The lead article in the current Builder & Broker Journal is an interview with the owner of Stokes Appraisal Service, Lee Stokes, and two of his appraisers, John Woodmore and Ken Walz.  The interview underscores what most real estate agents in the Triangle (and probably most other areas as well) have known for a long time; namely that the majority of home sellers are in denial. I can’t do any better than to quote from the article. “They want their homes placed on the market at what they think the home is worth.  The Realtor does his, or her, best to provide a range for selling the home, but the sellers choose the top of the range.  This means the home is going to stay on the market for a much longer time and cause ill will between the seller and Realtor.  Then, after the home sits on the market and becomes ‘buyer worn,’ the seller chooses a new Realtor, who chooses the right price for the the market and the home sells.  The first Realtor spent the marketing dollars with no gain.”

When you look at any of the TAAR Reports (Triangle Area Residential Realty) this is underscored.  The current issue, for example, provides the first quarter summary of activity in Cary, Apex and Morrisville.  I am going to be selective and pick some of the report items concerning Cary.  The following stats compares the first quarter 09 vs. the first quarter of 08. Inventory increased by 3%.  The average list price in Cary decreased by 7%.  The number of sellers who have dropped list price from original list price increased to 554 from 371.  To quote from the report ”What is happening with sellers who are not flexible/realistic on list price?  They still get to watch the dust gather on the real estate sign.  The average days on market for the active listings in Cary increased to 115 from 94.”  What are home builders doing?  They have almost stopped building in Apex and Cary.  First quarter permits were down 82% in Apex and 50% in Cary.  What about current supply?  Current supply numbers have increased dramatically.  In Cary the supply increased t0 15 months from 7.  First quarter closing were down 34% in Cary.  You can’t review statistics like this and refuse to acknowledge that a home must be priced in line with what the market IS if it is to have the chance to sell at all let alone within a reasonable period of time.

Another fact pointed out by the appraisers in the Builder & Broker article is that new homes have the upper hand over resale homes in the current market.  New homebuilders can offer more concessions which often includes lower financing rates. 

The bottom line is that we “bad old Realtors” are not trying to promote fire sale prices in order to get sales at the expense of the sellers.  We never make the market.  The market tells us what is going on by what is selling and at what prices and if we are to do our best for sellers we have no choice but to suggest prices that will enable their homes to sell.   

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com (undergoing revision)

Short Sales Stop Home Owner Mortgage Bleeding.  The prospect of losing one’s home is a tough one to deal with.  However, doing so can save much more aggrivation and pain than going through a foreclosure.  If the alternatives to a short sale have been exhausted or don’t make sense then it is time to investigate doing one.  They not only can work well for the home owner but for the lender as well.  Clayton Holdings, Inc. a Connecticut company, did a study that shows that from May to October of 2008 banks lost an average of 37 percent on short sale homes and 56 percent on homes sold after foreclosure.  The government and banks are doing their best to be deaf, dumb and blind to this.

Speaking of a pain in the posterior, one of the leaders in producing pain in that region, Countrywide, has been saying in their short sale approval letters that a buyer can’t resell the home within 30 days of approval.  Title companies have been refusing to insure transactions where Countrywide uses this verbiage.  They say they can’t be responsible for anything that happens to a property in the 30 days following a sale.  Those of you working with short sales should address this with your title company of preference.  If they say no, ask them to take the matter up with Countrywide and encourage them to remove it.  Countrywide seems to enjoy being difficult to deal with.

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com (undergoing revision)

KKK Has New Meaning.  In North Carolina, unfortunately, the connotation is still the same - BAD!  The construction sector of the nation’s economy has been losing jobs left and right.  North Carolina construction job losses ranks number three in this not to be envied “hit” parade.  During the past year, March to March, the number of construction jobs lost, state by state, has been staggering.  On a percentage basis the loss leaders are Arizona -27.7%, Forida -20.6%, North Carolina -19% and California -18.4%.

Triangle Commerical Contracts Tank!  The size of all public and private building contracts awarded in Durham, Orange, Wake, Franklin and Johnston counties in 2007 was $596 million.  In 2008 it was $209 million.  That’s a decline of 65%!  Number like that are number everyone can do without. 

John Fish:  Tel: (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com  (undergoing revision)

Years back Charles Kuralt scoured the country for CBS looking for unique stories about everyday people in the nooks and crannies of the U.S.  Now Roy, Mike and all the other ACC coaches of major sports scoure the playgrounds, playing fields and gyms of towns and cities throughout the country in hope of finding talent that will become stars for their teams.  I don’t know what it cost CBS to trot Charles and his team around the country in the motor coach they used but I do know that it costs a tidy bundle for ACC schools to get their coaches out and around to snare the next household name in sports. 

