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Cynthia LaChapelle

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Market Update

by Cynthia LaChapelle

This is an amazing time to get a property on the market. The Triangle area supply of homes for sale is down to historic lows, while prices have been rising. The amount of time required to sell is also down. Here are some facts about the year-to-date statistics:

  • New Listings in the Triangle region increased 2.2% to 4,204.
  • Pending Sales were down 43.2% to 1,752.
  • Inventory levels fell 16.2% to 12,545 units.
  • Prices continued to gain traction. The Median Sales Price increased 10.0% to $231,000.
  • Days on Market was down 11.5% to 54 days.
  • Sellers were encouraged as Months Supply of Inventory was down 22.4% to 4.6 months.

The general division between a Seller’s Market and  Buyer’s Market is at the point of having a six-month supply of inventory. More inventory indicates a Buyer’s Market, less inventory indicates a Seller’s Market. 

Interested in selling?  What will it take to get your home on the market?  We can answer that.  Maybe you're worried about missing out on your dream home in a hot market.  Use our custom search tool so you never miss a listing!

Yes Virginia, This is a Seller's Market...

by Cynthia LaChapelle
If you are in the right place and prepare your home properly
 

The market switches between being a Seller's market and Buyer's market at six months as average time listed on the market. You may know that we entered a seller's market in most parts of our area last year and earlier. You also may have heard rumors recently about bidding wars and houses selling on the first day that they hit the market. Both are true. (By the way, when a house shows a house was listed 2-5 days on the MLS until pending, that usually means that it took that long to negotiate which buyers to take, the final price and get it in the computer.)

The biggest surprise is that the market heated early - in mid-January. That is well ahead of the usual Spring bump in the market. Showings normally are the highest numbers in March and April, followed by the highest number of closings in May and June. (It often takes 30-60 days to complete escrow.) I have been involved in several multiple bidding wars this year in the western wake county area. We're past trying to negotiate the best deal in most instances. We have moved into the market where the broker's job is to be able to get the house for the buyer. I've lost houses because we showed up on Day 2 and others because we didn't bid high enough above List price. Register here to have custom listings emailed to you as they appear on the market http://www.buywakecountyhomes.com/

One caution to the person who is thinking about selling, however. Most of the houses that are sought after and fought over have been put into beautiful condition. They are freshly painted, usually have new or newer carpet, updated kitchens and baths and very little (if any) brass. Often the buyers ask if the sellers are still living in it. The ones that are dirty and need work will still sit a while. They won't usually have more than one offer at a time, which is the way that sellers get higher than list price. People don't want to buy your dirt and mess.There are numerous resources available if you want to know how to fix up your home for sale, including a number of articles on our website.  Interested in getting an idea of how your home compares to others in your neighborhood?  Check out this website http://www.sellingwakecountyhomes.com

However, beware of whether or not you can get the house to appraise in a rapidly rising price market. Houses in short supply go for higher prices than when the buyer has his pick of homes. Most appraisers want to value the homes at least where the buyer has paid, but they do have constraints put on them by the banks who have hired them. (They work for the bank, but are paid by the buyer.) Different types of loans and different mortgage companies put varying restrictions on the appraisers. They do use past data, which will be lower in a rising market. Whether you are a buyer or seller, it is wise to remember that when you win a bidding war, you will still need to be cognizant of the possibility of a low appraisal. The bank will lend only on the amount of the appraisal, not the sales price.

Takeaways:

  • Buyers need to watch for new listings closely and view them immediately
  • Sellers need to spend the time and money to make their homes market-ready
  • A properly prepared home will sell very quickly at a good price
  • Be cautious of appraisal amounts. The buyer may or may not be willing or able to come up with the extra down payment.

Congratulations LaChapelle Properties!

by Cynthia LaChapelle

LaChapelle Properties was founded in February 2005. Celebrating 10 wonderful years!  Pictured left to right are Frances Wirth, Brandon McLean, Stacy Millon, Cameron Saemann, Cynthia LaChapelle, Bill Hasse, Abby Kurtz and Walter Beard.

Celebrating is always better with chocolate cake!

