As Wake County residents, we have seen different market cycles since the year 2000. we experienced a recession in the early 2000s, a strong market in the mid-2000s, and then another crash in the late 2000s. The real estate market in Raleigh as of late has been much different than in the last two decades. We have experienced a major pandemic which has caused more buyers to search for homes with office space. The needs of buyers and sellers have changed dramatically over the last two years. Below we will tell you what you need to know about the current real estate market in Raleigh.
Inventory Shortage
Since the great recession of the late 2000s, new construction housing began to slow. This has lead to an inventory shortage in the early teens. This shortage has gradually accelerated as the population of Wake County has crossed over one million. Raleigh NC has always been an attractive location for people migrating from states where the cost of living is too high (New York, California, Etc).
As of February 2021, the Triangle Multiple Listing Service has reported 1,162 inventory homes for sale which is a 68.4% decrease from last year. Also, the month’s supply of inventory has decease to less than one month! A six months supply of inventory is considered to be a balanced market. Low-interest rates are also pushing buyers into the market that may not have otherwise been able to afford as much housing.
All these factors have combined to create a legendary seller’s market. According to the Triangle MLS market trends report, the average price of a home in Wake County recently crossed $400,000.
Read on to discover what should know about the real estate market in Raleigh.
The Good & The Bad of Bidding Wars
While it’s true that a seller’s market benefits the home seller, there is a downside to this scenario. As buyers are becoming more acclimated to submitting offers over and above the listing price, sometimes ten thousand dollars or more, this can have unintended consequences later on. First, the home may not appraise at the contract price. This means that the lender will not loan based on the contract price but on the appraised price. This causes the buyer to have to bring more money to closing which may lead to the deal fall apart at the last minute. It’s worth mentioning that the buyer will often be entitled to a return of their earnest money deposit if the property does not appraise at the sales price. Second, many buyers have become frustrated by losing out on bidding wars and have either elected to stay on the sidelines or go to new construction developers and build a custom home.
Unsustainable Appreciation
Houses prices in Wake County have been increased more than 11% over the last year. We have observed the appreciation rate to gradually accelerate each year.
This won’t go on forever . . .
There are two things you need to be aware of. First, the moratorium on evictions and foreclosures will eventually be lifted. Borrowers’ ability to repay was damaged due to the recession triggered by the coronavirus. There are many homeowners who are already a year or more behind on their payments. Around 2.75 million mortgages are in forbearance under the CARES act’s protection at this time, with approximately 10 percent of all FHA-backed mortgages more than three months behind on payments. Eventually, these houses will have to be sold to repay the loans. This means may see a large chunk of inventory hit the market sometime this year. Secondly, many first-time homebuyers facing the rapid jump in listing prices cannot afford the average home. Raleigh home sellers should be acutely aware that the current rising price trend on the real estate market in Raleigh cannot continue indefinitely, and the real estate market will be due for a correction. I am avoiding the term “crash” here because I don’t believe housing prices in Wake County will “crash.” I believe that changes in the marketplace will cause the levels of appreciation to flatten (Meaning fall below 5% on average). But this doesn’t mean that all houses in the area will lose more than 10% of their equity.
Avoiding the Risks of Selling
Avoiding selling for too long may mean that sellers miss out on this rare opportunity to strike while the market is at or near its peak. When it comes to traditional listings, a significant number of people simply do not want to take the risks of meeting with strangers to negotiate or do business. Many would prefer not to have showings during the pandemic because of potentially ill buyers walking through their homes. With stress already at an all-time high for many, the mere thought of the additional pressures of selling a home, especially when school and work are home-based, is too much to consider. Raleigh home sellers should know that there is another way to sell their home on the real estate market in Raleigh, by selling to a direct buyer like Wake County Home Buyers.
Ready to learn more about what Raleigh home sellers should know about the real estate market in Raleigh? At Wake County Home Buyers, we are here to listen and help you handle all of your problems. With fair prices, straightforward easy to understand contracts, and quick closings. Working with Wake County Home Buyers means there’s no need to delay selling any longer! Wake County Home Buyers will walk you step by step through the process and help you determine what is best for you!