-Help. The team works to build energy efficient and affordable homes in communities across North Carolina. Many of these communities are dealing with industry loss, dilapidated housing stock, and other issues. As we build, we want to attract homeowners and investment, and help to rebuild sustainable and prosperous communities.
That being said, I'm not sure where R.E.Market Durham goes from here. I'll still be working on homes in Durham (some very exciting projects), but will also be spending significant time in Goldsboro, Fuquay-Varina, Charlotte, and Greensboro. The purpose of this blog is to take the national real estate picture and distill it down to its Durham essence. I believe that I could do that even better with a first hand view of other North Carolina markets.
Posts here will be sporadic as I learn the five markets I'll now be working in. I hope to be able to bring an even better informed perspective once I'm back in the saddle.

Durham Event Calendar

This week, the American Dance Festival is in full swing as it celebrates its 75th anniversary. There are also several events for Father's Day, including an interesting looking luau at The Melting Pot.

See all of this week's events

Use the searchable event calendar

Letters From Vermont and America

I just ran across this while surfing the 'net. Senator Bernie Sanders from Vermont sent out an email to his constituents asking them what was going on in their lives economically. He had read all of the media reports about the unemployment rate, about how many people have lost health insurance, about how incomes have declined. But as many of us know, you can't always count on the media to get the story right. So he decided to go to the people and ask them. He says he expected a few responses; he got over 600.

He compiled some of the letters into a booklet and distributed a copy to every member of Congress. You can download the booklet by clicking the link:
The Collapse of the Middle Class: Letters from Vermont and America

Senator Sanders pulled a line from each letter as a title:
"We have at times had to choose between baby food and heating fuel."
"By February we ran out of wood and I burned my mother's dining room furniture."
"Not spending those ten hours at home with my husband and son makes a big difference."
"I want to drop everything I am doing and go visit him."
"We also only eat two meals a day to conserve."
"My husband and I are very nervous about what will happen to us when we are old."
"The pennies have all but dried up....Today I am sad, broken, and very discouraged."
"I don't go to church many Sundays, because the gasoline is too expensive to drive there."
"At the rate we are going we will be destitute in just a few years."
"I am just tired....I work 12 to 14 hours daily and it just doesn't help."
"Now we find that instead of a feeling of comfort, we have a feeling of dread."
"Some nights we eat cereal and toast for dinner because that's all I have."
"Insurance costs continue to rise causing some to forgo insurance to pay for groceries."
"Dentistry is expensive and people are opting not to come to the dentist."
"How devastating it has been for folks who travel great distances to get to their cancer treatment."
"I feel as though I am between a rock and a hard place no matter how hard I try."
"I have been forced to go back to work."
"We would like to not have to worry about where our next meal will come from."
"My husband and I followed all the rules.... Slowly, though, we have sunk back to the 'poor' days."
"It costs me so much money in gas that my wife and I live on $6 per day to eat."
"How much more of a hit can people take? The future looks extremely bleak to me."
"I am now living out of my car."
"Our life style has drastically changed in the past 12 months."
"My mortgage is behind, we are at risk for foreclosure, and I can't keep up with my car payments."
"We are barely staying afloat."
"I wonder some times if we should try to follow our dreams - decide to have children?"
"People say, ‘Cut back.' "
"Does anybody have a solution? Does anybody in Washington care?"

Reading these letters reminds me how fortunate I truly am. While we are more conscientious about gas consumption, and might eat out a little less than we used to, we do not have to make the decisions people talk about in these letters.
Here's hoping that our economy gets back to basics: jobs that pay a living wage, tight knit and supportive families and communities, and of course decent and affordable homes for all!

June Is National Homeownership Month

This month, we celebrate National Homeownership Month. The celebration is meaningful for what it says not only about our ambition in creating more access to the American dream of homeownership, but also for what it means when our ambitions fall short.

President Bush designated June as National Homeownership Month in 2002, with the goal of adding 5.5 million minority homeowners by the end of the decade. Achieving this goal would have a major effect on our nation. Historically, homeownership has been step one in the creation of wealth for Americans, leading to better economic prospects, access to more financial resources, and the ability to pass that wealth on to future generations.

