Raleigh-Durham Home Prices Swim Against Current In 2008

Originally Posted at Triangle Business Journal

The Triangle's housing market continues to be among the best in the country in terms of prices, according to a new batch of federal data.

The Federal Housing Finance Agency says home prices in the Raleigh-Cary area increased by 2.96 percent in 2008. That ranks the Raleigh metropolitan area 18th best in the country. The Durham-Chapel Hill area also fared well, placing 28th with home-price growth of 2.15 percent for the 12 months ending Dec. 31.

Nationally, FHFA says, home prices fell by 4.5 percent in 2008.

FHFA is the regulator of mortgage lenders Fannie Mae and Freddie Mac. The agency’s data exclude home loans that cannot be bought or securitized by Fannie and Freddie; that leaves out both homes with large “jumbo” mortgages and most homes with subprime loans. Thus, the data tend to overstate overall housing prices in an area.

But the agency’s data do make for useful comparisons among metropolitan markets, and they underscore a key fact about the Triangle's housing market: Even as transactions have dropped, prices have remained much stronger than in most areas of the country.

“Price declines continued in the fourth quarter although not as rapidly as some had expected,” FHFA Director James B. Lockhart said in a written statement. “We are hopeful the housing initiatives announced last week by President Obama will begin to provide much-needed stability to the housing markets.”

Obama’s $75 billion housing plan is meant to help homeowners avoid foreclosure.

Former KB Home CEO Karatz Indicted

Originally Posted at Triangle Business Journal

Bruce Karatz, former CEO of KB Home, has been indicted by a federal grand jury in a stock options scheme.

Los Angeles-based KB Home sold homes for a combined total of $263 million in 2007, the last year for which figures are available, according to Triangle Business Journal research. That made the firm the area’s No. 1 residential builder, though it is among a number of builders that have experienced local leadership and structural changes in recent months as the housing market has tanked.

Karatz, 63, is alleged to have backdated stock options over seven years, awarding himself and others millions in stock-based compensation. Karatz resigned from KB Home (NYSE: KBH) in November 2006 under pressure in the wake of an options inquiry. Other top KB executives forced out were Richard B. Hirst, executive vice president and chief legal officer, and Gary A. Ray, the head of human resources.

The SEC began its formal probe in January 2007.

According to the reports, Karatz’s 20-count indictment included seven counts of mail fraud, five counts of wire fraud, three counts of securities fraud, four counts of lying in statements to the U.S. Securities and Exchange Commission and one count of lying to KB Home’s accountants.

If convicted, Karatz, could face a prison sentence of up to 415 years.

Unexpected Rebound In New Home Construction For February

Originally Posted at Triangle Business Journal

New home building unexpectedly rebounded across the country last month as builders increased their housing starts to a 583,000 annual pace from a record low of 477,000 set in January.

The Commerce Department reported Tuesday that new home construction rose 22 percent from January to February but remained 48.5 percent below year-ago levels. The surge was led by an 83 percent jump in multi-family construction. Single-family homebuilding rose by a modest 1.1 percent.

In the South, which includes the Carolinas, new construction jumped 30 percent last month compared to the month before but was still 44 percent below the levels of last year.

Only one region reported a drop in housing starts: the West, where starts declined by 24.6 percent. The largest increase was in the Northeast, where starts increased 88 percent.

Permits for future new home construction in the South rose by 5.9 percent from January to February but were still 46 percent lower than the year before.

Nationwide, permits rose 3 percent from January to February but remained 48.8 percent lower than a year ago.

The South region includes Virginia, Maryland, D.C., Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and West Virginia.

N.C. Corporate Tax Revenue Down 37%

Originally Posted at Triangle Business Journal

Collections from the state’s tax on corporate profits were down 37 percent for the first eight months of fiscal 2009, July through February, as North Carolina companies battled the recession.

The number is seen as a barometer of business conditions.

Collections during the eight-month period were $275.8 million, down from the $441.5 million recorded during the same period in fiscal 2008, according to the North Carolina controller’s office.

