Housing market loosens

Staff WriterMay 19, 2009 

  • We're looking for first-time homebuyers who are taking advantage of low interest rates and the $8,000 tax credit. If you have a story to share, please contact staff writer Jack Hagel at jack.hagel@newsobserver.com or 919-829-8917.

For David and Ashley Zaino, the power of love puts them at the mercy of the housing market.

The Cary couple married and bought their first home a couple of summers ago, when the real estate market was busy with buyers and soaring prices.

Two months ago, they had a daughter, Madison, who brought with her a need for more space, just when buyers are scarce and prices are falling.

The Zainos are hoping to get a little more than what they paid for their home. But they're bracing for a loss.

"If we're able to get what we want in the end -- this new property -- then it's worth it," David Zaino said. "When baby stuff starts exploding, 1,400 square feet really doesn't go that far."

As the housing slump drags on, Triangle home sellers are lowering expectations and prices. And buyers, buoyed by low mortgage rates and new tax incentives, are starting to respond. It's a subtle crack in a frozen local housing market, where 13,393 unsold homes still await buyers.

Sales of Triangle homes are still off considerably from last year. But the decline appears to be easing in part because of lower prices. Sales of existing homes in Durham, Johnston, Orange and Wake counties totaled 1,412 in April, Triangle Multiple Listing Services data show. While that's down 20 percent from the same month last year, it's the smallest year-over-year decline since early last year.

The average price of new and resold homes sold in April was $216,000, down 9 percent. The average price of resold homes in April was $198,000, down 8 percent. They were the biggest year-over-year declines in at least eight years. And it was the first time since early 2006 that existing home prices averaged below $200,000.

The price trend is painful for homeowners looking to sell, especially those who have to sell because of a job loss. But the decline in prices is not nearly as steep here as it has been in other parts of the country that saw a huge housing bubble. And it's really a necessary correction for the local market's longer-term health, appraisers and researchers say.

Something's gotta give

Prices remain high in the region's most desirable neighborhoods. But some sellers are still too ambitious. And they'll have to capitulate if they want to sell, housing analysts say.

"There's still a bunch of people who say 'I'm still immune to everything,'" said Stacey P. Anfindsen of Cary-based Birch Appraisal Group, who analyzes MLS data for area brokers. "In a good, efficient real estate market, you need to have buyers and sellers who are flexible on prices going up or down. And now we're seeing the downward flexibility in price, and that's what the market needs to have."

During the first two months of the year, buyers and sellers were in a staring contest. Sales slowed to a 10-year low in part because prospective buyers have been hoping for bigger bargains. At the same time, lenders have tightened up, and the recession has made some prospective buyers leery of job security, and less willing to gamble on a new mortgage.

And as buyers have lingered on the sidelines, sellers have dealt with a glut of unsold homes. There were 15 percent more homes on the market in April than there were two years earlier, when prices were peaking. Sixty percent of sellers have dropped their price at least once, up from 47 percent a year ago.

A large selection

That shift pushed Glenn and Martha Edgerton into the market. The couple, who own a house in Sunset Beach, moved to a rental home in Raleigh three years ago to be closer to more entertainment.

By February, long after they had decided to make Raleigh their new hometown, they decided to buy. "We were really glad we waited because there's a lot of houses available right now," said Martha Edgerton, 67.

After touring two dozen homes, she and Glenn settled on an 1,800-square-foot ranch house with no stairs (a gift to her rebuilt knees), and a thicket of backyard trees that adds privacy at the end of a northwest Raleigh cul-de-sac. It had been on the market for nine months, once listed for $325,000. The Edgertons ended up paying $276,000.

The seller "was ready to sell," she said. "He had moved out of town. And we were ready to buy."

It was the other way around when the Zainos bought their three-bedroom home on Mint Hill Drive in Cary's Park Village subdivision.

"We bought at the peak of the market," said David Zaino, 32. "The property we have was our fourth offer on a home. During that time, you know the deal: You couldn't make a good enough offer."

The couple paid $205,000. They're asking $217,900. But they're facing competition from five other sellers on Mint Hill Drive, including one on the same block asking 13 percent less.

Not all is lost, though. They hope the softer market and lower interest rates will help them get more space. They've got their eye on a bigger house near Fuquay-Varina, which is being offered by the bank that foreclosed on an out-of-business builder. The price on that one has dropped at least $20,000 in recent months. They'll close once -- if -- the Cary home sells.

And they may drop the price. "If it makes the property move quicker, then it's worth it for us," David Zaino said.

They expect their mortgage rate to be below 5 percent, instead of the 6.75 they're paying on the Cary home. All told, they expect their monthly mortgage payment to increase by just 12.5 percent, while their home size will almost double and their yard size will quadruple.

They're not worried about the ebbs and flows of the market, David Zaino said. "We're going to be there for a long time."

jack.hagel@newsobserver.com or 919-829-8917

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