Let’s start with some stats
As promised in the last post, DurhamLuxRE will begin to look at a broader range of the luxury home market over a wider area in the Triangle. Specifically, we’re talking about any home listed and/or then sold for at least $450,000. Our old threshold was $700,000 and we still make the distinction between homes between $450K and $700K and those over $700K.
Since we haven’t looked at this lower price range of entry level luxury homes here are the statistics. But first let me head off anyone who might want to argue with the cutoffs. They’re arbitrary and I know it. There are some very nice homes in the area that are under $450K including mine but you have to make the cutoff somewhere.
In fact, there are parts of the country where $450K is still starter home territory but here in the Triangle that is well above the average in all the communities we will look at. In fact, we’re going to have a little fun like the New York Times does with profiles of what different levels of money will buy in different areas of the Triangle area as well as the country.
The five counties that I’ll look at will be Durham, Orange, Chatham, Person and Wake.
Wake has by far the biggest share of this market (72% over the last three years) and deserves more detailed analysis itself because of it’s size and it’s many communities. But our focus will be more on the western side of the Triangle while looking over our shoulder at Wake. We’ll include Person County simply because it is part of the four county Durham MSA, however, it is not much of a factor. Currently Person has 13 homes over $700K on the market and only 25 between $450K and $700K. Most of the homes in both categories are on Hyco Lake. In the last three years a total of 30 homes have sold in the two categories combined.
Relative to its neighbors, Durham’s performance in the low luxury range is very similar to its performance in the high luxury range in one respect; its market share among the five counties has ranged from about 5% to about 7% while its share of transactions in all price ranges combined is about 18%.
A lot of the lower tier are also in the same neighborhoods as the upper tier including Croasdaile, Hope Valley, Treyburn, Forest Hills and Southpoint Manor. But there are a plenty in the lower luxury category that are in newer more homogeneous neighborhoods without the mix of price ranges.
Growth was in Wake and Chatham
Of the 83 homes on the market in this tier in Durham, only 27, or 33% were built in 2005 or later. Only Person had a lower percentage, 20% or 5 of the 25 listings. Orange had only 40% while Wake had 59% and Chatham had 61%. This demonstrates were the growth was while the boom was in progress.
All counties had dramatic drops in this price range from the peaks in 2007 to 2009 . Durham dropped from 129 homes sold in this category to 66, or a 48% drop. Chatham went from 124 to 63 for a 49% drop. Wake took the real hit, dropping from 1417 in 2007 to 629 in 2009 for a whopping 56% drop. Orange dropped from 184 homes sold in the price range to 134 or a 27% drop.
Conclusion
With high inventories and slack demand, there are opportunities to pick up bargains for buyers with cash or great credit. All counties have more than an year’s worth of inventory on the market and Chatham has a staggering 3 years worth of inventory on the market at current absorption rates.
Statistics available on my other Durham real estate site’s , http://SpringtreeTerritory.com show that home values are down from 3% to 5% over the last year and are about the level they were at the end of 2006. There are clear signs that a recovery has begun in Durham real estate but it will take superior marketing and some good luck to recover what has been lost. We will continue to follow statistics and offer suggestions for how to market luxury homes in a difficult economy.
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