This year, National Homeownership Month is especially poignant. 2008 marks the 40th anniversary of the 1968 Fair Housing Act. A centerpiece of the Act is the prevention of discrimination based on race, color, religion, sex, national origin, familial status (families with children), and disability. Over the past six years, opportunities for minorities to become homeowners have flourished. New loan programs meant greater access to financing for more people, which meant access to homes. This represented the best in our quest for fair housing and for the goal of increasing homeownership.

As we now know, it also represented the worst. Minorities are expected to make up a disproportionate percentage of the foreclosures sweeping the nation. Entire neighborhoods (and in some cases, entire cities) have lost a generation or more of wealth created through homeownership. In the push to create homeowners on paper, we neglected to provide the underpinnings that would have made them homeowners in fact – i.e., staying a home long enough to put down roots, build equity, and accumulate wealth.

Without proper financial education for all Americans, regulation of lenders, and an economic system built on something more stable than consumer spending, the promises of homeownership will not pay off as well as they should. A recent article in the News and Observer noted that customers often did not understand how to prioritize their bills. They faced disconnection of their electricity, believing that the cable bill had to be paid first, since the cable company’s grace period was shorter. Local utility companies have started programs to help customers understand how to pay bills in order of importance, explaining to them that if they don’t have electricity, they won’t have cable, whether they paid the cable bill or not.

As is fitting, the theme of National Homeownership Month 2008 is “Back to Basics”. From the HUD website:

“This year's theme - "Back to Basics" - is designed to underscore the importance of having strong, common-sense fundamentals as a way to maintain a sustainable housing market. Many of those basics (verification of income, ability to repay) were ignored in the lead-up to the housing bubble. The Department will focus on helping families learn what the federal government is doing to help struggling homeowners; how to protect themselves against predatory lending; to better understand what goes into owning a home; and how to own a home they can afford. “

Couldn’t have said it better myself. Let’s all live up to our potential and make homeownership the dream we know it can be.

Location, Location, Location….Again

Two articles at the Wall Street Journal Online illustrate, once again, why the three rules of real estate are location, location, location. Holman W. Jenkins, Jr. writes an interesting op-ed on why the proposed mortgage bailout working its way through Congress will not actually solve the foreclosure problem.

Mr. Jenkins theorizes that the foreclosure crisis was created by speculation on the “drive ‘til you qualify” method of home buying. Most of the foreclosures in this country are concentrated in just a few areas, with the biggest grouping running from Sacramento to Las Vegas and Phoenix. His idea is that speculators bought up homes in developments on current or planned major commuter routes. As prices closer to urban centers continued to rise, buyers would continue to move further from these centers in search of affordable real estate, thereby driving up prices in these exurbs and providing a tidy return on investment.

A lot of these developments are oceans of cookie cutter development, with little recreation, infrastructure, lifestyle, or sense of place. These days, even bargain hunters aren’t looking to buy something with no inherent value. An investor that knows their property has very little value isn’t going to jump through hoops to continue paying the lender, even if they get a better deal on the mortgage.

Should Mr. Jenkins’ prognostication hold true, we’ll have a bigger problem on our hands. What in the world do you do with thousands of deserted and deteriorating homes sitting out in the middle of nowhere?

On the other end of the spectrum, Jeff D. Opdyke reports that major downtowns are weathering the storm much better. He offers a quick dissection of markets in Chicago, New York, Boston, San Francisco, and Los Angeles. The overall assessment of the markets? Slower than a couple of years ago, sure, but not abandoned in a field. High end real estate continues to rise ($10 million for a San Francisco condo, anyone?). The very best downtown locations are strong, but if you’re on the wrong street, or worse yet, more than a few steps from downtown in a surrounding neighborhood, it’s touch and go. Again, not perfect, but not mired in foreclosures either.

