Winston Salem Area Blog

The coming year could witness property values in the US dropping by as much as one trillion dollars. It is also believed that a few cities will be spared this scourge because the property rates have not peaked there. This is a concern that is troubling a lot of Americans – but perhaps not the ones who are still waiting to buy their first home! The soaring foreclosure rates in Chicago have dropped the rates of property considerably in this year alone. People have defaulted consistently because of the failing economic scenario and so the mortgage companies have been left with no option but to foreclose the mortgage. When a homeowner fails to repay three or more mortgage payments consecutively the terms and conditions of the mortgage allow for the mortgage company to serve the defaulting client with a notice to pay up the amount in full or have their property auctioned. Some contracts do not make for this legal notice period and the mortgage companies move in immediately and attach the properties of the defaulting borrower. This is a sad state of affairs because millions of people around the globe are facing difficult times and though they are putting in extra effort they will, at some time or the other, default in their mortgage payments. This is something many mortgage companies are just waiting for. They move in, foreclose the mortgage, and auction the property, literally for a song. As a result the number of properties on the market has dramatically increased. People who can afford it are buying these properties at dirt cheap rates as an investment, as they know the rates will go up within the next couple of years. The question here is if the mortgage companies know this, can they not be a little more considerate, in these difficult economic times, and offer an extension of the mortgage to their customers? Experts are mum on the subject – they know this just a money making racket.   

Contrary to the growing drumbeat of popular economists across the globe predicating that the U.S. housing market is in the midst of a significant downturn, there simply is no evidence that this is true for us in the Triad.
Consider this easy analogy: When builders stop building in an area but people continue to move into that area, it means demand is outpacing supply. Therefore, prices go up at a faster clip.
You see that in areas where not much additional real estate is available (Florida, northern Virginia and areas on the West Coast). The Home Price Index, which is a broad measure of movement of single-family home prices, shows a 138 percent increase during a five-year period for the West Palm Beach-Boca Raton area in Florida. For northern Virginia, it was a 112 percent increase.
How about the Greensboro-High Point or Winston-Salem MSAs? The figures are not even close to making us an overpriced market.
So why did we not see more price runup in recent years?
There’s at least two primary reasons, as we’ve reported in recent weeks. First, we’ve not seen the robust job creation that other parts of the country have been experiencing. And, just as important, local builders have kept plenty of new product coming on the market. There are enough homes being built in most parts of the Triad that the supply is keeping pace with the demand — essentially controlling the heat.
These numbers suggest that the Triad real estate market never got hot. In fact, the only area in North Carolina that experienced major growth in home prices was the Wilmington MSA, where the HPI index is 63 percent higher than what it was five years ago. That mirrors the giant gallop in home prices in coastal areas across the country. Economists such as RBC’s Ivana Rupcic say those areas likely will see adjustments in sale prices.
As we report this week, Triad Realtors are already taking steps to compete in what very well might be a tougher local housing market next year. But the next time someone mentions a housing bubble, we must all remember that it is a nonstory in the Triad and, it appears, in most of North Carolina.

Two developers have plans for a total of 52 upscale homes in two separate subdivisions near Kernersville.
Pegg Development and Realty plans to develop Driftwood Acres, a 34-lot subdivision on 22 acres in Kernersville. Lots will be sold to individuals and custom home builders. Jack Pegg, owner of Pegg Development and Realty, expects home prices to start around $350,000.
Mitcho Inc. has plans for 18 single- family homes on 27 acres straddling the Forsyth and Guilford County line. Les Mitchell, president of Mitcho Inc., said his company will build most of the homes. Prices are expected to start around $275,000.

Portrait Homes, which is already developing the Robyn’s Glen town home complex near Piedmont Triad International Airport, has plans to expand that project to include more town homes as well as office and retail space and a day–care center.

According to plans filed with the city of Greensboro, Portrait Homes wants to build 141 additional town homes adjacent to Robyn’s Glen North Regional Road near American Express. The first phase of Robyn’s Glen, now under construction, will have 112 town homes.

Officials at Portrait Homes could not be reached for comment, but Henry Isaacson, its attorney, confirmed the project and said the company hoped to break ground sometime in the spring.

The commercial component of the project will feature 10,000 square feet of office space, an 8,000-square-foot day-care facility and 2,000 square feet of retail space, Isaacson said.

Given Portrait’s average town home price of about $150,000, the combined residential development would be worth nearly $38 million. Based on construction-cost estimates, the commercial development would have a price tag of about $1.4 million.

