by Mariana Byrd
Since the start of my real estate career seven years ago, I have focused on helping clients sell their townhomes.
From my experience, and in general, the townhome market tends to be more cyclical than the single family home market. A large majority of townhomes are bought by first-time home buyers in the spring/early summer. In our market, graduate students, medical residents, etc make up a large portion of townhome buyers because of price range and ease of having minimal to no exterior maintenance and landscaping to maintain. Therefore, one of the best times for selling a townhome is in the spring/early summer when schools are being decided upon and transitions are made.
Between 2002-2007, as in most areas, we began to see an increase in new home developments. In 2001, the major townhome developments in SW Durham were Woodcroft, Woodlake, and Darby Glen. Between 2002 and 2007, we saw the following new townhome neighborhoods be developed in SW Durham: Auburn Square, Park at Auburn, Chancellor’s Ridge, Cambridge at Wyndcross, Thaxton Place and Elm Grove in Hope Valley Farms, Lochside, and Southpoint Terrace. These new developments added 842 new townhomes in the 27713 zip code alone. They were quickly bought up by buyers.
Before the mortgage meltdown in the fall of 2008, many buyers were able to finance loans close to, or at, 100% of the sale price. Therefore, many needed little, if any, down payment to buy their home. This was great for most students/residents since it allowed them to buy a home thereby contributing to a thriving townhome market.
Fast forward to 2009, due to the overall economic recession, tighter lending practices, and low consumer confidence (first half of 2009), the number of townhomes that sold in Durham County was 17% less than in 2008 (per the Triangle Multiple Listing Service). SW Durham, specifically zip code 27713, experienced a 28% decrease in closed transactions in 2009 compared with 2008. The “worst” economic, and thus fearful time (i.e., low consumer confidence), occurred during what should have been peak selling season for townhomes in our area. Therefore, a large contributor to the drop in townhome sales was due to their cyclical nature.
I am hopeful that this year will be different for several reasons:
- The first time home buyer tax credit will be in effect during the peak selling season for townhomes. Allowing first time home buyers, as well as those sellers that are buying another home, to possibly take advantage of up to $8,000 in tax credits (see previous blog by Jessica Sadler for more info).
- The economy as a whole is in better shape now than this time last year.
- Our area has fared better than most with regard to the local real estate market (see Courtney James’ previous blog). This will only increase consumer confidence and allows buyers to feel more comfortable investing their money in real estate.