Propelled by a hefty tax credit for first time home buyers North Carolina home sales have been on a path to recovery, but the recessionary economy is taking a toll on the state. North Carolina housing markets are likely to suffer through more pain before a sustained recovery develops.
The first time home buyers extension and expansion for present homeowners should give markets a lift in the first half of 2010. But the North Carolina economy is highly dependent on the outcome of the banking sector and questions surrounding whether two powerful banks remain in Charlotte.
Sales have risen in Charlotte, but not anything close to where they were during the boom and housing prices are declining. Increasing foreclosures will hamper the market as more and more homeowners are unable to make their mortgages with climbing unemployment.
Charlotte’s recovery is strongly tied to whether Bank of America and Wachovia pull their headquarters out of the community, the national centers for the two lenders. Should the banks move out of the area thousands of jobs would be jeoparodized, damaging the housing market and sending home prices much lower.
| City |
Forecast |
| Charlotte |
− 10.7% |
| Raleigh |
− 9.3% |
| Wilmington |
− 6.4% |
| Durham |
− 8.9% |
| Greensboro |
− 7.2% |
Employment is the top factor in housing markets and with higher unemployment in banking, manufacturing and the furniture business the area could suffer through a plunging economic climate. Housing Predictor forecasts Charlotte home values to deflate at an average of 10.7% in 2010.
However, the banking sector works out in North Carolina, the state holds one of the most promising futures for long term growth and economic strengthening with a more diversified business climate than many others.
The housing bust led to many bankers leaving Raleigh, a second mortgage hub to Charlotte. But intense growing pressures have sent home sales on an upward pattern in Raleigh with the assistance of home buyers’ tax incentives and lower prices. The climate will take at least a number of months to find stabilization and is forecast to see Raleigh home values slide 9.3% in 2010.
In Durham home sales have also seen a boost and may soon see a bottom since prices didn’t climb as much as in Charlotte. But the upward surge in housing sales shouldn’t be viewed as the market returning to any sort of healthy equilibrium for sometime since financing is tougher to get and foreclosures are showing signs of growing.
However, the extension of the federal tax credit should act to boost the market with lower home prices and low mortgage rates. Durham is also attractive as a college town to investors, who see investing in the community as a more long turn solution in real estate than many other areas. Durham home prices, however, are forecast to decline an average of 8.9% in 2010.
A rare but steady rise in new home building permits and rising home sales should aid Wilmington in pulling out of the slump earlier than other areas of the state. However, the impact from North Carolina’s banking sector could extend a long way out of Charlotte and have an impact on Wilmington’s home market. The market is projected to weather the financial storm better than other areas of the state and forecast to experience average housing deflation of just 6.4% in 2010.
Greensboro has been on a bumpy ride in terms of home sales ever since the financial crisis began to unwind. As forecast, prices have been declining at an even clip and sales are projected to be anything but strong during 2010 on the way to a more stable marketplace. Rising foreclosures and bank assisted short sales will act to hurt the market further in the New Year on the way to average deflation forecast at 7.2%.
