Triangle Housing Market

[paletexan]

I was reading over this article about the ever popular discussion on bubbles and the housing market from triangle business journal:

http://triangle.bizjournals.com/edit_special/24.html

I was curious to get input on the region, and whether there are localized pockets where prices are inflated, and ready to burst. It almost seems like most areas inside the Raleigh beltline are unaffordable, and I know Orange Co can be priced quite high. There is just too much land to expand for me to consider paying over $600,000 for a tiny ranch off Wade Avenue.

[Jones_]

I was reading over this article about the ever popular discussion on bubbles and the housing market from triangle business journal:

http://triangle.bizjournals.com/edit_special/24.html

I was curious to get input on the region, and whether there are localized pockets where prices are inflated, and ready to burst.  It almost seems like most areas inside the Raleigh beltline are unaffordable, and I know Orange Co can be priced quite high.  There is just too much land to expand for me to consider paying over $600,000 for a tiny ranch off Wade Avenue.

<{POST_SNAPBACK}>

Bubbles matter little to the employed family settled in for a number of years. The housing bubbles referred to in the business journals are those caused by speculation. Other situations that can cause "bubbles" are mass layoffs or job relocations, and the builder induced bubble where so much is built that prices are even pulled down. So is the economy hurting if some rich people in south beach buy condos at 500k each only to find that they cannot find another buyer and must drop the value to 400k? Hardly. Am I worried if my 200k condo in Raleigh suddenly drops in value to 175k? Not as long as I intended on staying a while and I keep my job.

Hayes Barton may have been bubble territory at one time, but with capital gains shielded up to 250k now, prices keep climbing there (land values exceed downtown..wow!). Downtown condos have experienced a builder induced bubble since the year 2000...nobody will buy a resale in Park Deveraux or 510 Glenwood with The Dawson and The Paramount coming online brand new, not to mention Founders Row massive drop in prices because their floorplans lacked the contempory chic any of the othes mentioned above have. Two bed/2 bath townhouses in north Raleigh have experienced a builder induced bubble since the late '80's...virtually no price increase since then.

So how do you stay off a bubble? Buy where location cannot be replicated(downtown, a lake front etc.), buy what is in limited supply(builders are always trying to beat you to this dollar though), and will likely remain in limited supply, buy where jobs are plentiful (or the stream of wealthy retirees is steady, whatever), and look for moderate historical price increases..not too much..not zero.

Raleigh will not experience a macro bubble, and will not be affected if some other region does. With some common sense and realistic expectations it is easy to stay off the micro bubbles.

[JunktionFET]

I think that Raleigh is too small to see localized bubbling and bursting just yet. For the time being, the areas of escalating value will continue to rise and probably plateau at some point, if not already in some neighborhoods.

One of the things that keeps the values in check is the infill occuring in northwestern and western Wake County--the NC55 corridor out towards the Chatham County line, and the areas along the US70 corridor (Brier Creek, et al). That land is of course becoming quite valuable but there is much to be developed. The property values out there aren't low enough to really disrupt the balance.

I suppose the thing that really drops demand for the western and northwestern parts of Wake County as well as anything inside the I-440 Beltline is Johnston County. Land out there is quite inexpensive by comparison, and the addition of the US64 freeway as well as development along US70 (nasty as it may be), have made northern and northwestern Johnston County look quite attractive for some home seekers.

Speaking of development out that way, US70 really needs to be truly expressway'd otherwise it will become another Crapital Blvd.

The completion of the I-540 loop around southern Wake County may cause some problems for higher value areas of Wake County. However I don't even think those segments are in the latest budget... so we have some time to sort out all of that.

[Subway Scoundrel]

The comments to this question/comment are very good. On that note, I think what Raleigh/Triangle will see are not prices falling "off the table" (a large sudden decrease) but a slower appreciation. I saw this in my house which I bought in 1998. After 2000, when the job bubble busted, the lightning increase of house worth slowed down. My house is worth more, but has not appreciated at the same speed as the mid-to-late nineties.

I lived in 5-points for 8 years and I remember people who would come in and buy a house and then paint it and sometimes sell it for $25Kplus more. That ended as the market got smarter.

[dmccall]

We bought near North Hills back in 2000 and while our house appreciated quite a bit compared to the neighborhood, it still paled compared to the national average over a 5-year period. (I can't remember where I got the stats, though)

[raleightransplant]

Some of my friends are surprised when I tell them there's no bubble in Raleigh...at least on a large-scale. The place is pretty well-known as a desirable place nationally, but I always explain that it's simple supply and demand. The area is still growing and there are options on where to live in this area. You're not hemmed in by the beach, and it's not super dense like a Boston for example so land is available particularly with infill. A true example of a natural boundary and supply/demand could be shown by the bubble they're facing down at Wrightsville Beach...housing has jumped 421% since 2001...yeah, wow!