Both of these articles got me thinking about how the market is playing out in Durham right now. While we don’t have anyone commuting for hours just to afford a home, Durham has become even more about location recently when it comes to home sales. Our city has morphed over the past couple of decades into a new geographic identity. Rather than having one central geographic point where commerce, entertainment, and community all mesh, we have several. The downtown/Duke corridor, the Southpoint area, and RTP all feed different parts of our collective soul, and each has developed a sense of place that has supported home values.

The neighborhoods around Duke and downtown (especially those providing equal access to both) are continuing to hold value. But I also draw a conclusion from Mr. Opdyke’s piece – there’s downtown, and then there’s downtown. The west side of downtown, encompassing West Village and Brightleaf, and extending to Duke’s East Campus, is our version of downtown Chicago’s Gold Coast. A great example of how the real estate market has developed is the Bullington Warehouse condominium on N. Duke Street. It was developed in the 1980’s, before construction prices went through the roof. It’s no frills construction has enjoyed gradual upfit over time by condo owners, meaning that a pretty nice condo can still be had for under $300,000 – and the seller can actually turn a profit. You can eat, drink, and be merry to your heart’s content just by crossing the street. Or marvel at an office of the largest advertising firm in the world. Or walk by the building holding one of the largest Porsche collections in the country. Bullington Warehouse condos are selling fast and for at or near asking price. West Village is almost always completely leased up at higher than market rents. In short, this is downtown Durham’s location.

A twin corridor is taking shape on the east side of downtown, traveling roughly along Mangum Street. As Kevin Davis reports on Bull City Rising, the area is taking shape, albeit at a slower pace than was expected a couple of years ago. It appears to have the makings of a location, with some great new restaurants, the opening of the Durham Performing Arts Center, and planned residential development. If the Wall Street Journal musings hold, it will it need to mature naturally over the years as the Brightleaf area has done, developing its roots and sense of place, and proving its value to the community. Forcing development to fill some ethereal “need” won’t do it (sure, we can sell you an affordable condo – you know, people in Manhattan would kill to get their hands on 600 square feet for $200,000!).

The second market driver in Durham is the Southpoint area. Since opening in the early part of the decade, The Streets at Southpoint mall has served as a hub for residential and commercial development in the southern part of the county. This year, this area has been one of the two most active real estate markets in Durham, according to the Triangle Multiple Listing Service. While downtown has grown and evolved over many years into its current incarnation, Southpoint was a seemingly overnight sensation based on a different theory of location. The mall was built in a prime but underutilized location – it sits just off a major Triangle thoroughfare, I-40. This highway and its offshoots will eventually connect you to almost everywhere in the Triangle and points beyond.

As a marketing assistant for Belk during Southpoint’s grand opening, I got the full tour and story. Apparently, the developers had looked at downtown Durham and its history. They knew that downtown had once been home to the best department stores and restaurants in town, with crowds filling the streets for holiday shopping and nights on the town. They wanted to bring that feeling to the Southpoint area, and designed a retail destination that incorporated some of the feel and look of Durham’s tobacco town heritage. Their idea created a location in southern Durham, one not quite matched by the more generic Triangle Town Center (music will ensue if you click this link) built around the same time in Raleigh. TTC has all the stores, but not the sense of place that Southpoint has.

The up and coming corridor is the Hwy 70/98 area leading into Research Triangle Park. RTP is a major driver of employment for the entire Triangle. Its zoning has always made residential development (and public transportation) there a non-starter. As commuting to RTP from Wake County becomes more onerous, people are looking at the Durham County side of the line, and developers have taken notice. Once Brier Creek settled in, bringing restaurants, entertainment, and grocery stores, the sense of place was developed for Durham to RTP commuters.

This corridor is the other most active real estate market in Durham this year. The east part of Durham bordering Wake County is anticipated to be the fastest growing Durham submarket over the next decade.

So here in Durham we have a truly diverse, multi-node city. One hub founded on history. One founded on history removed to a new location (and with The Cheesecake Factory!). One founded on the draw of jobs and shopping in another county – go figure.