 

New North Carolina Real Estate Laws as of January 1, 2015

by Cynthia LaChapelle

The new year starts out with some changes in laws affecting homeowners and potential buyers and sellers. This is going to be boring for most of you, but my investor clients (those who buy and sell a number of properties per year with me) will be very interested.

New laws as of Jan 1

Oil and Mineral Rights Disclosure   If you buy property on or after Jan. 1, the owners of that property have to furnish a mineral and oil and gas rights disclosure statement. If you have questions about severing oil and mineral rights, please ask. This is a hot topic, particularly since fracking is moving into our state and even our geographical area.

Protection between husband and wife using a Trust    A new North Carolina law provides that husbands and wives who transfer real estate which they own as "tenants by the entireties" to a trust have the same protections from each others' creditors as they would before transferring it to the trust. The protection is conditioned on the spouses remaining (1) married and (2) the beneficial owners of the property placed in trust.

Contract Changes    There have been several small changes to the Offer to Purchase and Contracts to reflect Oil and Mineral Disclosure changes as well as tightening some language so that the meaning of the contract is more obvious for those who needed help in understanding some terms.

Also in January

The cost of replacing your heating and cooling system is rising again. Federal law requires a 14 SEER (Seasonal Energy Efficiency Rating) HVAC (Heating, Ventilation and Air Conditioning) unit instead of 13 SEER on Jan. 26. Production stopped months ago, and the supply is dwindling. The cost difference is broadly $1000/ unit. If you are currently doing a rehab, be aware and buy it now. Also, a new gas will be required in 2025. They are currently phasing out R22 for R4-10A. Be extremely careful when doing repairs to current systems that you don't ever mix gasses!

We're topping the charts again!

by Cynthia LaChapelle

Money Magazine names Cary #19 on best places to live. 24/7 Wall St. has Cary as the 8th Best City to live in the US. Of course, long time residents already knew that!

Want to find your dream home in Cary, NC?  Click here to search the local listings using numerous parameters.  You can save your search and get automated email updates!

When VINYL is a Four-Letter Word

by Cynthia LaChapelle

I was asked recently to look into why a house in my neighborhood was still unsold. It's in an upscale Cary neighborhood where houses are selling in an average of 40 days. This one has been on the market for more than three months. The price is good, and it looks nice on the outside and is in a good location. Next I checked the inside pictures. It's clean and nicely furnished.

The problem I see is that the fittings don't match the price and location. The notes said new carpet, and that actually made me sad for the sellers. They had the opportunity to fix the biggest glaring problem and passed it by. The pictures show hardwood floors in the dining room only. It shows carpet downstairs and worst of all - VINYL  IN THE KITCHEN. I also see laminate countertops and some of the fixtures are still the old brass.  I expect to see these finishes in a mobile home. (Want more tips on how to avoid common seller mistakes? Click Here)

Vinyl is the worst. One of my good friends, a long-time appraiser, looks at vinyl like I would at newspaper lining the floor of a birdcage. She gets paid for her opinion of what types of finishes should be used in homes of various prices and areas. She does appraisals for FHA, HUD, mortgage companies and individual investors who want to know the "After Repaired Value" of house they have purchased.  She sees vinyl floor as something people should not do. 

You get more money faster if the Buyers love it. Consider that people buy homes for one of two reasons. Either they fall in love with it and want to live there, or it is a low enough price that they are willing to do renovations on it to make it fit.  If you want to know what people love, buy the glossy magazines and look. Go into the very expensive neighborhoods and see the model homes. This will show what people love specific to your area. The upscale home in our area needs upscale finishes like granite, stainless steel appliances, wood floors, nice tile work, etc. You won't find a model home that has brass fixtures or white vinyl cabinets left over from the Eighties and Nineties.

The hands-down most preferred flooring in our area is hardwood. Yes, I know not everyone wants hardwoods- just practically everyone. (There are floor preferences based on the geographic origination of the buyer that could be the subject of another whole blog.) You also don't want to see several different floorings in an area. The style now is continuous floors. The Eighties are over.

