With the coronavirus impact, there is a lot of anxiety about the economy and equity in people’s homes. Many homeowners have asked me if their homes will appreciate in 2020, or if home prices will go down.
To answer this question, we need to look at local market data. Also, we need a reliable and consistent source of data, preferably a local source. Finally, we’ll need to analyze this data and draw a sound conclusion.
Does that sound technical and yucky? I get it.. I’m more interested in getting to the bottom line rather than reading endless reports and market studies, so I’ll try and make this quick and painless.
What Does It To Mean To Appreciate?
It means that a home is worth more now then it was at a previous point in time, usually measured in increments of a year.
Where Should We Get Our Market Data?
There are many sources of data that report average home prices in a given city. So if you do a search for average home prices in Raleigh NC you will come across the larger data providers such as Zillow, Redfin, Trulia, etc. The challenge is that all these sources seem to report different numbers. As a result, I prefer to use a local, standardized data source such as the Triangle Multiple Listing Service (TMLS). While they only report data on houses that are listed for sale in the MLS, the data follows a uniform pattern making the numbers more precise. Especially for the local, as opposed to the national, marketplace. To answer our initial questions, we will be using data from the TMLS.
What Data Points Will We Use?
- Average Sales Price
- Median Sales Price
- Inventory Levels
- Showing Data Relative To Price Point
*Data Courtesy of Triangle MLS Market Trends Report
| April 2019 | April 2020 | +/-(%) | |
| Avg Sales Price | $358,408 | $382,309 | +6.7% |
| Median Sales Price | $318,952 | $344,135 | +7.9% |
The median sales price increased by +7.9% from $318,952 in April 2019 to $344,135 in April 2020–a very positive sign.
The average sales price increased +6.7% from $358,408 to $382,309 during the same period. What stands out to me is that both of these numbers are both above 5%, a sign of strength in the market.
What’s the difference between the median home price and average home price? I answer that in more detail in this post.
Average Sales Price: is calculated by adding up the sales prices for homes sold in a specific area and time frame and dividing that number by the total number of sales in that set.
Median Sales Price: The price of the sale in the middle of a data set when you arrange all the sales prices from low to high.
Are you confused yet? haha, don’t worry. All you need to know is never to compare the average sales price in a given period with a median sales price from a different period because it will skew the data. Apples to apples, oranges to oranges.
We can see that prices of gone up over the last year. But what about the impact the coronavirus has had on the Raleigh NC real estate market?
To answer this question we’ll look at changes in price from March 2020 to April 2020. As the stay-at-home orders were issued in late March.
*Data Courtesy of Triangle MLS Market Trends Report
| March 2020 | April 2020 | +/- (%) | |
| Avg Sales Price | $369,430 | $382,309 | +3.37% |
| Median Sale Price | $334,433 | $344,135 | +2.82% |
As you can see above, the median sales price was $334,433 in March 2020 and increased to $344,135 in April 2020, for a total increase of 2.82%. The average sales price of $369,430 rose +3.37% to $382,309–awesome!
Do we have our answer?
Let’s look a couple of more things before we come to a definitive conclusion.
*Data Courtesy of Triangle MLS Market Trends Report
| Inventory | April 2019 | April 2020 | +/-(%) |
| Inventory of Homes for Sale | 4,079 | 3,497 | -14.3% |
| Months Supply of Inventory | 2.4 | 2.0 | -16.7% |
Notice how the inventory numbers are down from last year? The number of homes listed for sale decreased by 14.3% from 4,097 in April 2019 to 3,497 in April 2020. Note that this only includes homes listed on the TMLS and does not include private sales. What this means is that there is less inventory on the market to supply the demand for housing.
The supply of homes in months refers to how long it would take all of the current inventory to sell assuming nothing new came on the market. We see a decrease of 16.7% which suggests a shortage of supply.
If you’re wondering about the supply levels during this year the reports show 3,411 houses for sale in March 2020 and a slight increase to 3,497 in April 2020. I don’t think this is positive or negative.
Therefore, given the above data there is strong evidence of home appreciation over the last year, and since the outbreak of coronavirus. You may be thinking to yourself ‘Will MY house appreciate in 2020?’ It’s true that the data provided are for Wake County as a whole including $50,000 condos as well as luxury houses listed at over $600,000. Let’s look at the showing data for these different price points.
*Data Courtesy of Triangle MLS
| Price | Total Showings | % Of Showings At This Price | Weekly Average | Showings per Listing | |
|---|---|---|---|---|---|
| $150k – $199k | 2,072 | 10.88% | 483.47 | 8.74 | |
| $200k – $249k | 2,952 | 15.50% | 688.80 | 8.15 | |
| $250k – $299k | 2,710 | 14.23% | 632.33 | 6.08 | |
| $300k – $349k | 2,556 | 13.42% | 596.40 | 5.67 | |
| $350k – $399k | 2,010 | 10.55% | 469.00 | 4.79 | |
| $400k – $449k | 1,467 | 7.70% | 342.30 | 4.43 | |
| $600k – $649k | 315 | 1.65% | 73.50 | 3.84 |
The price point that is receiving the most showings is clearly $200,000 – $250,000, which is the most popular in Raleigh, and in Wake County NC in general. I see this conclusion in the data and in my own experience.
We recently sold one of our renovation projects in North Raleigh, 27616. We priced it at $235,000, and in one week, we had 50 showings and 18 offers ranging from $233,000 – $246,000 ($11,000 above asking price!). It’s worth mentioning that this house had all granite countertops in the kitchen and both bathrooms, as well as luxury fixtures making this home very desirable.
So let’s answer the question…
Will my house in Raleigh, NC appreciate in 2020?
I think houses in the $200,000 to $250,000 price point will appreciate this year. I think that homes that are valued in this range will see the most appreciation out of all the ranges listing in the showings report. I think homes, on average, in the $250,000 – $399,000 range will also do well. I’m not sure the home priced at $400,000+ will have the same result. There is a sharp decline in showings beginning at the $400,000 mark. Also, my experience and the feedback I get from colleagues in the industry are that buyers at the $400,000 price point are much pickier.
I hope you found this article to be helpful. Feel free to post your questions below. If you have a house that you are looking to sell directly visit our contact us page, we look forward to speaking with you