Historic Cleveland-Holloway Neighborhood Home Tour

The Cleveland-Holloway neighborhood just east of downtown Durham is hosting a home tour this Saturday, May 17. The tour starts at 1pm at 406 Oakwood Avenue, a 1920's Craftsman bungalow currently being renovated.

The cost is free, although a $5 donation to the neighborhood is greatly appreciated. For more information about the tour and available home in the Cleveland-Holloway area, visit http://chhomes.blogspot.com.

The neighborhood also garnered a cover on this week's Independent Weekly. See the article here.

Directions: From downtown, go 1 block east on Holloway. Just past the library, take a left on Queen Street and then a right on Ottawa. Go one block to Oakwood Avenue.

First Quarter Market Trends

TMLS has released the market trends report for the first quarter of 2008. Here are the highlights for Durham County:

• Job growth continues, although it has slowed throughout the Triangle. From Feb. '06 through Feb. '07, job growth was 3.1%. From Feb. '07 through Feb. '08, the growth fell to 1.2%. This slowdown tells the tale of the Triangle housing market better than just about any other measure. Our real estate market has traditionally been fueled by people relocating to the area for work or school. When there are fewer jobs being created, there are fewer reasons for people to come here.
• Inventory is up, sale prices are down. Inventory has increased by 6%, and sale prices are down 5%. The average sale price in the first quarter was $194,400.
• Property is still appreciating. This is probably the biggest bright spot. While many areas of the country are seeing property values collapse, we are still seeing overall appreciation. The average appreciation for resale housing in Durham County was 4.22%. Appreciation can vary widely by neighborhood. Based on MLS data, Duke Park saw the best run, with an average per year appreciation of 13.72%. Duke Forest and Hope Valley rounded out the top three. At the bottom of the positive scale was Eno Trace, with .85% average appreciation. The MLS list was comprised of about 30 neighborhoods. There are obviously more neighborhoods than that in Durham, and I’m very curious about the rest of the list – are we looking at negative appreciation in some neighborhoods not listed in the report?
• Pending sales are off. There is now lots to choose from, but buyers are not taking the plunge. Pending sales are off 22%, and closed sales are down 21%. Durham County fared slightly better than the rest of the Triangle, where pending sales and closed sales were down 27% and 24%, respectively.
  The right homes are selling. Combined with the appreciation we’re seeing, the homes that sell are selling faster than they were last year – 87 days on the market compared with 94 days for the same period last year.

Top 10 Selling Developments

1. Woodcroft
2. Hope Valley Farms
3. Grove Park
4. Keystone Crossing
5. Parkwood
6. Duke Forest
7. Grandale
8. Hope Valley
9. Stratford Lakes
10. American Village

Top Appreciating Subdivisions

1. Duke Park
2. Duke Forest
3. Hope Valley
4. Finley Forest
5. Falconbridge
6. Downing Creek
7. Woodlake
8. Chancellors Ridge
9. Parkwood
10. Wyndcross

Construction Almost Complete at 907 Exum

Seed and sod are down at 907 Exum, a sure sign that construction is winding up. This is the newest home from the Durham Community Land Trustees, and continues their mission of building affordable, energy efficient homes that honor the architectural heritage of southwest central Durham. For more info about DCLT, check out my previous post. This bungalow is a spot built home in the Burch Avenue neighborhood. Three bedrooms, two baths, living room, dining room, and kitchen, and an easy walk to Duke and downtown.

With a list price of $104,000, this home is a great opportunity for first time homebuyers. Buyers will need to be first timers and owner occupants (sorry, no investors).

This home has energy efficient design, and was built to specific efficiency standards under the SystemVision initiative from Advanced Energy. SystemVision homes are built using rigorous quality standards; inspectors are active from the outset with input on the design of the home, and inspecting the construction site to ensure that standards are met every step of the way. Advanced Energy guarantees the results of their process - for the first two years of ownership, they guarantee that heating and cooling bills for the home won't exceed a certain amount.
For even more info, check out the home website at http://www.907exum.com/.