So where do we see vinyl floors most? Mobile homes. If you have the same finishes in your home in a country club community in Cary as a mobile home, you will have a problem.  Even mobile homes sell really well when they are renovated to look like a nice stick-built home. I know a woman from my investment club, the Triangle Real Estate Investors Association, who buys, renovates and resells mobile homes exclusively.  She does a profitable business. Her rehabs are in high demand, because she puts very nice fittings in them. She removes the finishes that look cheap and uses tiles and stone surfaces and the sort of lighting you'd find in a really nice home. I've seen pictures of her renovated mobile homes that look nicer than this Cary country club home.

I don't know all the facts of this sale. I don't know if the sellers are cooperative about showings or restrict when buyers can visit. Maybe they keep it dirty and cluttered on a daily basis - not like the one day that the pictures were shot.  These two things also can hamper a house from selling. The one thing I can see with my own eyes is that when buyers come into this house, they are met with very down market finishes that they aren't likely to want to live with in an area of up market choices.  Most buyers in our market don't have the time, inclination or experience to renovate a home. They want to walk into something pretty and just live there. (Want to find out your home's value?  Follow this link)

May/June 2014 Housing Market Overview

by Cynthia LaChapelle

Our Triangle housing market is leaving a lot of the country in the dust. Whatever you've heard about other parts of the country, forget about that when you come here.

An already strong real market in the Triangle continues to improve. The number of properties on the market has been one of the areas of most concern  due to a shortage of properties to sell, but the number of properties is increasing. 4585 properties were on the market in the Triangle MLS in May, up 8% from last year.

Pending and closed transaction continue to rise. Year-to-date Pending Sales were 12,579. This was up 5.9% over 2013 YTD. There were 3189 closed transactions in May and 11,587 YTD. These numbers are up 2% for the month and 2.8% for the year.

Days on market has continued to drop to an overall market average of just 93. A market has equilibrium at a six months supply. Less than six months denotes a Seller's market, and more than six months denotes a Buyer's market. We currently have a 5.9 month supply.

Sales prices continue to increase. The average sales price in May was $246,293 and the YTD average was $240,291.

Sales prices are very close to list prices and rising steadily.  May sales were 96.4% of original list price and  95.6% YTD. When including price reductions, sales prices were 97.8% for May and 97.4% YTD of final list price.

Our housing affordability index, though dropping, is still good. This index measures housing affordability for the region. An index of 120 means the median household income was 120% of what is necessary to qualify for the median-priced home under prevailing interest rates. A higher number means greater affordability. Ours is 155 YTD and 147 for May.

Our numbers at LaChapelle Properties June 1 2013 to June 1 2014 are even stronger. Our average sales price has doubled, and our volume of sales has more than doubled. We hit a new high sales price of $1.59 million for one home and added four new brokers.

This report uses figures and data from the Triangle Multiple Listing Service and provided by Stacy Anfindsen.

HVAC, SEER values... Why Should I Care

by Cynthia LaChapelle

You usually don’t think about the major systems in your house, but when you are buying or selling your home it can be an important fact financially.

You are purchasing a property in “as is” condition according to the purchase contracts adopted by the NC Bar and Realtors Associations a couple of years ago. While some repairs may still be negotiated, it is no longer a requirement for the seller to fix the major systems- like heating, plumbing, electrical and roof.

The only way to have a serious assessment of the heating and cooling system is to have an inspection by a licensed HVAC professional.  The home inspector that you hire to do the general inspection will only give the HVAC a basic pass/fail. Is it currently heating or cooling the home depending on the season, and is there anything grossly visible?

What you can’t see can kill you. One of the things you will look for are whether or not the heat exchanger is cracked – a condition which can allow carbon monoxide to leak into the home. This is a life-threatening situation.

Another thing to check for is gas leaks. These are hard to detect without a “sniffer” and again are a serious situation. I had a brand new construction home and persuaded the buyer to order an Inspection. He discovered a gas leak in the attic that could easily have caused an explosion!

Another thing to watch is challenges created by federal law on energy efficiency. The requirements for HVAC systems changed in 2006 from a 10 SEER (Seasonal Energy Efficiency Ratio) minimum to a 13 SEER minimum.  We are at the point where large numbers of the 10 SEER systems have needed repair or replacement. You need to know what your system is to evaluate how much life it has left. Many systems have a 12 to 15 year life span. Also, if part of the system needed replacement already, does the repair component match the rest of the old 10 SEER system? A mismatch can void the warranty on the new portion.

