The New York Times in an editorial today endorsed President Obama's choice of North Carolina's Mel Watt to lead the Federal Housing Finance Agency. Here's what the Times had to say:
The New York Times published a story that our real estate reporter, David Bracken, has been writing about for months, if not longer.
The housing industry is experiencing a standoff of sorts. There is a shortage of single-family homes for sale around the country. We have been seeing this in the Triangle. But it is a strange kind of shortage that doesn't seem to result in a big jump in prices or a buyer frenzy. It is as if supply and demand are existing in different economic universes. Let me explain.
At the end of February, there were 7,515 homes on the market here. That was 20 percent down from last year and 40 percent down from two years ago, according to Triangle Multiple Listing Services data. That means that this area has a five-month supply of homes for sale.
But the average sales price of a home is up just 1 percent and a crucial metric, the number of days a home stays on the market, continues to drop but is still at 117 days.
So, while the Times story suggests that in some markets around the country sellers are getting multiple offers, prices are jumping and the homes are flying off the shelf, something is still holding this market back.
I think that's because the Triangle housing market is still recovering. There is an undercurrent of buyers and sellers still groping around, trying to get a bead on things.
Unemployment, by Triangle standards, is still very high, at 7.7 percent at year end. At the end of 2006, the Raleigh-Cary-Durham jobless rate hovered at 3.5 percent. People without jobs don't buy houses. OK, maybe they did during the subprime days of yore when you could get a mortgage by fogging up a mirror. But not today.
There are other wet blankets on the market. Buyers and sellers are playing a waiting game. People who bought a house back in the mid-2000's for, say, $250,000, may be sitting on real estate that is now just worth $220,000. They may owe more than their house is worth, and sellers don't want to come to the closing table having to write a check to pay off the mortgage balance that the sales price doesn't cover. They were raised by their parents to believe that you walk away from closing with money, the equity that has grown over time.
Buyers, for their part, aren't sure that prices have really, finally, absolutely bottomed, despite evidence to the contrary. Somewhere, out there, is a crazy good deal where they can practically steal a house from desperate sellers.
And, believing that they have the upper hand, they want the homes to be brought up to pristine condition.
No nail holes, no carpet stains, no loose hand rails.
So while the things we learned in that 8 a.m. Econ 101 class -- you never missed a lecture, right? -- suggest that we should be reaching equilibrium soon where all buyers and sellers come together where the supply and demand curves intersect at a price they can live with, it hasn't happened. (Editor's note: For the econ professors out there, I know the curves represent "quantity supplied" and "quantity demanded." Don't email me. I was awake in Econ 101. I'm a journalist engaging in shorthand.)
Sellers are on a sort of strike, keeping their homes off the market, and buyers are being tougher than maybe they should be.
The only thing that will deliver a jolt to this impasse is going to be a significant drop in the jobless rate. In other words, more people working. That isn't going to happen fast. A couple of the historic engines of growth in the Triangle were state government and the universities. Well, the Republicans who now control the legislature and the governor's mansion are definitely not interested in boosting the number of public sector employees. The reverse is true.
They will argue that shrinking government leaves more money in the hands of the private sector, and the jobs will be created there. I have no doubt of this, over time. But it will take time for this transition. Someone who loses a government-funded job -- in the state bureaucracy, as a teaching assistant in an elementary school, or at a university -- doesn't walk into a new private sector job overnight. Then there is the sequester, which may cost this area jobs -- we have folks here who commute to Ft. Bragg and to Seymour Johnson Air Force Base, as civilian employees and defense contractors.
And there are plenty of private employers who are uncertain about what Obamacare will mean for them. Will that additional employee push them over some magic number that will increase their health care costs?
I don't want to sound overly pessimistic. Eventually, the market clears. We have been in a five-year funk. It has been so long that people forget what good times feel like. There is a lot of pent-up demand for housing. In the past five years, a lot of kids have graduated from college and are now in their mid-to-late 20s, and they are forming families and they want a backyard. A lot of folks who bought starter homes back in 2008 want to move up to a bigger house. The Triangle is still growing; Raleigh-Cary is still one of the fastest growing areas in the country.
So the housing market will continue to stabilize, prices will be firming up and rising, and more sellers and buyers will come to terms. Just how fast is tough to gauge, but things are a heck of a lot better than they were a few years ago.
