Chart of quarterly year-to-year home sales in Durham

Year End Report

by Jay on December 30, 2009

Some good news for real estate in Durham

Well, maybe Christmas and New Year celebrations have been a little more subdued than in recent history but there was a glimmer of hope in the statistics that I pulled from multiple listing service data for my end of the year report on real estate market conditions.

There are a lot of sources for real estate statistics but I usually compile my own by doing multiple listing searches on closed homes.  This doesn’t catch all sales because some new home sales don’t go through the MLS system and there are a few others that don’t involve a REALTOR and aren’t in MLS either. I go to this trouble because I don’t have to guess about assumptions others might make and usually I can get information a little bit ahead of other sources.

The glimmer I see is in the data I pulled on quarter over quarter sales numbers in Durham County. For the first time in two years quarter over quarter sales numbers actually ticked up. Fourth quarter closed sales were up 26% over the last year. To put this in perspective however, we have to keep in mind that the final quarter of last year was one of unusual uncertainty with the financial markets collapsing and the election going on. Recall that as the rumbles began, John McCain famously proclaimed the economy basically sound and then had an “oh oh” moment and suspended his campaign briefly to return to Washington to see what he could do to help.

In Durham, the fourth quarter of last year and the first quarter of this year were the worst sales months in at least the last five years. Compared to 2007, the fourth quarter of 2008 was down 32% in number of sales and almost 40% in terms of dollars.

But this year, the year-to-year comparison has been improving throughout 2009. The first quarter was down 32% from 2008, the second quarter down 13%, the third quarter down just 6% and then the corner turns dramatically to a 26% increase in the last quarter.

For the whole year, sales are still down about 9% from last year and 32% from 2007 before the crisis hit.

In 2007, the roughly 4654 closed transactions recorded in the MLS system represented almost $935 million. In 2009 the corresponding numbers are 3162 transactions and $621 million. There is no way to track accurately the loss of commissions to brokerages and brokers in the county but if you assume the average commission on a transaction is 5.5% the loss would be around $31 million over the two years compared to what it would have been if sales had simply flattened out at 2007  levels and not declined.

There are a couple of things worth noting here. First of all, in spite of everything there are still a lot of homes being sold. Secondly, the average sales price of homes sold in Durham was basically the same as it was in 2008 and only about $4000 less than it was in 2007. Someone smarter than I am might be able to show that buyers are actually getting more for their money and sellers lost a lot of equity. There is no way that I am aware of to extrapolate this data to show that or figure how many people are living in homes where they owe more than they could get for those homes now if they put them on the market.

Foreclosures seem to be taking more space in the classified pages than home ads these days so this glimmer of hope may be too late for some people. Let’s keep our fingers crossed, say our prayers and help ourselves and our neighbors minimize the damage until the economy picks up steam again.

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