Thursday, October 23, 2008
Residential housing priced at $500,000 and above is currently oversupplied, according to the Second Quarter 2008 Triangle Area Residential Realty Report published by S.M.A. Publications, Inc. The report uses data from the Durham, Orange, Chatham and Wake County Revenue Departments to support their findings.
The 2005 market on the fringe of having an oversupply in the luxury sector, and by 2008 luxury inventory grew 130% and sales simply couldn’t keep up. Realtor.com showed 991 luxury listings at the end of he second quarter in 2005, and by the same time in 2008 those listing had increased to 2,279. Between 2005 and 2008, North Raleigh and Southwest Wake had the highest percentages of growth in the luxury sector at well over 2005 each, with Durham at over 150%. While homes sat on the market an average of 9 months in 2005, the current supply is now at 17 months.
This growth in the luxury segment has reached a point that it is not healthy for the market. In 2005, increasing costs of land and development led developers and builders to create many luxury priced communities, resulting in an overflow of homes that the 2008 market cannot currently support.