It is that time of year that we look into the crystal ball and see what we believe the real estate climate will look like in the coming months.  Here are some thoughts about real estate in the Triangle in 2011.

Beginning mid-2010, the Triangle residential real estate industry was poised for a slow economic recovery. Thanks to a relatively healthy job market, historically low mortgage interest rates and the (now expired) homebuyer’s tax credit, that prediction largely came true.

The population growth and overall strong economy in the Triangle continue to be positives as we look ahead. However, to employ a now overused phrase, we’re not out of the woods yet. We enter 2011 optimistic but with our eyes wide open.

Recent accolades include a #1 ranking for “Strongest Job Market in the Nation” from Manpower. Combine that with the area’s lengthy winning streak for “Best” rankings:

• “Best Place to Live in America” (Cary, CNNMoney.com)
• “Best Quality of Life” (Raleigh, Portfolio.com/bizjournals)
• North Carolina’s high ranking as “Best State for Business” (Forbes)

… and the region has the foundation to allow it to emerge from the housing malaise early…possibly by late 2011. There are a couple of significant factors to watch.

First and foremost, how will the increase in the number of foreclosures impact this real estate market? The jury is still out, but the indications are that distressed properties, which include short sales and foreclosures, will remain more of a niche market and account for less than 10% of active (for sale) inventory in the Triangle. However, any surplus of foreclosures will continue to bring down home prices. The silver lining there? The affordability of housing for individuals relocating to the Triangle improves dramatically.

The second factor of concern is consumer confidence which continues to lag behind other positive economic indicators. Even in the optimistic and vibrant Triangle region, a sluggish consumer confidence index is keeping too many potential homebuyers on the sidelines. However, as the labor market continues to improve, look for the “pent-up demand” to create a much healthier housing market by late 2011.

Jobs will continue to tell the tale. Forbes magazine recently turned to real estate research firm Local Market Monitor to determine which markets have the greatest likelihood of future housing price appreciation due to their mix of jobs weighted toward growth industries. According to that research, the Raleigh-Cary Metropolitan Statistical Area (MSA) bested all the rest, including Austin, Nashville, and Denver. And when you also consider our region’s stable employment base in state government, health care, and world-class universities, the stage is set for more healthy growth and a better year for residential real estate in 2011.