Raleigh Relocation | Moving to Raleigh | Triangle NC Relocation Information: December 2007

Buying a New Home versus Renting

If you're planning a move to the Raleigh area, you're probably asking yourself this question: Buy now, or rent for 6 months or a year and gamble that prices will go down? 

There's more to consider than just the price of your new home.

How much will it cost in terms of personal adjustments?

• How hard is it to find the kind of home and neighborhood you're looking for? 
• Will the kids need to adjust to a new school, church, friends, and then have to do it all over again right after they've settled?

How much will temporary living arrangements cost in terms of cold, hard cash?

• Renting a Raleigh area 2 bedroom, 1 bath, 900 sq ft apartment at $800 per month (a bargain, bare-essentials home) - $9600 over one year.
• If renting a 3 bedroom, 2 bath house in the Triangle, average rent is at least $1200 per month. That's $14,400 over one year's time, plus the extra moving costs and any nonrefundable deposits. 
• Renting a storage unit to store excess household goods from your previous home - $1200 (for a small unit) over one year.
• Paying for a second U-Haul (economy do-it-yourself) to move from your temporary apartment to the home you eventually purchase - $300. (You'll need to move all your belongings from both the apartment and the storage unit - also be prepared to pay for pizza and beer for the group of friends that helps you move - again - or add an additional several hundred to thousands of dollars for professional movers.)
• Did you pack away too much? Add the cost of buying all the stuff that's "somewhere" in the storage unit - dishes, furniture rentals, seasonal clothes...

How much will that new home cost if you wait a year to buy?

• Probably more than you think.
• Average annual home appreciation in the Triangle for a home is about 6%, including the most recent totals for 2007.  Sales are slower, but homes are still appreciating, as they have been, slowly, steadily and predictably, over the past 5 years. 
• According to the Office of Federal Housing Enterprise Oversight, national appreciation over the past five years is 28.5% - about the same as the Triangle. 

It's places like San Jose, CA, that are seeing the downward trend you've been hearing about - and since they've had a 5 year appreciation rate of 87.3% - it's not surprising that home prices there are now correcting.   

Overall U.S. numbers in the 3^rd quarter market reports show that home values have a 1.7% decline from last year. This is represented mainly by problems in the Michigan, California, Arizona, and Florida markets - where home prices had increased to nearly double the levels of 5 years ago, and now are correcting.

Let's look at some different scenarios.  After all, we don't know what's going to happen in the real estate market - but we do know that the Triangle market has not overinflated, that jobs are plentiful, and that thousands of newcomers continue to move here. The Raleigh/Durham/Chapel Hill area remains a top destination, for people wanting great jobs, climate, recreation, education, and people-friendly culture. 

If Triangle homes continue to appreciate at the slow, steady average rate of 6% that they have over the past 5 years - that $250,000 home will cost $265,000 a year from now.  You'll have spent about $11,000 on rent (for that small apartment,) have one less year paid down on your mortgage, and your new home will now cost you $15,000 more than it did one year ago.  If you had bought when you first moved, you'd now have $15,000 equity in your home, along with a year's worth of payments on the mortgage.   

If Raleigh area home appreciation slows down to a mere 2% - less than the annual inflation rate - that $250,000 home will cost $255,000 a year later.  If you decided to rent an apartment and wait and see, you'll have lost a year paying down on your mortgage, spent $11,000 on rent, and your home will cost $5,000 more than it did a year ago.  If you'd bought immediately, you'd have $5,000 in equity, plus again a year's worth of payments.

Worst case (and none of the current trends in the region point this way) - suppose that homes actually depreciate by 2% in the Triangle.  This would mean a unlikely downswing of 9% from last year's 7% appreciation rate - in a market area with lots of movement and lots of buyers.   In this scenario, the home that was worth $250,000 last year is now worth $245,000, or $5,000 less. 