During the 2007-08 school year ACC schools spent $10.996 million on recruiting.  With regard to the Research Triangle “Big Three” Duke University was the number one spender in the big bucks sweepstakes at $1.56 million.  The University of North Carolina was number four at $1.13 million and North Carolina State University was number five at $1.07 million.  To fill in the one through five blanks, Geogia Tech was number two at $1.33 million and Virginia was number three at $1.28 million.  Wake Forest was at the bottom of the ACC list at $623 Thousand.  When you consider how well Wake Forest basketball and football teams have been doing it becomes obviously that some schools get more bang for their bucks than others. 

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com (undergoing revision) 

TRIANGLE COMMERCIAL PROPERTY SALES PALE.  For the last ten years the average commercial property quarterly sales in the Triangle has been about $286 million.  The sales during the first three months of this year are the lowest on record at $50 million.  Also, it is 94% below the same period last year - ouch!!  Tightening of lender requirements and buyers looking for even lower prices are the main factors bringing sales to a near standstill. The national commercial property pricing index that is put out by Moody’s and Real Estate Analytics has declined 21.5 percent since its high water mark in October of 2007.  The inability to fund maturing debt on commercial properties is a cause for concern nationwide.  This is making it nearly impossible for anyone to place consistent values on properties.   “Brother can you spare a dime?”  If you aren’t old enough to remember that line - - you may be better off.

John Fish (919) 696-3474  Email: Marvmax@mindspring.com   Website: www.JohnFish.com (undergoing revision)

US Department of Commerce Census Bureau Says Homeownership Down to 67.5%.   This represents a half point decline from a year ago and is the lowest level since the beginning of the decade.  The decline is most pronounced among younger buyers and African-American households.  The breakdown of homeownership by group is as follows: 74.7% of adult whites owner their homes, Hispanics 48.6%, blacks 46.1%  “all other races” 57.4%. 

MORTGAGE LOAN APPLICATIONS:  Refi’s still rule mortgage activity.  According to the Mortgage Bankers Association refinancings represented 75.3% of total applications last week which was down from 79.7% the previous week.   

Foresight Analytics Chart of Maturing Commercial Debt Is Staggering.  Several times I have mentioned that the third shoe of debt that has yet to be understood by the public let alone take top spot in the evening news is that of commercial debt.  The chart in question shows that future commercial debt that will be maturing is: 2009 - $248 billion  2010 - $270 billion  2011 - $296 billion  2012 - $306 billion  2013 - $303 billion  2014 - $266 billion  2015 - $259 billion.  With all the talk about subprime loans that cripple the home buying public, the mortgage industry, the home building industry and the federal government this debt has strong global implications that have yet to be taken into consideration or understood.  From 2009 through 2013 more than One Trillion 425 Billion of commercial debt comes due!  The amount of the shortfall is likely to be of an amout that will put great pressure on the commercial real estate debt market and commercial property values.  Real Capital Analytics of New York says that the amount of distressed commercial properties, since the end of last year, has already doubled to $49.2 billion.  Real Capital’s definition of a distressed asset is a property with a reported default, foreclosure, bankruptcy filing or lien.  Chicago’s General Growth Properties owns 200 malls nationwide.  One of them is Streets of Southpoint in Durham.  By getting lender’s to extend deadlines on more than $2.25 billion of their debt they have been able to stave of bankruptcy.  So, while the shock wave of unrepaid commercial debt has yet to have a strong local impact, at some point it probably will.  Whether the govenment programs to gather in the so-called toxic assets will curb the pressure or just delay the inevitable remains to be seen.  As always, those with capital are keeping a sharp eye out for values that will allow them to feather their nests by purchasing quality assets at fire sale prices. 

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com (undergoing revision) 

Health Care Benefit Program To Cover The Mentally Deficient - The President And Congress.  After careful consideration of the many bailout programs and ”programs for the people” the Government has undertaken and is proposing the one that seems to make the most sense is that of health care.  It seems to me that Congress has come to the inevitable conclusion that they have collectively gone stark raving mad and they need to put all the health benefits they can in place so that when they are hauled off to the looney bin they will at least have all their mental health bills paid for.  Now you might well say “There isn’t enough money in the world to cover that much insanity!”  Normally you would be correct but then you can’t print money and they can.  Not that I have to prove the point but I will anyway.  Inspector General Neil Barofsky has released a report expressing concern over Tim Geithner’s Public-Private Investment Partnership.  The report, issued today, said “The sheer size of the program ($2 TRILLION -not BILLION - TRILLION) is so large and the leverage being provided to the private equity partner participants so beneficial, that the taxpayer risk is many times that of the private parties, thereby potentially skewing the economic incentives”. 