More pics:

Durham Community Land Trustees

One of our favorite clients is the Durham Community Land Trustees (DCLT). For the past twenty years, they have been building homes that are affordable to the majority of Durham residents. That's no small feat, given that their target area is neighborhoods near Duke University, where real estate prices have increased faster than prices in other areas of Durham. I think it's worth it to revisit why the land trust model has a place in our market, especially given the number of first time home buyers that are now losing their homes in this tough real estate climate.

DCLT's goal is to provide permanently affordable home buying opportunities to first time home buyers. However, their approach encompasses more than just providing a home. They educate and support buyers, and eventually provide a path for buyers to move up to a market price home.

DCLT home buyers attend home buyer education courses before purchasing their home. These courses prepare buyers, letting them know what to expect from their real estate agent, lender, and others involved in the process. They also receive opportunities to work with counselors to create a monthly budget, handle credit issues, and understand how much they can afford to spend on a home.


Perhaps the most important part of the DCLT mission is protecting buyers from predatory loans. Over the past year, we have watched the dream of homeownership turn into a nightmare for many first time home buyers. Because they didn't have the education and support they needed when buying a home, they ended up with adjustable rate mortgages, and other loans with high interest rates and fees. DCLT works closely with a group of preferred lenders, and even has a loan pool offered through the state of North Carolina. These loans are low interest (and in some cases no interest), and are designed to ensure that buyers are getting a leg up with an affordable mortgage. Buyers have the peace of mind that comes with a quality home, and a chance to save money that might have otherwise gone to pay a larger mortgage.

DCLT has also committed to energy efficient and environmentally friendly building practices. Many buyers are never told about the hidden costs of homeownership, such as higher utility bills and home maintenance costs. These items can add hundreds of dollars to the cost of owning a home over the course of a year. DCLT uses low maintenance materials and energy efficient standards wherever possible and even offers an energy use guarantee - heating and cooling bills can be as low as $26 a month. Upgraded insulation, solar water heaters, and semi-permeable driveway designs are all examples of methods used by DCLT to create homes that are good for homeowners and good for the environment.

While DCLT provides opportunities for home buyers, it also wants to provide stability for the neighborhood. More homeowners means better looking and better maintained homes, more involvement in neighborhood associations, and more stable home values. Like many other community builders, DCLT asks buyers to give something back in return for the chance to buy a quality home at a low price. To keep their home affordable, buyers agree to pass along some of their equity to the next buyer, keeping the home affordable over time.

As we recover from the hangover of the easy money mortgage market, it's a good idea to get back to the basics. The dream of homeownership is founded on the security of having a place for family and a chance to improve your finances by saving money. Organizations like Durham Community Land Trustees offer buyers the chance to take part in this dream.

Take a look at current DCLT homes for sale:

http://www.907exum.com/

http://www.1513chapelhillroad.com/

Coming Soon - Cameron Place - a neighborhood of new, energy efficient homes near Duke University

FairClosingCosts.com Launches in May

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?

• Real estate agent
• Lender
• Appraiser
• Insurance agent
• Home inspector
• Home warranty provider
• Notary public
• Surveyor
• Attorney/settlement company/ title examination
• Title insurance company
• Wood infestation (termite) inspector
• Septic inspection
• Well water inspection

New Listing - 803 Cleveland

We've just listed this duplex at 803 Cleveland. It's downtown, fully leased, and renovated - the owner has worked to keep as many of the architectural details as possible. Two huge apartments; each unit has 2 bedrooms, 1 bath, over 1000 square feet, great closet space, super high ceilings, upgraded light fixtures. A shared root cellar provides extra storage. Opportunities to own something like this downtown don't come along often. Listed at $129,000 - visit http://www.803cleveland.com/ for more information.

View Larger Map

Durham Public Schools Video Newsletter

Durham Public Schools now produces a video newsletter for parents. I'm not sure if this is new. I never noticed it before, but it seems like a good idea. Check it out here.

New Durham and Triangle Housing Numbers

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.

Market Indicators
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).


Mortgage Bailout?
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.