You can save $5,000 on the cost of your new home! Although, of course, you're down another $6,000 on top of that for that $11,000 you spent on an apartment and storage. Not to mention packing, moving, and unpacking the entire household and helping the family adjust a couple of times in one year - and putting your back out (or owing a lot of people who pitched in) carrying those dressers and armoires up and down those stairs.

What other issues should be taken into consideration?

• Renting means first and last month's rent, plus a security deposit, or about $2100 upfront for an $800 per month apartment. 
• Can your family adjust to the smaller living space of an apartment, along with the dual adjustments to new friends, school, church, neighbors?   
• Are you okay with people living on the other side of the wall, overhead, underfoot, and the come-and-go varying hours?
• Does the complex have a limit on parking?  How many spaces do you get?  Covered or uncovered?  Is there room for guests?
• Can you get on calendar at the apartment complex to use the entertainment facilities when you have social gatherings?
• Do you have a pet?  Does the complex care? Don't forget the pet deposit.
• You'll have to contact and set up phone, internet, water, garbage, power, and natural gas twice within a year.  Some utilities require deposits for each location. 

What else can you save if you buy now?

• Motivated sellers may be willing to help with closing costs.  This could save you about $5K.
• Builders are moving through their excess inventory right now - and are slowing down on new starts, as well as getting more stringent with presales.   The deals that have been out there for the past few months in the Raleigh area are going to fade away, because scrupulous builders don't make that much profit to begin with, and they can't stay in business if they're giving homes away.
• The supply of homes in the $200-300K range is actually very low in most locations throughout the Triangle.  Some other price points have higher inventory and thus more room to negotiate.

Take your time, do your homework, use an agent.  Measure costs and savings, both in dollars and peace of mind.   And buy when the home, the neighborhood, and the value feels right.

 

You may also be interested in these popular green building topics:

Green Home Building in the Triangle

What is a Green Home?              

What Is Geothermal?  Geothermal News and Information

Passive Solar Homes and Ideas

 

You've just found the deal of a lifetime - and can increase your net worth in one easy step.   Quick, honey, grab the checkbook - we've just hit the jackpot!  But have you really?

A home builder advertises they're knocking $38,499 off their price!  Wow - that's amazing!   "Originally" $389,900, this home is now "on sale" for $351,401 - $38,499 instant equity, right?  Be careful - like any slash-rate bargain, you might want to check it out before you go for that deal.

Ask for Comps

If this builder is cutting prices locally to recoup losses in other, more stagnant markets like Florida, Nevada, and California, they may have been running these kinds of promotions for a while, which could be reducing the value of the neighborhood.  Ask the selling agent in the model home how the neighborhood is doing, and they may say "Great!"   Ask them to pull comps. If they give you generalizations or change the subject, call up your friendly neighborhood real estate agent (which won't cost you anything - the builder will be required to share their "selling commission" with them - just let the builder know you're working with an agent) and ask the agent for the comps. 

If comparable homes in the neighborhood, on similar promotions, have been selling for an average of $355,450, that $38,499 "discount" on that home that's originally $389,900 isn't as good a deal as it seems.  Any bank or real estate agent, when valuing the home, will not go to the builder and ask how much that home is worth.  They'll pull the past six months of sales in that neighborhood, and compare.  If the average home with similar features and size sold for $355,450, that's what the house is worth.  Your home is valued at $4,049 more than you paid for it. That's something to consider. But it's not $38,499.

While you're at it, ask your agent to find out if the home you're looking at was ever even listed at $389,900 - and if not, what the actual original list price was.     

Read the Fine Print

Read carefully - way down the page on the other end of that 72 point font headline that's screaming "buy now" is the small disclaimer that narrows down the possibility you'll actually get that discount.

Extra-Quick Closing Dates

An advertisement boasts of several homes available at bargain prices. IF you close by three weeks from today.  Are you ready to buy the house and close in less than three weeks? Is your bank?

Large Down Payments

Some of these incentives require down payments of 5-10%, or require that the loan amount be no greater than $417,000 - the maximum amount for a non-jumbo loan (which has fewer qualification requirements).   Do you have that kind of money on hand?

