Third Quarter 2009 Market Report

So what are we to make of this? For several quarters in a row now Durham has maintained over 10% of the luxury market in the Triangle with 13 sales. Since I have been doing these updates, my rather arbitrary definition of the luxury market has been anything in the MLS system that is listed for $700,000 or more in Wake, Durham, Orange and Chatham counties. In the third quarter of 2007, Durham’s share was only 3.5%, so it has more than doubled in two years.

That’s the good news.. sort of. What has really happened is that Durham has plugged along between 10 and 15 sales per quarter while the other counties’ numbers have sunk.  Wake has taken the biggest hit. In the third quarter of 2007, Wake County closed 144 homes at $700K +, then dropped to 107 in 2008 and to 67 in 2009 for a plunge of 54% over the two year period.

During  the same two year period, Orange County dropped from 58 closed sales in the third quarter of 2007 to 26 in 2008 and then avoided the steep drop in 2009 finishing the quarter at 24. Orange also has 24 pending sales, portending a good fourth quarter. Chatham dropped from 15 in 2007 to 9 in 2008 but is back to 11 in 2009 with six pending.

Wake also is saddled with the highest inventory and lowest absorption rate. At 641 active or contingent listings at $700+ it has enough inventory to satisfy the next nine and a half quarters, or more than two years. At 101 active and contingent listings, Chatham’s inventory is also at the two years plus level. Durham, which for many years had the lowest absorption rate in the area now has the highest with just less than six quarters or a year and a half worth of inventory. Orange is also just less than six quarters.

Several other patterns in Durham have remained consistent. Currently there are 72 active listings and 2 contingent listings. The difference between contingent and pending listings is that contingent listings may still be shown by TMLS member agents. Of these 74 listings, 5 are in Croasdaile, 2 are in Forest Hills, 2 in Maida Vale, 4 in Meadowmont, 4 in the Oaks, 1 is in Trinity Park, 12 are in Treyburn and 24 are Hope Valley, New Hope Valley or Surrey Green. 7 are scattered in other places in the county including two horse farms.

Also in Trinity Park are 13 listings for the Brownstones, townhouses being developed just west of Brightleaf Square on property that was once part of the old North Carolina Eye & Ear Hospital (or McPhearson Hospital for those of you with longer memories.) I’m told by a normally reliable source that construction on these very upscale homes will not begin until there are several committments from buyers to take to the bank.

Of the 13 luxury homes sold in Durham and the 4 that are pending closing, 3 were in Croasdaile, 1 was in Duke Forest, 1 in Forest Hills, 2 in Maida Vale, 2 in Trinity Park, 2 in the Oaks, 2 in Treyburn and 1 in Hope Valley.

Dramatic price slashing continued in the Durham luxury market.  Of the 13 listings closed in the quarter the ratio of sold prices to list prices averaged 90%, the worst among the four counties tracked. In terms of real dollars, the discounts ranged from $29,500 to $271,000. 10 of the 13 already had reduced pricing from the original listing. The average time on the market from the TMLS statistics also far exceeded the other counties at 255 days, however, I don’t attribute much meaning to this because a few homes in a small market like Durham can throw the averages way off. Most agents also find ways to start the count over again. The legitimate way to do it is to take the home off the market for 30 days and relist it.

Why has Durham apparently held its own and increased its market share of the luxury market in these difficult times? I’d like to believe that a lot of it can be attributed to Durham finally being “discovered” with its revitalized downtown and improving government and school system.  These are certainly among the factors.  I’ll be more convinced of that when several of the Brownstones are under contract and construction begins on this very attractive Downtown vision, but I’m afraid most of the credit goes to aggressive price cutting and the willingness of sellers to negotiate.

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