Isaacson said Portrait was considering relocating its local headquarters from West Market Street to the new development. For the retail component of the property, which was requested by city planning staff, he said, something along the lines of a Subway or Starbucks was likely.

The development hopes to take advantage of the American Express call center across the street from Robyn’s Glen. In fact, that company expressed the interest that made the idea of a day-care center part of the project, Isaacson said.

Though many people doubted that homes near the airport would sell with the FedEx hub on the way, Isaacson said Portrait has told him that sales of the town homes have gone well.

Isaacson said the zoning case would be heard on Nov. 13, but that the plan would also require approval from city council because the development would mean a change in the city’s comprehensive plan.

The Business Journal of the Greater Triad Area - October 20, 2006
by Matt Harrington

A High Point development company and home builder are partnering to create a subdivision of about 110 upscale homes in northeast Davidson County.

Tom Grein, project manager with PHD Builders, said plans call for between 50 and 60 town homes and 50 single-family homes.

The town homes are expected to range in size from 1,700 square feet to 1,800 square feet. Prices are expected to start at $225,000 and go as high as $350,000.

The single-family homes will be between 2,800 square feet and 2,900 square feet with prices ranging between $250,000 and $350,000.

The 64-acre property, located off Chestnut Street, has been annexed by High Point, said Mark Walsh, managing partner of development company Maynard-Walsh LLC.

Crews have begun to clear the land and the first lots are expected to be ready for home construction in spring 2007, Walsh said.

The project could be a tough sell, especially the houses in the upper price range. According to data from MarketGraphics, a Tennessee-based firm that tracks the local housing market, there is an annual demand for about 54 single-family homes or town homes selling between $225,000 and $275,000 and only eight homes in that price range on the market.

But MarketGraphics finds almost no demand for homes in the northeastern corner of Davidson County that sell for more than $275,000.

But Grein said he is optimistic about the project. His company’s research has shown a demand for high-end homes in High Point, especially in the Davidson County portion of the city.

“We think that’s a good location and a good price point,” he said.

The Business Journal of the Greater Triad Area - October 27, 2006
by Michelle Cater Rash

It’s no secret that the housing boom is for the most part, over. As the number of residential properties on the market builds, buyers have more properties to choose from and are gaining power at the negotiating table. But buyers still need to be smart to get the most for their money.

Everywhere, homeowners and developers are scrambling as houses take longer to sell — in July, the number of sales for previously owned homes dropped to their lowest level in two and one-half years and the inventory of houses up for sale was at a record high. At the same time, sales of new homes were down more than 20% compared with the same time last year. Last week, the National Association of Realtors reported that pending sales of existing homes decreased in July at a seasonally adjusted annual rate of 7.0%, their lowest level in more than three years. Existing-home sales “are likely to flatten in the months ahead,” says David Lereah, chief economist for the trade group.

So is now the time to buy? “It depends on your personal needs,” says Richard Rocker, a real-estate agent in Kamuela, Hawaii. “If you are buying as an investor, I would be cautious. If you don’t need to buy and see that the market is correcting, sit on the sidelines and be patient.” As an investor, it’s best to buy at “rock bottom,” he says.

Robert Lavoie, an attorney with the Real Estate Practice Group for law firm Devine Millimet in Andover, Mass., has a different view. “Buyers who keep waiting for the bottom of the market will end up losing out on a lot of opportunities,” he says. “It is probably better to get a good, solid deal than a rock-bottom deal, which may never come along. There may be a recovery, who knows?”

If you’re looking for a home that is just that — a home — and not an investment property, it may be the right time to make an offer on that house or condo you’ve been eyeing. Here are four strategies for getting the most out of your real-estate dollar:

1. Stay informed. With the housing market in transition and prices fluctuating, it is important to understand what’s going on in the marketplace, says James Barry, president of Listingbook, an online service in Winston-Salem, N.C. that connects real-estate agents with their clients.

Buyers should gather up-to-date information on what homes are available, as well as how they compare to other residences for sale. Get this information through your real-estate agent or through Web sites like RealEstateJournal.com and Zillow.com.

Having updated information helped Robert J. Mullin, a financial consultant with firm RBC Dain Rauscher, save at least $30,000, he says. In May, Mr. Mullin moved from his $750,000 residence in Basking Ridge, N.J. to one priced in the $400,000s in Clemmons, N.C., he says.