Mandatory Lenders

What is this going to cost - long term? Many builders have their own lending divisions.  They offer reduced prices on homes - as long as you use their lender.  They may even be able to get it closed in 20 days. But what kind of interest rates are they charging? How fast will that profit be eaten away? Ask about the interest rate. If they tell you, "Everyone goes with our lender - it's so easy and of course they're competitive," ask for details.  Then shop around with at least three other lenders.   On a $349,900 home, even a quarter point difference in interest rate will save you $20,596 over the life of the 30 year loan - which may be several times the amount you think you're saving with their bargain price.  If there is a half point difference between their lender and yours, the difference doubles to a $41,192 savings over the life of the loan! Compare this to what you've saved up front, on that bargain price.  

If you're required to use their lender, check on the overall health of the homebuilder. If something should happen to the company, what happens to your loan?  Is that rate guaranteed?  Is there anything in the contract to ensure that your interest rate won't increase by 1, 2 or even more points?  Is massive home discounting a sign that this builder is struggling to stay in business?   You may want to check out their holdings in other areas - and make sure the incentives that they are offering aren't to shore up a shaky position elsewhere. 

Available Inventory - those "Quick Delivery" Homes

What if you want to choose your own floor plan? Check that fine print - the biggest discounts apply only to completed or nearly-there production homes.  You're stuck with somebody else's upgrades - and the bill for that stuff you may not even want. When a builder says, "select homes, only" what they're really saying is that you don't have any say in the selections - or how much those add-ons cost. Be sure to ask a lot of questions, like: "What's the base price of the home?"  "Can I get a detailed list of the options that have already been added?"  

You may find that the "base price" of the home, in that neighborhood, is $309,290.  To get to the "original" price of $389,900, the builder may start with a "lot premium", of anywhere from $4K to $20K.  Ask which lots don't have "premiums" - you may be surprised to find that every lot has a premium - making it impossible to actually buy a home for the base price!  

Is that $389,900 home really worth more than $80,000 over the base price for that model?  Or are you looking at true market value?  Ask for a pricing addendum - on which you can find a line by line detail of each option added to the base price of the home, and the amount charged for each one.  If you've ever done any remodeling, you may be surprised to find, for instance, that "adding" a microwave costs an extra $449. That upgraded carpet is an extra $7921. Hardwood floors cost an extra $8149.   And then there's a lot of little stuff you wouldn't even notice. You may find that even with all those upgrades, you still have linoleum, basic countertops, and very little trim - a typical tract home.  But you're paying for a whole lot more. Was that list of upgrades really worth the extra $70K, on top of the base price and the lot premium?   Are those upgrades going to recoup their value at resale time?  If you've got more upgrades than the rest of the neighborhood, chances are you won't get that money back when you resell.  You'll probably find that the biggest discounts apply to the homes with the most upgrades - which may be nice, but don't count on the overall value of the home being that much higher. 

Ask plenty of questions

Here's a handy list you can take to the builder, when you're ready to have an incentive's chat.

•1.       Can you give me a list of comps for this neighborhood for the past 6-12 months?

•2.       Do I have to use your lender?

•3.       What is your lender's interest rate? 

•4.       How much will I save over the life of the loan by going with my lender, who can offer a lower interest rate?

•5.       What is the minimum and maximum lot premium?

•6.       What is the base price of the home being promoted?

•7.       Can I have a pricing addendum showing all the options in this home?

•8.       Can I make any further changes to the home?

•9.       What if I don't want to make a 10% down payment?

•10.   How healthy is national home builder XYZ?  Are you at risk due to overbuilding in other markets?  Why are you doing so much discounting?

Serious about buying? Think about taking along a real estate agent. The seller pays their commission - not you - that's the way home sales work.  But the agent will work for YOU and watch out for your interests.  They'll run comps for the neighborhood, as well as let you know about other homes in the same price range.

