As I've argued before (and here), the problem is exacerbated in the Raleigh/Wake County area. There was once a flood of people moving to Wake County from areas like Washington, DC. (Raleigh was the #1 destination for people leaving Fairfax County, Virginia), Long Island, NY, Chicago, LA, etc., all areas affected by the real estate bubble in the form of escalating prices. They moved to Raleigh flush with cash from the sale of their homes in those areas and demanded big homes here. Builders obliged.Home sales have plunged over the past year, leaving builders saddled with excess inventory, especially of larger, more expensive homes. In July, new-home sales were running at a seasonally adjusted annual rate of 870,000 units, down sharply from 1.3 million in 2005.
Now that the bubble has popped, the demand for these larger, more expensive homes is gone, yet builders continued to build big. Too many people, most notably the real estate profession, argued that this area was impervious to the housing bubble - keep building. Had the Treasury and the FED not recapitalized the banking sector, banks would have been forced to call in loans of builders and foreclose on many of the homes that have sat empty for two or more years. They've simply prevented the market from clearing.
The big concerns in this area are 1) the thousands of homes for sale in the $400k+ range; 2) the shadow inventory (homes that are sitting vacant but not on the market, or homes currently being rented only to keep them off the market for the time being), and the partially finished developments of $500k, $700k and $1 million homes that dot Wake County. The median household in Wake County cannot afford the median home on the market, much less an increase in what is already idle. If you purchased a big expensive home in a partially finished development, don't be surprised to see a home half the value of yours being built next door in the next few years.
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