Year End Report on Durham’s Luxury Home Sales

OK, I’ve been slack

I’ve missed two quarterly reports, but frankly there hasn’t been much to report. For at least the last 5 years there have been 30 homes sold in Durham for over $700,000 each year. When I did the quarterly report for the 1st quarter only three had been sold and it hasn’t gotten much better. 5 were sold in each of the 2nd and 3rd quarters and 2 in the final quarter. I’m writing this 9 days before Christmas and there are two homes under contract with contingencies and 1 pending but none of them are scheduled to close before the end of the year. So the total for the year is likely to remain 15, less than half of the average for the last five or six years. But it gets even more dreary.

Pricing

In this crop of sales only 1 home closed at a price over $1,000,000.  Every single one of the sales had been reduced in price.  The lowest price drop was $23,000 and the highest was $1,015,000. That’s not a typo, that price drop was almost equal to the highest sale. The average price drop was $282,400. Even when you take the highest and the lowest out of the calculation, the average is still $246,000…almost a quarter of a million dollars.  The total of the price drops was over $4.2 M.  All but 4 of the price drops were six figures or more.

Where were the sales?

5 of the sales were in Hope Valley, 3 were in Treyburn, 2 were in Maida Vale, 1 was in SouthPointe Manor, 1 in Duke Forest and 1 in the Oaks. Two were not in subdivisions. Croasdaile had none. The Durham side of Meadowmont had none.

What’s the inventory?

With such weak sales you would think that the inventory would be high. Actually, it’s not. In fact it is the lowest I’ve seen since I’ve been tracking this market. In previous years there have usually been 70 to 80 homes on the market in this upper price range. As I write this there are 36, less than half in a “normal” Durham market.   Hope Valley leads the way with 12, Treyburn has 6, Croasdaile has 5,  The Oaks has 4, Meadowmont, Duke Forest and Trinity Park each have 1 and the rest are spread around in other areas outside of the upscale neighborhoods.

So, what’s going on?

Well, the obvious thing is the economy and general uncertainty. Another factor is that many of the homes that would have been in this category a few years ago are being listed for less than $700,000.  Many others have been taken off the market, perhaps in hopes that their owners can recover when the market comes back.

But that doesn’t really explain what has happened to our position in the four county area that I monitor, Durham, Wake, Orange and Chatham.  In the last few years by holding steady in the luxury market, Durham pushed its market share up to about 8%; still not great considering it has about 19% of the overall market.  But in 2010 it sunk  below pre-recession levels to less than 4%.

What is a little mystifying to me about this year’s dramatic drop is that the Durham economy really isn’t doing that bad. Our unemployment rate is low relative to the rest of the country, we’re getting national attention for our brains, our business climate, DPAC, etc. Downtown is now a wonderful place, our school systems are better, our political climate not so raucous, and start-ups are vying for space in the basement of the American Tobacco Campus.

Here’s one theory that other brokers are not going to like hearing. We’re not doing a good enough job of selling the city. A few weeks ago to make a point in a meeting of other REALTORS I did a survey of the top twenty Durham listings by price as they are presented on REALTOR.com, still the largest search portal for real estate. I picked REALTOR.com because on that site the listing agent can write much more copy and put up more pictures than what gets passed by the multiple listing service to the other search portals.  Of the 20 only 1 made any attempt to describe the virtues of Durham.  I think that’s a shame.

On the other hand, if you’re a buyer in this market this is one heck of a time to come in and swoop up some really great homes at better prices than have been seen for years.  As the car dealers scream on TV, here in Durham “We’re dealing!”

Note: All the statistics used here I compiled myself using MLS searches that any member of the Durham Association of Realtors can do. Homes sold outside of the MLS system are obviously not included. However, in my judgment the statistics are complete enough to draw the conclusions I have about market trends.

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