The Veterans Leadership Council is having a fundraiser tomorrow night at the Hilton North Raleigh Midtown on Wake Forest Road. Gov. Pat McCrory has committed to attending and making this one of his first official public events, the council says. The nonprofit is creating a Veterans Life Center at the Umstead Hospital Complex at Butner, hoping to offer emergency and transitional housing, job training, support groups, mental health services and various therapies for 400 veterans a year. The cost is $100 per person. For more information and to RSVP contact Joyce Kohn: firstname.lastname@example.org or 919-210-3829
You can read more about the Veterans Leadership Council here:
I have spent the last couple of days looking at data, and I'm thinking how bad it's been but I'm hopeful that the worst is past
Without discussion, the Durham City Council approved a $373 million budget for 2012-13 Monday night, an increase of $10.5 million over the current fiscal year.
The council had settled on the budget after a public hearing and several prolonged meetings in the past three weeks. At its regular meeting Monday, the budget passed unanimously along with 41 other items on the council's consent agenda.
"The citizens of Durham should be proud and appreciative of the work this council has done as well as the administration to shape this budget," said Mayor Bill Bell (right).
Durham taxpayers face a one-cent increase in their property-tax rate next year, to 56.75 cents per $100 valuation. The increase adds $25 to the tax on a $250,000 house.
The extra penny, dedicated for low-cost housing and services for the homeless, is projected to bring in $2.3 million next year. Durham has planned a five-year, $57-million program of housing construction and improvements, with associated social services.
Downtown property owners also face a 7-cent tax increase to pay for promotions, special events and hospitality services in a "Business Improvement District."
Charges are also going up for city water customers and stormwater fees to property owners. The charges are rising on a gradual schedule, mostly to pay for compliance with water-quality regulations in the Falls Lake and Jordan Lake watersheds.
More housing is on its way to downtown Chapel Hill.
The Town Council unanimously approved the Shortbread Lofts, a 7-story, apartment complex on West Rosemary Street Monday night, saying it will bring more people downtown and offer more rental opportunities for residents.
The vote was 7-0, Council member Donna Bell was absent and Council member Laurin Easthom excused herself from the vote because her husband's law firm represented the developers.
City administrators and council members came away from a Friday meeting on next year's budget with some good news and a good many questions.
The good news was that the city appears poised to finish the current fiscal year on budget, with no need for the sort of last-minute cost-cutting there has been in recent years past.
Most of the questions pertained to dealing with a 2012-13 budget shortfall projected at $2.6 million, and how to fund the "dedicated revenue stream" for low-cost housing that Mayor Bill Bell called for in his State of the City address last Monday.
"Something's going to give," said City Manager Tom Bonfield. "We haven't determined (what) yet."
The presidential election is still a year away, but the Obama administration is already sending a steady stream of officials to North Carolina, a key battleground state.
This week Neal Wolin, deputy secretary of the Department of the Treasury, was in Raleigh to attend the annual North Carolina Affordable Housing Conference.
Wolin stopped by the News & Observer this afternoon to talk about the administration's economic proposals, including its efforts to assist struggling homeowners.
Wolin defended the administration's record in regards to foreclosure prevention and other attempts to quicken the housing market's recovery.
He said the administration's programs for loan modifications and refinancing, the first-time homebuyer tax credits, and efforts to make loan servicers operate more responsibly have made a difference.
Laminate flooring maker Pergo, hurt by the housing slump and increased competition, recently cut 16 jobs at its Triangle operations.
The layoffs reduced Pergo's workforce in Raleigh and Garner to about 175 people. The company doesn't expect to eliminate any more jobs, said Marc Kmec, Pergo's human resources director.
"We don't take these types of cuts lightly," he said. "We don't cut with a hairtrigger when there are slowdowns. But we're in the same circumstance as any company tied to consumer spending and the housing market."
Kmec declined to comment on financial results or how much Pergo's sales have dropped during the economic downturn.
Ply Gem Holdings, a Cary company that filed plans to go public last year, reported lower sales in the second quarter as demand for the company's building products continued to be hurt by softness in the housing market.
The company's second-quarter sales totaled 294.5, 2.4 percent lower than the same period a year ago; quarterly earnings were $28.5 million, down from $30.3 million from a year ago.
Ply Gem sells vinyl siding and other products for home exteriors. The company's financial performance is closely tied to housing starts, which have remained at low levels since the homebuyer tax credits expired last year.
"Given that market conditions for 2011 are expected to remain challenging, Ply Gem will continue to focus on maintaining a lean overall cost structure while maximizing cash flow and striving to outperform the marketplace in all business units, which will ensure that Ply Gem emerges stronger as the housing market recovers," said Gary Robinette, the company's CEO, in a release.