The state taxes corporate profits at a rate of 6.9 percent.

In a new report on the state’s fiscal outlook, North Carolina General Assembly researchers pegged recessionary job losses in the state at 197,000 through February and commented that “recessionary conditions will persist for much, if not all, of 2009.”

Mortgage Rates Hit 1971 Levels

As Originally Posted to Seeking Alpha

The gap between the 10-year Treasury note and the 15-year / 30-year fixed-rate mortgages has narrowed, not surprisingly, since the Federal Reserve began actively buying mortgage securities in January (see Bloomberg article).

The average rate on a 30-year fixed mortgage fell to 4.96 percent in January, the lowest it has been when considering data that goes back to 1971. Rates were recently at 4.98 percent. With a promise to increase mortgage-backed security purchases by an additional $750 billion, along with as much as $300 billion in Treasury purchases over the next 6 months, rates obtained with the help of a Raleigh real estate agency should continue to be under pressure in the near term.

As the Fed continues to support low rates in hopes that consumers will either refinance or make a new home purchase, others are also encouraging consumers to purchase now, but for different reasons. Given the flood of money entering the market, consumers will eventually begin seeing inflationary pressures. Now may be the time to act while both rates and prices are low.

Housing Experts Say Buyers Have Several Options

From News 14 Carolina



CHAPEL HILL, N.C. – Real estate experts say the federal government is providing several opportunities to help certain parts of the housing market.

For qualified buyers, there are a number of government programs to help finance their purchases.

Whitney Long, a loan originator with Carolina Home Mortgage in Chapel Hill, N.C., says although private bank loans have been harder to secure, loans from the Federal Housing Administration or through the VA or USDA can provide help for those looking to finance most or all of their costs. She said that especially applies to those who use the first-time homebuyer's credit.

"We're starting to see a lot more people get pre-qualified, think about buying now that the credit has come out with the $8,000 for new home buyers," Longs said. "So, it's certainly a big incentive for people to think about it."

She said she's doing about 50 percent more government loans than before.

Even though experts are not sure when the slump will end, they know the numbers will eventually start heading the other way.

"If you look at all the things that have historically gone well for our market, in terms of the universities, the demographics, the educational level, the income and earning level of the people that live here, those are the types of markets that come out of recessions quicker," Stacey Anfindsen, a real estate market analyst, said.

The housing market in the region is doing better than the rest of the nation and although they're slower than before, statistics show there is activity in the real estate market.

But Nick Tennyson, executive director of the Durham, Orange and Chatham Home Builder's Association, knows people are being cautious.

"I don't think any of us should kid ourselves about the fact that there are people who have lost their jobs in our market and people who are afraid about that," Tennyson said. "I think that's really just stopped a lot of people from considering any sort of purchase."

Commercial Real Estate Properties Going Green in Raleigh

Increasingly, there is more demand for environmentally-friendly working and living spaces in the U.S.. Fittingly, the cutting-edge technology firms of the Research Triangle Park area of North Carolina are leading the way through innovative design and eco-engineering. The following article, taken from the Triangle Business Journal, highlights the efforts of America's largest center for technology development.

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As the epicenter of innovation and cutting-edge technologies, Research Triangle Park is pushing for a more “green” environment, both inside its buildings and across its 7,000-acre expanse.

Liz Rooks, executive vice president of the Research Triangle Foundation, which oversees the park, says zoning and environmental best practices have changed dramatically in the last 50 years.

With the opening of the Wake County portion of the park, the RTF worked with North Carolina State University to design a master plan with a heavy emphasis on protecting the ecology, she says.

Environmentally sensitive land was identified and declared off-limits for development. Steep slopes were clearly marked out, and existing vegetation was retained to prevent erosion.

Despite the nation's housing slump, Raleigh real estate remains in steady demand due to the unique combination of high-tech businesses, world-class colleges and universities, and advanced medical facilities. Efforts on behalf of the Park to "go green" only add to the appeal.

Read Entire Article from the Raleigh Business Journal