Home sellers begin to budge

Sliding local sales sound an alarm

Triangle home sales sank in July, again. Prices dropped, too.

On the surface, the latest local housing data show that the national slowdown continues to hurt this region. But the numbers also may signal subtle improvements.

The sales slide wasn't as bad as in June, which posted the largest decline since the effect of the nationwide housing slump hit the Triangle in late 2006. And the price decline reflects sellers' willingness to negotiate, which could help loosen a logjam of unsold homes.

"Sellers are realizing that there's a lot of inventory out there," said Wes Minton, a broker at York Simpson Underwood in Raleigh. "And if they want to sell their house, they have to price it extremely competitively.

"Buyers are realizing that it's a buyer's market."

A total of 2,079 existing homes were sold in July -- down 30 percent from the same month a year earlier; it was the 12th consecutive month of declines, according to data compiled by the Triangle Multiple Listing Service. The drop in existing-home sales in Wake, Durham, Orange and Johnston counties was slightly less than the 33 percent decline in June.

Meanwhile, in the Triangle and several surrounding counties, there were 28,053 homes for sale in July -- a 29 percent increase from July 2007. Homes that did sell traded for an average of $241,437, down 2.7 percent from a year ago. The median price dropped 3.3 percent to $192,000.

The price decline isn't good news for sellers, especially for those whose homes are their biggest single investment. But it is important for the health of the local economy.

As prices subside, buyers are expected to take bigger bites out of the 7.8-month supply of homes for sale. The sooner that inventory is cleared, the sooner home builders can build more -- creating jobs that fuel other industries.

The latest numbers suggest that sellers are ending a stalemate. In recent years, homeowners have become accustomed to ever-increasing prices as the Triangle's population has surged. And they've been reluctant to budge from top dollar.

But people moving here are having trouble selling their houses elsewhere and therefore can't afford to buy another home. Also, banks have been tightening lending standards in the wake of the subprime lending debacle. Buyers now need better credit ratings or more equity to get a mortgage.

The July price drop was the steepest year-over-year decline in the past two years. But prices were still stronger than July 2006 -- the busiest July in the past five years -- when the average price was $231,546 and the median price was $186,000.

"A decent amount of the selling population has their houses unrealistically listed," said Stacey P. Anfindsen at Birch Appraisal Group of Cary, which analyzes multiple listing service data for Triangle real estate agents. "Sellers see that they have competition now. They didn't have competition before."

It's not clear whether we've hit bottom, Anfindsen said, and there's no telling when an upward swing will take hold. He'll be encouraged once pending sales increase three months in a row.

That total, however, has dropped each month since April. And sellers are adjusting.

Price drop closes deal

Tom Menges, a broker at Re/Max Preferred Associates, has a client who listed a home for $450,000 in North Raleigh's Stonehenge subdivision. After it lingered on the market, the seller dropped the price in May to $425,000. By July, the price had been cut to $400,000. An offer came days later.

"Clearly, price overcomes everything," Menges said.

Kip Rivers, 51, found that out in Hedingham. His father lived in a 1,200-square-foot home in the eastern Raleigh neighborhood until he died late last year. In February, Rivers put the home on the market for $154,000. It sat for months.

"The market was stale down there," said Rivers, who lives outside New York City. "People were coming in, looking and saying, 'Yeah, this is a nice house, but I can do better down the road.' "

In April, he dropped the price to $150,000. Still nothing. "Nada, zero, zippo," Rivers said.

So he dropped the price to $146,900 in late June. He had an offer within a week. It sold for $142,000 a couple of weeks later.

The price represented a 4 percent gain over what his father paid in 2004, property records show. That's not bad, considering that, where Rivers lives, homes that were worth $650,000 two years ago are selling for $500,000 today.

"From where I was standing," Rivers said, "Raleigh was pretty much holding its own."