Remember, there's more to a home than its price. Looking for more space, on acreage? Is the neighborhood in the right location, with the right schools?  Need someone to negotiate closing costs?  Want a second opinion regarding that bargain price? A good agent will work to get you the best home for your money. 

 

You may also be interested in:

Jobs in the Raleigh Area

Triangle Area Market Reports - How's The Real Estate Market in Raleigh?

Shopping in the Raleigh Area - What Kind of Shopping Is There?

Raleigh Relocation Package - All About the Raleigh Area!

Which Part of the Triangle is Cheapest to Live?  Property Tax Guide

 

Your New Home - Custom Tile Baths, Kitchens, and More

A Raleigh Custom Home Builder's Guide to Tile Types and Terms 

A landmark of luxury, tile has beauty and functionality.  With a wealth of designs, patterns, and even types of tile, home builders are using tile to create one-of-a-kind bathrooms, kitchens, and more.  

Here are answers to questions about varieties of tile, as well as a glossary of tile terms to use when looking at your next home!

 

If you're planning on having one or more rooms accented by tile, you'll want to know some information about the basic materials, installation, and accent pieces available.

Master Bath Tile Treatment Options

The master bathroom is often the first place in a home to receive a tile treatment.   In custom homes, it's becoming common to see a tile floor, tile shower, and tub with tile surround.      

Tile projects often start with simple squares of tile, whether 4"x4" on walls,  13"x13" on floors, or something in between. 

But even a straightforward square tile application can be dressed up by placing some or all the tiles diagonally.  This requires a more skilled and time consuming installation (and more costly), but the result can be interesting, and seems to draw the eye to the contrast with other surfaces or even with the natural horizontal lines of the walls.

But there is so much more to tile than square pieces - and depending on the budget allowed, a project can be composed of a multitude of different shapes and pieces.   Here is a guide to some of the options:

Tile in Raleigh Custom Homes - Medallions and Inserts 

Sometimes medallions, or inserts, are placed as accents at the corners of 4 tiles - a corner is cut from each of the four main tiles, and the medallion is placed in the resulting "square", at a 45 degree angle. 

These are small squares of tile that contrast with the larger main tiles to draw attention.  They can be highly decorative 2"x2" squares with raised or inlaid designs, small mosaics consisting of 4 pieces on a backing, metallic or glass, or even just a smaller version of the large tiles used in the main part of the project.   The most basic inserts can be an inexpensive way to add variety to a project, depending on the number used. 

Tile in Raleigh Custom Homes - Mosaics

Mosaics are quite popular accents as well.  They have many uses.  Sometimes used in shower floors, they can also be cut into strips two or three units wide and used as borders or accent pieces on backsplashes, across thresholds, or on walls.   This can be a slightly less expensive way to add color and texture to any project.   Mosaics can even be divided into squares of 4 pieces, and used as inserts as described above.  Pictured is a mosaic used as a border between horizontal and diagonal tiles in a kitchen backsplash. 

Tile in Raleigh Custom Homes - Chair Rail 

Chair Rail can be used at eye level on a shower wall to add an interesting texture, or to mark a difference between horizontal and diagonal tile placement, as shown here.  

Chair rail is usually between 2 and 3 inches wide, and 8 to 13 inches long, and has a rounded, 3 dimensional look. 

It can also be used around a tub:  either around the base, or around the upper part of the tub surround. 

Because a chair rail piece is fairly large and ornate, and must be made using a special process instead of a typical basic tile mold, using these will add  a moderate to significant cost to the project. 

 

  

Tile in Raleigh Custom Homes - Listellos

Listellos are decorative pieces used on floors or walls. 

These pieces are between 2 and 4 inches wide, and between 8 and 13 inches long.  They are often etched with decorative floral or artistic patterns, raised or inlaid, and can be the most expensive pieces included in any tile project.   

Listellos are often more colorful than the rest of the tile used, which helps them stand out even more.   Care must be used in choosing listellos - because of the additional color applied to many of these, it can be difficult to find a color match to the main tiles. 