“The ability to do a market analysis helped us find a home that was appropriately priced,” he explains. Thanks to his real-estate agent, who sent emails and photos about new Clemmons-area listings regularly during his search, Mr. Mullin says he “saved money by making the process more efficient,” negating the need to rent temporary housing or pay for storage.

Knowing how a house stacks up against others on the market is handy from “a negotiation standpoint” and can help you bargain for a good price when making an offer, Mr. Barry says.

Make sure the information you have is current, says Chris Kelly, a broker associate with Coldwell Banker Residential Brokerage in Center Harbor, N.H. “Look at comparable properties that sold no more than two months ago,” he advises. “Properties that sold within the last two months have sold for a lot less than those sold within the last 12 months.”

2. Jump on a good deal. Consumers aren’t snapping up homes as quickly as they did during the housing boom, but that doesn’t mean buyers can take their time. That’s because attractively priced homes still draw plenty of interest.

“It’s the same scenario [as it was during the housing boom], except that we wait longer for properties to be at a price where a buyer will take it,” Mr. Kelly says. Once a property is priced correctly, there should be plenty of buyers vying for it, he says. “If priced properly, a home will sell in days.”

He mentions a house in his area that was on the market for nearly a year at $799,000. When the sellers chopped $200,000 from the asking price, they received nine offers, he says. “Those buyers were there,” he explains. “They were waiting to see if the value was there.”

If a price drops, “be there first,” Mr. Barry says. A price reduction could signal a “highly motivated seller,” he says, and “a tremendous opportunity for a good deal.”

Beat other buyers to the punch by getting pre-approved or pre-qualified for a mortgage and line up a home inspector before you make an offer. That’s because homeowners usually want to sell within a certain time period, Devine Millimet’s Mr. Lavoie says. “Most sellers don’t want to waste their time with anyone who is not pre-qualified,” he explains.

If you absolutely adore a house, don’t wait too long for a seller to reduce his price, says Dale Davis of Davis Team Real Estate at RE/MAX Napa Valley in Napa, Calif. “You can miss what you really love waiting for a price reduction,” he says. “If you love it, and you think it is a good price, come in with an offer a little bit lower and start the negotiation process.”

3. But…don’t move too fast: You have to move quickly if you spot a house at a good price or if the house of your dreams comes along, but the housing slowdown also means that buyers have time on their side while looking for a property, as the number of properties for sale is mounting, giving consumers more choices.

“There is no longer a feeding frenzy for homes, so buyers can wait for what they want [to come on the market] instead of compromising just to get a house,” Mr. Davis says.

Finessing today’s market means not rushing the search process, but acting quickly when the right deal comes along. “Buyers can be patient to find the house they like, not necessarily to buy the house they like,” Mr. Davis explains.

Take the time to think about what you want in a home and what neighborhood or geographical region you prefer, advises Tiffany Smookler, a sales agent with Vermont Country Properties/Sotheby’s International Realty in Waitsfield, Vt.

Sometimes, “people don’t get to know the area well enough and move on an opportunity without thinking about it,” says Ms. Smookler, who works in a vacation-home locale with many out-of-town buyers. Your purchase may turn out to be a long-term investment, so thinking it through first is advisable, she says.

With so many houses available from which to choose, “be very specific about what you want,” Mr. Kelly says. Only look at 10 or so properties at a time, he suggests. Otherwise, “you will have too many choices and will get confused,” he says.

4. Get tough. It’s now easier to convince homeowners to come down on price or make other concessions than it was in recent months, so don’t be shy about offering “what you think a home is worth,” Ms. Smookler says.

“You can’t be afraid to offend,” she explains.

Buyers are requesting — and getting — price reductions and concessions from sellers, Mr. Davis says. While you should always ask for concessions, the best time to get them is when a property has been on the market for 30 days or longer, he says. These days, sellers are more likely to give in to your requests than risk losing a potential buyer, he explains.

In some parts of the country, sellers are willing to accept less than what their neighbors got for their homes, he says. “Sellers are motivated,” he says. “Some are making two mortgage payments.”

The most frequently asked-for concessions are for repairs, Mr. Davis says, such as fixing termite and fungus damage or water leaks and replacing worn or stained carpeting. Sellers can make these fixes or compensate the buyer by paying some of the buyer’s closing costs, so there’s “less money the buyer has to come up with right now, today,” he says.

Some home sellers are using extravagant tactics to lure buyers. “They are doing crazy things to create interest,” Mr. Davis says. “There was somebody who bought a brand-new car, parked it in the driveway, and said, ‘If you buy the house, you get the car.’ ”

By Lauren Baier Kim