It Was a Cold Winter.
Don’t know whether to blame it on the weather but the first quarter of 2010 was something of an outlier in a long string of weak but consistent quarterly reports. For several years Durham County has averaged around 35 homes sold annually that were originally priced at $700K or more.
This year has not started out with a bang, with only three homes sold in that price range. This compares with 9 sales in the first quarter of last year, which was right after the bottom dropped out of the economy. There were 11 sales in the first quarter of 2008 and 6 in 2007. There were 5 sales in the last quarter of 2009.
Pricing seemed to be the weapon of choice for the successful sellers. All three of the homes that did sell in the first quarter did so with pretty dramatic price reductions.
The first, in Hope Valley, closed for $100K less than its listing price at the time of sale and $160K less than it was originally listed for. The second one, in Maida Vale closed for $104K less than its listing price at the time of sale and $209K less than its highest listing price. The third home in Treyburn is recorded as closing at $900 more than its list price at the time it was closed but a whopping $625,100 less than when it was first listed a year and a half ago.
In the listing price range of $450K up to $700K, 9 homes closed in the first quarter at an average of 90% of the list prices. This compares with 11 in 2008 and 6 in 2007. The bright spot here is that there are 21 homes in this category that are under contract and pending. That suggests some good activity in the early spring to get this many relatively expensive homes under contract.
Current Inventory
As of this post, in the $700 or more category inventory stands as 70 homes with 2 more in the “contingent” situation, which means that they are under contract but can still be shown to prospective buyers. The contingencies could be for financing or the sale of the buyer’s home. At a rate of 3 sales per quarter that means there are 24 quarters of 6 years worth of inventory.
Of the current inventory of $700K plus homes, 23 are in or near Hope Valley, 11 in Treyburn, 7 in Croasdaile, 6 in Meadowmont, 6 in The Oaks, 3 in Maida Vale, 2 in Forest Hills, 1 in Duke Forest and the rest spread out in other neighborhoods.
In the range of listings of $450K to $700K there are 102 current listings in Durham County. That equates to less than 3 years worth of inventory, however, the high number of pending sales is encouraging.
Conclusions
So what do we attribute this rather bleak picture for sellers of high end property in Durham? The weather really might have been a factor. By recent standards it was a cold winter in the Triangle. Neither Wake nor Orange Counties put up strong numbers either. It is also true that it is more difficult to get financing without good credit and a solid net worth, especially on the high end.
I continue to believe, however, that difficult times require new strategies. Trends in real estate marketing that are taking hold on the west coast as evidenced by the post about the California upscale home, haven’t reached the conservative east coast.
I made the case for more sophisticated marketing of homes two years ago when this blog was initiated. Since then Durham has become an even better community and part of a better real estate “product” to market but the use of sophisticated real estate tools like single property web sites is still rare.
Price…dropping prices, that is… seems to be the creative solution in these parts. We’ll never know whether spending $10K on sophisticated marketing might have saved $100K or $500K on one of those homes that sat on the market for years and sold only after a series of steep price drops. Twenty of the current inventory of seventy $700K plus homes have already had price cuts from the current listing. Some of these homes have been listed multiple times at higher prices.
If this were a rust belt city like Detroit, such a strategy might be prudent but with a strong economy, (normally) great climate, and a great lifestyle it’s hard to understand why our luxury market isn’t more robust.
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