A look at the month of July Everyone wants to know what the real estate market conditions are like a...

1. Crystal Coast real estate
A look at the month of July
Everyone wants to know what the real estate market conditions are like along the Crystal Coast of
North Carolina. Is it time to buy? Is it time to sell? Is the market improving? Has anything changed?
In the words of David Byrne in the song Once in a Lifetime it is still, Same as it ever was, Same as it
ever was, Same as it ever was.
This market, like the Talking Heads song makes you want to wear an over sized white suit and slap
yourself in the head. Here's why.
When we compare the market results of July, 2011 with the same month every year dating back 5
years we discover that not much has changed at all. The number of homes sold, homes for sale and
the supply of inventory has basically remained the same. From 2007 through 2011 July has averaged
109 properties sold, 2098 homes for sale and a 19 month supply of inventory. These numbers are
averages but very closely reflect the actual numbers for each year. In other words, there hasn't been
any high highs or low lows that averaged out to a middle number.
Price on the other hand has been all over the place. The lowest average July sold price for a Crystal
Coast home was $214K in 2009. The highest over the past 5 years was $280K in 2007. This past July
saw the average sold price at $254K.
But the supply of inventory is what we really need to be look at to judge the over-all health of the
market place.
To determine the supply of inventory (sometimes called the absorption rate) we first assume that no
new properties are coming on market. We then take the number of properties sold during a month
and the current number of active properties (for sale) and determine the rate in which properties get
sold. In a normal stable market the supply of inventory is 6 months. This is why listing agreements
are often for six months.
During the July 2011 the Crystal Coast real estate market had a 19 month supply of homes. So as the
formula goes, If no new inventory came on market it would take over a year and half (19 months) to
sell everything currently listed on the market.
But if the market has been so stagnate and bloated for so long then why has price been all over the
place? Five years is a long time in the world of finance. A lot has happened during that time. We
have gone from no verification signature loans to mortgages that require a credit score of above
800. That's a big change in a short period of time. The market is motivated by someone's ability to
get funding and getting that funding has been difficult of late.
Interesting to note is that the Crystal Coast has seen an increase in cash sales. Normally during any
given time period 12%-14% of all transactions are cash. But now a whopping 25% of all homes sold
have been cash and that's been going on all year long.
Where did this cash money come from and why is it being spent on homes? I'll get in to that a little
later on.

2. The last July that the Crystal Coast had a stable, normal market was 2005. Back then there were
only 868 homes on the market for sale compared to 2067 this past July. 2005 sold 220 homes while
this year only 99. And most importantly in July of 2005 the supply of homes was mere 4 months
compared to our current level of 19 months. Ouch!
July 2006 was when signs of the oncoming real estate debacle had already started. Inventory leaped
up to 1,470 homes, sales slipped down to 141 and the supply of homes increased to 10 months.
How do you win in market that's stopped dead in its tracks? If you're a seller you have to under price
your competition. Switching agencies isn't going to help. They all belong to the same MLS and
usually advertise in all of the same places. In a market like this price is what is going to determine if
you sell or not. Any seller clinging on to the inflated prices of yesteryear is doomed.
If you are a buyer then you are looking for someone to blink. You've got to find a seller who is tired
of the market and wants to sell now and will price their home appropriately. And you better have
your financials in order too. When one of these properties hits the market they get gone and gone
fast. Remember you are also competing with cash buyers. So your first stop should be with a lender
before you start your property search. Find out how much you can borrow and all terms and
conditions associated with the loan. This will also give you time to correct any discrepancies that
may be found.
Some buyers may feel like they don't need to visit with their lender first. That would be a big
mistake especially if you are interested in a short sale or any distressed property. A letter of pre-
approval from the buyer's bank is almost always a prerequisite for these properties. Think about it. A
bank just went through one bad experience. They don't want to go through another with the same
property.
Now about those 25% cash buyers I mentioned earlier. Here is what is going on. In the type market
we have right now there are always target specific opportunities that avail themselves. For example
I know of a new construction in Emerald Isle that went on market for $1.25 Million. There was
$950,000 tied up in it. The property did not sell and went into foreclosure. Some lucky buyer bought
this new 5,000 square foot beach home for $550,000.
When the equity and value in a property is so great sometimes it makes sense to move monies
around from other urban resort condominium sources and buy it. That's why cash sales have
doubled. If you don't have that type of resource then you better get your financials squared away
before you house hunt. Cash buyers can buy quickly. You don't want to be left behind at the bank
filling out a loan app.