Real Trends is a real estate trade publication published on a monthly basis. In the November 2009 issue they reported a survey they deemed the 5% rule. The survey was conducted through their own independent research with supplemental data coming from research university giants. Simply put, the “5% rule” says that in a normal year 5% of American house holds will purchase a home. According to their findings this has been the trend for the past 30 years and is the anticipated estimation for 2010. Through some technical growth calculation Real Trends further reports that the number households in the US increase by 1.1% each year. With these two statistics they can further project anticipated housing sales out into the future. They expect that it will take till 2024 for home sales to again reach 2005 levels. In this projection I wasn’t quite sure what they meant by “home sales.” I’m guessing they meant housing prices. I sent them an email for clarification and I’ll let you know what they come back with.
Let me bring this home to the Triangle. During the crazy real estate speculation The Triangle, luckily, didn’t get caught in the housing price inflation. There were for sure people that got mortgages who probably shouldn’t have. Also, the temptation to refinance grabbed another group of people. While the price bubble didn’t strike The Triangle, no one has been immune to the recession it caused. All these scenarios are currently being played out in the Triangle foreclosure and short sale market. However, short sales and foreclosures make up a small slice of the total real estate market; about 5% in Raleigh. Compare this to a city like Phoenix where nearly 80% of the homes for sale are either a short sale or a foreclosure and you get a good idea of The Triangle’s real estate health. The Triangle is an area poised for explosive growth over the next 20 years. People who get in now on this real estate market should continue to see the healthy 3-4% appreciation historically experienced in the region.
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