What are folks paying for gas and housing these days?
Gas prices hover over the $3 mark at a gas station in San Francisco on Friday, April 15, 2005. Propelled by a surge in the price of gasoline and other energy products, producer prices shot up 0.7 percent in March, the biggest jump in five months. The Commerce Department reported Tuesday, April 19, 2005. (AP Photo/Marcio Jose Sanchez)
What are you shelling out at the pump these days, as Chimpy watches his economy spiral? Kate found a station in Raleigh last week at $2.11. At the Durham Costco this weekend it was $2.16. I don’t see fewer SUVs on the road yet, though it’s hard to find a hybrid if you wanted to trade in your behemoth.
Commerce is also reporting the jump in interest rates is slowing the housing boom. (ABC):
Commerce Department said construction of new homes and apartments fell by a surprisingly sharp 17.6 percent in March to a seasonally adjusted annual rate of 1.84 million units.
That decline was much larger than the 4.8 percent drop that many analysts had been expecting and could signal that the moderate rise in mortgage interest rates is beginning to have an impact on the housing industry.
Here in the Triangle, it seems like there is no end to the housing boom. In the southern area of town, there are more developments going up than I can keep track of. I don’t know where all these people are coming from. Housing prices have soared, but given House Blend readers live all over the place, it would be interesting to hear the range of what is perceived as “soaring.”
“Soaring” in my case, is what I’ve seen over the course of the last 10-15 years. I purchased an in-town 3 BR/1BA 1940 Craftsman bungalow in the central part of town in 1993 for $68K. It was in an progressive, old-millworkers’ neighborhood called Old West Durham, located near Duke’s East Campus, within walking distance of the Ninth Street, the informal gay/bohemian/student district. Most of the homes there are for the DIY types, with always something to fix or update. When I grew tired of DIY in 2003, by that time the real estate market was HOT in this neighborhood. I sold the place as-is (meaning I didn’t paint or do the cosmetic stuff one normally does before selling) for almost double what I paid for it. That’s insane.
That said, you can still find a three-bedroom/one- or two-bath house in Durham for under $90K. It would likely be in the northern part of town (not as close to RTP, where many people work), or in the older, central part of town. Folks that want large lots will find it in northern Durham. But, the point is, there is still entry-level, non-shoe box housing available.
Most of the next level of housing stock in Durham, resales of newer existing homes (>10 years old), falls into the $150-$225K range. There’s a lot of turnover in this market, though not as much as I’ve seen in the recent past. A lot of people must be sitting on these investments as new construction goes up. Unfortunately, a lot of houses in the newer developments are easily >$225K. These are not quite McMansions, those run >$400K in these parts.
Kate and I like to drive around the area and go into these newer houses to see what people are getting for their money. Of course the models are upfitted with every possible option to entice buyers. Most new construction tends to be two-story affairs on really small plots of land. You’re almost SOL if you want a one-level house. These structures seem to go up overnight; I wonder about the quality of these dwellings. The developers squeeze as many houses as they can, and often on crappy lots — like ones situated on a hill precariously near a steep drop, or on slopes that are erosion nightmares.
All I keep thinking is that many of the buyers are probably financially overextending themselves to get into these new, bigger homes. Once you add all the options, that price tag rises fast. Many of these purchases have to hinge on two incomes; they are one layoff away from losing that McMansion. One thing I don’t know is the level of no-interest lending in this area – I’m assuming there is a lot of creative financing going on that is putting folks in precarious positions.
I don’t want to leave out apartments. It’s a transient enough area — with universities, hospitals and high-tech here — that they keep filling apartments as well. Prices are all over the map. You can pay as little as $500-$600/mo for an older place, all the way up to a staggering (for these parts), $1200-$1500/mo. That’s ridiculous, given you could own for that price, but since there are people that may be here on a contract job in RTP, apparently they are willing and able to shell that out.