[ralex231]

^^ Yeah I know my uncle bought a house on wrightsville in 1999 for 260k and he says it is work a mill now. Talk about apreciation lol

[NoVA20176]

One of the reasons I'm moving to Raleigh...

I bought my 18 y/o 1200 sq. ft. Townhouse in NOVA (30 miles west of DC) in Feb 2004 at $206,000 (a total bargin at the time) and 17 months later the same townhouses in my row are going for $350,000. In 2 years I stand to make more than 150k on a small townhouse.

Raleigh here we come

[paletexan]

One of the reasons I'm moving to Raleigh...

I bought my 18 y/o 1200 sq. ft. Townhouse in NOVA (30 miles west of DC) in Feb 2004 at $206,000 (a total bargin at the time) and 17 months later the same townhouses in my row are going for $350,000.  In 2 years I stand to make more than 150k on a small townhouse.

Raleigh here we come 

<{POST_SNAPBACK}>

That's great, almost $300 per square foot. Maybe now is the time for Raleigh to balloon like that. With gas prices going up making long commutes unpopular, and the current housing boom, the desirable supply has to be dwindling ... And when it does I hope to cash out my house for an urban condo (I hate lawns).

[NoVA20176]

I lied. I also have a 600 sq. ft. unfinished basement. So it's 1800 sq. ft. with 1200 of that finished. You get the idea though. The average cost of a house (condos, townhouses, single family) in Loudoun County, VA is $580,000. The salaries here might be 20-25% higher, but the housing is almost 3 times as much.

One of the reasons we're moving is because we actually want a lawn and a garage. Still want to be close to the city. The DC suburbs are just so huge. I mean it's built out close to 50 miles in every direction.

So what is this I hear of Raleigh getting mass transit? That would be awesome.

[orulz]

The transit may or may not happen. Construction will start literally the second they get a full funding grant agreement from the FTA, but nobody's sure whether they'll get that and many are pessimistic.

If it does happen, the first segment will run between Raleigh and Durham. Get more info about it here.

Whatever you do, don't buy a KB home. Their developments are everywhere, but from what I've seen they're definitely on the low end of the quality scale.

[NoVA20176]

The transit may or may not happen. Construction will start literally the second they get a full funding grant agreement from the FTA, but nobody's sure whether they'll get that and many are pessimistic.

If it does happen, the first segment will run between Raleigh and Durham. Get more info about it here.

Whatever you do, don't buy a KB home. Their developments are everywhere, but from what I've seen they're definitely on the low end of the quality scale.

<{POST_SNAPBACK}>

We've already visited Raleigh once this year and toured a KB home. I have done some research on them and pretty much only heard bad things. We will not be buying a KB home. We might not even buy new. We're looking in the north/northeast Raleigh area and the Morrisville/Cary area.

Thanks for the advice though.

[raleightransplant]

NoVa..welcome to the area. I think you're gonna love it here

I would go with Morrisville/Cary if I were you. From my experience, North Raleigh is not worth it. It's simply too far from things and there's no sense of community. Very disconnected, but traffic is freaking HORRIBLE. Cary seems to me to be engineered much better and it's just more suburban in feel, if that's what you're looking for. North Raleigh has let the developers go wild, and I think that's drastically affected the quality of life. I can't wait to move central myself!

[urbanvb]

What is a KB home?

[Subway Scoundrel]

What is a KB home?

KB Homes is a large national home builder who builds these cookie cutter neighborhoods. The only thing I like about KB Homes is they sponsored the Bar area at the RBC Center. Good food (but expensive) at Canes games.....

[paletexan]

Buy where location cannot be replicated(downtown, a lake front etc.), buy what is in limited supply(builders are always trying to beat you to this dollar though), and will likely remain in limited supply, buy where jobs are plentiful (or the stream of wealthy retirees is steady, whatever), and look for moderate historical price increases..not too much..not zero.

You make a good point here about limited supply. I've always thought Raleigh had nothing special going for it in terms of unique addresses, but on second thought, there is downtown, inside the beltline, near Umstead Park (off Ebenezer Church Rd), and homes close to area lakes ... all are valuable and limited in supply. It also explains why EVERYONE seems to want parks built everywhere (i.e Dix property) so their property can benefit.

My home was built in a mostly industrial part of town (W. Raleigh off Chapel Hill Rd), but things are starting to change making my location less unique. I think I'll become a NIMBY and protest it