If you can get beyond the gloom and doom about subprime loans and job losses you would do well to remember that those who bought land and other hard assests for chicken feed during the depression were those who became extremely wealthy when the times got better.  I could go on about that for many pages but then a word to the wise should be sufficient.

SHORT SALES.  Considering what is going on in the economy you might need to consider a short sale.  And what, pray tell, is a short sale?  When a home owner owes more than their home is worth, the homeowner is late making mortgage payments or will shortly be in that position and the wolf (bank) is on the verge of sending you a foreclosure notice a short sale might be in order.  If so, you need to find out what your options are and perhaps use a short sale in order to salvage your credit - or most of it.  When using a short sale a Realtor works with the bank in an effort to get them to take less, perhaps considerably less, than they are owed.  If the bank agrees to a short sale the home owner, in many cases, can be totally out from under.  That is the VERY brief “down and dirty” as to short sales.  There is much for to it than that.  If you are in that position or think you will be in the near future and would like to talk about it, call me or send me an email and I will arrange a time to talk to you about it.

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com (currently under revision)   

Raleigh, North Carolina.  North Hills Expansion Continues Despite Economy.  Driving past North Hills Shopping Center you would not think that the nation’s economy is in bad shape.  The 17-story office building, which will include retail and restaurants, has topped out.  It is expected to be completed late in the year.  The building that will contain 400 apartments and a two-story Harris Teeter grocery store is essentially under roof.  The grocery store and the first group of apartments should also be ready before year end.  The only part of the project that is behind schedule is the hotel.  The Hyatt Summerfield Suites has yet to break ground and the projects developer, John Kane, couldn’t say when that might happen.  None-the-less, it is encouraging to see growth going on in the face of continued economic bad news.

STUPIDITY THERMOMETER SHATTERS AS HEAT FROM THE DUMB INDEX REACHES NEW LEVELS!

President OBummer says the United States is no longer a Christian nation!  Speak for yourself OBummer, not the nation!!  The White House is going to the dogs in more ways than one.

The President and Congress continue to point the nation toward bankruptcy with programs that are totally socialistic and pile up a national debt that is beyond belief.

Universities are supposed to be bastions of free speech and places where young men and women can learn to expand their thinking and understanding - - or at least so the story goes. The University of North Carolina, that so recently covered itself with glory in athletics by winning the men’s NCAA basketball championship, has trampled free speech in a manner that would have received an A+ rating by Himmler.  Tom Tancredo was invited to give a speech opposing in-state tuition benefits to unauthorized immigrants.  Protesters broke a window in the room of the building where he was speaking, hurled profanities at him and police had use pepper spray on them to get him safely away from the scene.  I seriously doubt that any of the protesters are paying for their own education or anything else they have and enjoy.  I also doubt that any of them know very much about the the oppresive laws and conditions in Mexico that cause its people to flee from it.  You would think their anger would be better directed toward opposing that nation’s problems and a drug cartel that kills and destroys lives at an incredible rate.  But, then that would require thinking and we wouldn’t want to do that at a University.  Ah well, so much for free speech.

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com (undergoing revision)

Raleigh, North Carolina.  As previously reported SunTrust Bank bought the north Wake County luxury subdivision - Hasentree - at the foresclosure sale.  Competing bidders then had 10 days to make bids and none did.  SunTrust now indicates they think it is best to keep the project in its entirety and go forward using most of the same players that were in place when Creedmoor Partners owned it.  Thus, Fonville Morisey & Barefoot will handle sales and marketing, East West Partners Club Management of Chapel Hill will take care of club operations and PPM will still handle the homeowners association.  What future roll, if any, Creedmoor Partners will have has not been revealed. 

ROLESVILLE EXPANSION APPROVED - Rolesville, NC grew by another 1,143 acres.  The acreage is within a mile of its current borders.  Wake County commissioners approved the expansion.  Rolesville was North Carolina’s fastest growing municipality in 2006-2007.  Watershed issues are still up in the air.

John Fish (919) 696-3474   Email: Marvmax@mindspring.com  Website: www.JohnFish.com (undergoing revision)