 

Tile in Raleigh Custom Homes - Bullnose 

Bullnose tiles are made especially for edges, such as on this tub surround.  These tiles are generally 2-4" wide, but not as decorative as listellos or chair rails.  There can be some color variations from the main tile.

Tile vendors now produce additional products as well - customers can order soap dishes, shelves, and even towel bars crafted out of coordinating tile, for a luxurious and seamless master bathroom.

 

Art Accents

For the kitchen, art accents have been popular.  These are really paintings done on tile, composed of anything from a single 4x4 insert painted with a grape cluster, to a 16x24 mural composed of 24 individual blocks and painted with a full Tuscan scene of grapes, wine bottles, and trailing vines.  

If you've already budgeted for a custom tile backsplash in your kitchen, adding a few inserts above the stove is usually a possibility.   If you want a full mural, be prepared to increase your expenditure significantly. 

Tile can be used in many different areas of the home.   Some custom homes have secondary bathrooms with tile floors and tile tub surrounds with a standard porcelain tub.   

Tile floors can be found in kitchens, breakfast rooms, laundry rooms, even occasionally on patios or foyers.  Fireplaces are another common place to find tile - a tile hearth and surround gives a polished feel to today's gas fireplaces. 

 

 

 

There are many different kinds of tile available today.   Ceramic tile is most commonly used, but it's useful to know all the basic tile types.

Types of Tile - Ceramic Tile

Ceramic tile is known for its durability, resistance to dampness, affordability, and ease of cleaning.   It's safe to walk on when wet.   

Sealant should be applied every 4 years or so, but when sealant is properly applied tile is very water tolerant - you could even hose it off!   Made from slabs of clay, ceramic tile is fired for hardness.  

Check before using ceramic tile outside - it needs to be extra strong to tolerate expansion and contraction from temperature changes.   Glazed or unglazed, smooth or textured, and available in a wide variety of colors and styles, ceramic tile is the builder's choice for most tile floors, walls, or accents. 

Types of Tile - Natural Stone

Natural stone  - quarried slate, limestone, flagstone, granite,  or marble - can be cut into tiles, even though all of these are better known as full countertop materials. 

Each has it's own pros and cons - for instance, marble is known for its beauty, but it is expensive, requires a lot of maintenance, and can crack, stain, or mark easily.  No wonder they don't let us touch the marble statues at the museum!  Slate is noted for its beauty and long life, but it is soft and can split. 

Granite is durable, dense, and strong, but is mainly formed into basic tiles with few additional options.   

Natural stone is also one of the most expensive types of tiles, and some materials require more care and sealant due to natural permability.   Because these stones are created in nature, no two rooms will ever look the same. 

Cement Tile - Types of Tile

Cement  tile is created by pouring cement into molds, then finished by firing or natural drying.  Color may be added.  A strong sealant must be applied in order for cement tile to resist stains.  This type of tile is not as common.

Porcelain Tile - Types of Tile

Porcelain tile is made from material similar to that used for ceramic tile, but it is fired at a very high temperature, which makes it denser and more resistant to moisture.  It is fine grained and smooth, and can be matte, unglazed, or highly polished.  It is stronger and more durable than ceramic tile.   As better processes for creating porcelain tile are found, it is becoming less expensive and more common. 

Terrazzo - Types of Tile

Terrazzo - a cement or epoxy base is used, in which stone or marble chips are imbedded.  The surface is then highly polished.   Terrazzo is known for its unique beauty, style, and permanence, but it is expensive and can be somewhat slick to walk on. 

Saltillo (Mexican Tile) - Types of Tile

Saltillo (Mexican tile) - these tiles are generally handmade and air dried, thus they are a little softer and less durable, but with a unique look from exposure to elements.  When used indoors, the tiles must be sealed - some come sealed from the manufacturers. 

