Wednesday, Mar. 16, 2011

Cary housing market becoming more affordable

Raleigh-Cary ranked nation's healthiest

The Triangle, no stranger to being ranked at or near the top of various "Best of" lists, has a new accolade: healthiest housing market.

Builder Magazine has named the Raleigh-Cary area the healthiest of the 100 largest U.S. housing markets. Durham-Chapel Hill ranked third, behind No. 2 Austin, Texas.

While positive housing news is welcome, the rankings are likely to elicit skepticism from those struggling to sell their homes. The Triangle has a 10-month supply of houses on the market measured by the pace of sales during the final three months of last year.

The rankings are based on a range of factors, including home price appreciation or depreciation, job growth, household and income growth, unemployment rates and building permit activity.

Raleigh-Cary got the top spot even though the magazine said home prices are expected to fall 10 percent this year "due to a spreading foreclosure problem."

The rankings reflect both the Triangle's resilience during the downturn and its outlook for growth, said Tim Minton, executive vice president of the Home Builders Association of Raleigh-Wake County.

"Clearly our market has been able to weather the storm better than most," he said. "Part of it is our prices never accelerated like other markets did so we've not had to recover from that part of it."

The question now is whether the Triangle's relative health compared to other markets will translate into a quicker recovery.

From a builder standpoint, the healthiest markets are ones where the issuing of new building permits is on the rise.

After falling dramatically in 2009, the Triangle saw permit activity recover somewhat last year.

New single-family building permits increased 16 percent in Raleigh-, according to Market Opportunity Research Enterprises.

But much of that activity occurred in the first quarter as builders met demand created by the now-expired federal homebuyer tax credits.

Helm said demand for new homes is likely to remain flat until the market deals with the excess of existing homes now on the market.

Homebuilders today are being extremely selective about where they build, focusing on areas near job centers where there's more proven demand.

The decline in lot prices means builders are now able to offer more affordable homes in places such as southwestern Wake County, which includes Morrisville, Cary and Apex.

"Before, if you wanted to buy a house that was under $250,000, you weren't going to look at Cary as an option," Minton said. "Now Cary is an option."

Pulte Homes, for example, is building at two of its Cary developments: Carolina Preserve, its community for people 55 and older, and the Estates at Davis Village.

"There are signs that people are coming out to buy," said Lawrence Lane, Pulte's division president for the Triangle. "If you're in the right location, with the right product and it's priced appropriately there are buyers out there."

While the Carolina Preserve has homes over $300,000, Lane said the best market was for homes in the $175,000 to $250,000 range.

If there's one thing that's likely to put a drag on any housing recovery, it's the labor market, Minton said.