Also, be aware of whether the ducts also were replaced if the system itself was replaced. Not only will an older duct be more likely to be dirty, if it is torn, it can be leaking your heated and cooled air into your crawlspace, attic or outside. Even worse is that the higher the efficiency rating of your system, the more likely it is to actually decrease the total efficiency if mismatched. You could pay a higher utility bill due to the lack of suction.

Be sure to ask your Broker about the components of the home and how that will affect you financially and more. To find out about this more ask us today!

There are so many factors that come into it. What is your financial position going to be in an extra year vs. how much will it cost you to buy?  You may be chasing a moving target.

The biggest unknown is the cost of borrowing money. Historically interest rates can swing like drunken monkeys A one percent rise in interest rate on a $250,000 loan increases your monthly payment by about $150 per month, depending on where you start.  The change is $146 going from 4% to 5%, and $156 from 5% to 6%.  (Link to For Buyers/Loan Analysis) The 2013 average closed sales price in the Triangle MLS system was $246,700 for all homes and $231,000 for resale homes only, so $250K is a good gauge for many people.

To sign up for alerts of homes matching your choices,  CLICK HERE.

Our interest rates have been artificially bought down by the government since the financial meltdown. That has been going on for several years now, and the national deficit is showing it. Basically, 5% is where mortgage rates make no money, according to my banking sources. Banks don’t do things to make zero money. They will charge as much as they can, and it is influenced largely by how much the money sources can make elsewhere, like Bonds.

When is the dam going to break? I wish I knew. No one thought it would be this low for this long. Bernanke has made noises about putting things back to normal, but market and political pressures have held him up a couple of times. We do know it is going to happen, we just don’t know exactly when. Remember too, that is money paid to buy the exact same house, not buy more house.

I know that sounds alarmist from your vantage. From my vantage, I’ve seen rates change that much in a month. Rates have been quite stable for the last few years under government control, but before that we were used to a 1% swing as the normal fluctuation … sometimes during the buying process. It was extremely important to lock the rate once you had a contract, because those six weeks could break your sale. (And often did if not locked.)

Also, prices are an issue, but it won’t put you nearly as far behind. If your house increases at relatively the same rate as the one you buy (an assumption), you will be behind.  Round numbers - If a $200,000 house increases by 10%, it becomes $220,000. If a $350,000 house increases by 10%, it becomes $385,000. It has increased $15,000 more than the smaller house, but most of that would be financed over 30 years. While unpleasant, it wouldn’t keep you from being able to move.

What is the goal of waiting? If it is to save enough for a 20% down payment, it probably isn’t worth the risk. Even if you have to pay PMI, (private mortgage insurance) you can remove it later by proving you have acquired enough equity. This could include paying the principal down with your budgetary savings. In effect, you can put your monthly savings into your mortgage at a 4%-5% rate vs the bank at a small fraction of a percent. Since it’s amortized interest vs. simple interest, the effect is even bigger than it appears. You’ve actually shaved years off the term of your loan, and therefore big bucks, while you’ve increased the equity. And, the equity increases on its own in a rising market. (Disclaimer-I can’t guarantee the market will rise any more than interest rates. I’m using the data available.)

Triangle Home Sales up 11.2 Percent in January

The same factors that catalyzed widespread market recovery in 2012 and 2013 are likely to continue in 2014, though perhaps at a more moderate pace. That's not a bad thing, since the market is returning to a stable, healthy state. Potential trends to watch for in 2014 include increased seller activity, more new construction and fewer foreclosures on the market. Inventory is another metric to watch this year.

Prices marched higher. The Median Sales Price increased 10.8 percent to $198,000. Days on Market was down 9.6 percent to 103 days. Absorption rates improved as Months Supply of Inventory was down 24.1 percent to 4.7 months.