New Listing - The Ringside Building

We've just listed 308 W. Main Street in downtown Durham. Many are familiar with this building as the home of Durham landmark Ringside. The building is 5500 square feet and is listed at $500,000. Great location in the heart of downtown at Five Points. Huge windows, high ceilings, wonderful history.

For questions or to request a private showing:

THeyward@MaverickPartners.com

919-491-7014

Durham Event Calendar

This week's events cover a wide spectrum. Musicians of all ages are taking to the stage, with concerts from the Durham Public Schools Honors Band and the Duke Symphony Orchestra. Several exhibits continue to run at the Nasher Museum of Art at Duke University.

If you haven't been to Parker & Otis in the Brightleaf district, now is a good time to visit. Check out Wine After Work on Thursday evenings for $2.50 glasses of wine and $1.75 bottled beer. Or, hang out with Friday night staple the Duke Street Dogs and get a full slate of music styles, including blues, country, fiddle tunes, waltzes, and jazz standards.

This week's events

Downtown events

Calling All Bull Durham/Durham Bulls Fans!

The Historic Durham Athletic Park is undergoing renovation, and the City of Durham, NC wants your help to ensure that the rehabilitation is accurate in detail. You can help bring back this piece of Americana - the DAP, as it is affectionately known, served as home field for the Durham Bulls for many years. It became known around the world when Durham and the DAP provided the setting for the movie Bull Durham.

The city is calling "all residents and former residents and Bulls fans everywhere" to send in images and photos of the DAP, going back to its construction in the 1930's.

Here are the instructions and guidelines for submission:

If possible, images need to include the date taken. Submissions should also include complete contact information (name, mailing address and phone number) so they can be returned by May 15, 2008. They can also be scanned and submitted via email, DAPphotos@durhamnc.gov. By U.S. mail, send them to:
Durham Athletic Park (DAP) Photos
c/o Beth Emerson City of Durham General Services Dept. 101 City Hall Plaza Durham, N.C. 27701
E-mail: DAPphotos@durhamnc.gov
For additional information regarding the DAP renovation project, contact Emerson at (919) 560-4197, extension 277, via e-mail at beth.emerson@durhamnc.gov, or visit the City’s Web site at www.durhamnc.gov/departments/eed/dap.

Durham Event Calendar

Durham: A Self Portrait is back for a return engagement at the 14th Annual Black Diaspora Film Festival. This film sold out when it ran at The Carolina Theatre last November; it is now making the rounds of several venues across the city.

Also playing thie week: Arlo Guthrie at The Carolina Theatre and special Valentine's Day dinners across the city.

See the Event Calendar

See the Downtown Events Calendar

Zilpy - The Zillow of Rental Properties

Looks like there's a new entrant in the online property valuation game. Zilpy has echoes of Zillow (map mashups, super simple Beta interface) but is geared toward analyzing the rental market in a given area. Investors, landlords, and renters can all benefit from the site. It shows median and Section 8 rental rates, broken down by square footage and number of bedrooms. It has an "Area At-A-Glance" section and a section highlighting major areas of town and neighborhoods. My favorite part is the "Heatmap" - a map mashup that overlays a city map with color coded "zones" showing how hot (read: expensive) the market is in different parts of a city.

The Durham, NC Heatmap

I'm not sure if Zilpy will suffer the same issues as Zillow, ie, wildly inaccurate property valuations. But on the surface, it looks like a promising resource for researching rental property.

Lennar Offers a Deal

National homebuilder Lennar is offering a deal: a 30 year fixed rate mortgage at 4.875% if you purchase one of their homes using their preferred lender. Plus, they are paying up to 6% towards closing costs. An interest rate this low is worth a serious look, as it will boost buying power significantly.
There is, of course voluminous fine print attached to the deal - read carefully and review with your real estate agent. Another note of warning: Lennar is on the Ailing/Watch list over at Builder-Implode.com. DO YOUR RESEARCH on any Lennar neighborhood you are considering. I've read some horror stories about people contracting for new homes, and the builder going out of business mid-construction, leaving unfinished homes and neighborhoods with half-built streets, pools, and clubhouses.