Terra Cotta - Types of Tile

Terra Cotta - think of  "clay garden pots", and you'll have an idea of the natural rich reds and oranges from the clay base.  These tiles are absorbent, and most often used on patios.  They must be sealed for indoor use.  Be careful, there are wide variations in quality. 

Agglomerate - Types of Tile

Agglomerate - Another textured tile, created by mixing graded marble or granite chips with portlar cement, polyester resin or epoxy. 

 

Glass Mosaics - Types of Tile

Glass mosaics - These are becoming very popular.  In shades of blue, green, brown or even clear or translucent, glass mosaics provide a unique, if not natural, look. 

These tiles usually are ¾"x3/4", and come in sheets roughly 12"x12" for application. 

This look can be expensive, but glass tiles can also be coordinated as medallions or accents with full size ceramic or other tiles. 

A luxurious tile floor, shower, or bathtub surround provides long lasting beauty and durability in any home.  Visit tile showrooms and model homes for ideas if you're building from the ground up or remodeling, or ask your local builder if they will work with you to provide just what you're looking for.

 

 

 

Click on the links below for more new home master bathroom and kitchen tile trends, ideas, and styles

Tub Surround Tile Ideas - Photo and Tips

Kitchen Tile Backsplash - Today's Top 5 Designs

Custom Home Master Bath Design Ideas

Custom Home Design Build Ideas - How to Design Build your New Home

Kitchen Tile Backsplash Ideas - 2012 Kitchen Trends

Top 10 Master Bathroom Trends - Ideas You're Going to Love!

 

Looking for a new home under $400K in the Triangle?

Raleigh Custom Homes

 

Far from the "slump" apparent in other areas of the country, The Triangle housing market remains strong - especially in new homes under $400K.

Home prices are still appreciating at a slow, steady pace - the average sales price in October was 5.6% higher than a year ago - and homes are selling at 97% of list price.  

A home in the Triangle remains a safe, sound investment - and Stanton Homes CEO Stan Williams has been answering some oft-asked questions about supply and demand.

"While changing standards for jumbo loans have slowed the pace of steadily climbing gains for homes priced above $400K, inventory of lower priced homes is still moving well and is actually in short supply," said Williams.

"While it's true that there's been some adjustment from the extremely brisk sales of 2006 and 2005, it's obvious that this region continues to be a huge draw for buyers," said Williams.  "Buyers expecting prices to drop in the $200-$400K supply may be in for a surprise.  These homes continue to sell at 97 percent of value or better - as they always have. We're building as fast as we can but we're anticipating that by Spring, there won't be enough new homes available in that price point to meet demand."

Although the past two years showed higher overall totals, Williams said that this year's trends - even in higher priced homes - remain solidly aligned with big picture averages.

The first three quarters of 2007 saw 6444 closings in Wake County.  This is down compared to the record 2006 and 2005 years, but up 18% from 2004's 5455 closings, up 37% from 2003's 4702 closings, up 91% from 2002's 3382 closings, and up 100% from 2001's 3226 closings, in first three quarter comparisons according to public records. 

"Clearly, the overall trend reflects a much healthier direction than many areas of the country," said Williams.

The overall Triangle market has a 5 month supply of homes - squarely in the middle of the five-to-six month supply that the industry considers to be the best balance for buyers and sellers, according to the TARR Report (Cary/Apex/Morrisville Markets.) 

According to the various recent TARR reports, the overall Wake and Chatham County supply of new homes in the $200K - $400K price range varies from 6 to 2 months, with the lowest inventory in the most desirable areas and the most desired price point of $200-299K.  

Total jobs in the area have increased 2.3% in the past year. 21,000 new potential home owners are moving into the area. Those already living here will continue to trade up or trade down as their family needs change.

"The Triangle market is exceptionally well balanced right now for both buyers and sellers," said Williams. "It's an exciting time."

 

You may also be interested in:

Most Up-to-Date Raleigh Market Reports - How is the Housing Market in Raleigh?

Wake County New Home Communities

Wake County NC New Homes

Wake County NC Property Tax Rates 2011