Given how far the market has come, it's a good time for folks to reassess their situation. Many who were hesitant to sell in recent years may find themselves in a completely different position. Getting a fresh comparative market analysis might be a good idea. Interest rates remain attractive and should remain below their long-term average, but they are expected to creep higher in 2014. Politicians are gearing up for midterm elections, so pay close attention to campaign messaging as relates to real estate or mortgage financing. Job growth is still fundamental and is likely to dominate this election cycle. -Stacy Anfindsen, Birch Appraisals, for the Triangle MLS.

CLICK HERE to view my newsletter containing more sales data and other useful information.

Waiting another year is a gamble. You’re betting that interest rates don’t rise enough to make it painful or impossible next year to move, although we know they must go up. You are also chasing prices, which are clearly rising. In many cases, you are better off owning  the increase of a larger priced home  than a smaller one - as long as you are staying in the normal range for your area. Unusual  or very expensive properties are a calculation on a different scale.

My analysis- the risk of waiting a year is very high versus the possible gains. You would definitely lose on some points and likely lose on the important points. You would gain on relatively minor points.

CLICK HERE for more information on the value of your home.

Western Wake County Market Activity

by Cynthia LaChapelle

Single Family Homes in Short Supply

If you're coming from another part of the country that still has a depressed market, get ready to be surprised. Except for the highest price points, we are in a seller's market in many parts of the Triangle. The real estate market is heating up in general, and the western part of Wake County is just plain hot. We don't have many distressed sales, we do have people who buy homes for cash, and in Western Wake County we have a shortage of properties for sale.

The Cary, Apex, Morrisville area averaged a two-month supply of homes in inventory  for all of 2013, and the South Cary, Holly Springs, Southwest Wake averaged a three month supply. The market is even hotter than it sounds for most properties, because that includes the high priced/luxury  homes that sell more slowly. (The term "supply" means how long it would take to sell everything listed if nothing else were put on the market- also called the absorption rate. )

The break even point is between a Buyer's and Seller's markets is six months.  So a five month supply would be just into a seller's market,and seven months would be just into a buyer's market.

The under $300,000 price point is very important. The 2013 average closed sales price in the Triangle MLS system was $246,700 for new and resale homes combined  and $231,000 for resale homes only.  Homes in this price range are in short supply.

Cary, Apex, Morrisville (CAM) averaged only a one-month supply of homes under $300,000 for all of 2013, and South Cary, Holly Springs, Southwest Wake (SCHSSW) averaged a one-month supply for homes under $150,000 and a two-month supply for homes $150,000-$300,000. The Average Days on Market for all price points for these two sub-markets were 78 and 86 days respectively.

This shortage eases slightly as prices increase. CAM had a 2-3 month supply and SCHSSW a 3-4 month supply in the $300,000-$600,000 range.  The numbers climb to 4 months for CAM at 600,000-$800,000.

The first Buyer's market numbers don't appear until above $600,000-$800,000 in SCHSSW - with a seven month supply. Both sub-markets are back into Buyer's territory at prices above $800,000 with seven and nine month supplies respectively.

Foreclosure Sales Down, Cash Sales Up

There are a couple of more interesting notes about our market that might surprise you. A lot of transactions are all CASH. People are not taking mortgages to buy these homes. In fact, 20% of all TMLS closings 4th quarter were cash deals. Be very aware if you are advised that you can pick up a property for cheap if you can pay cash, because that will impress someone.  One in five of our transactions already are cash.

Who are they advising you to impress? Foreclosures and other kinds of distressed properties top the list.  Again, if you are coming from another part of the country that has a lot of distressed property,  our market is different. Listings designated as distressed in our MLS dropped from 10% in 2012 to 7% in 2013. Think about that a minute. There are almost three times as many people already paying cash outright for property in the Triangle as there are distressed sales combined.

My last point is how critical it is to price your property correctly from Day One. You will get a higher sales price statistically if you hit the sweet spot of the market. Properties priced correctly initially sold for an average of 98% of original list price in 61 days average. Properties which had to reduce their price sold for an average of 90% in 161 days average. In addition to the difference in sales price is the added cost of over three months of extra mortgage and other expenses.

Data was compiled from Triangle MLS by Stacey Anfindsen of Birch Appraisal Group, Cary. While deemed accurate, they are not guaranteed.

Displaying blog entries 11-20 of 21