RALEIGH – Across the Triangle, median home prices continued to accelerate in March, pushing housing affordability to a new all-time low. Making matters worse: mortgage interest rates are climbing, too.

First, here’s the latest on home prices:

A new market trends reports from the Triangle Multiple Listing Service reports that the median home sale price across the region was $394,950 in March 2022, up from $317,950 the year before.

That’s a difference of $77,000, or 24.2%, in just one year, the data shows.

While prices increased by 24.2% in the region between March 2021 and March 2022, affordability has decreased by 23.3%.

Each month, the Triangle Multiple Listing Service releases its Housing Affordability Index, which measures affordability for housing across the entire region.

“For example, an index of 120 means the median household income was 120% of what is necessary to qualify for the median-priced home under prevailing interest rates,” the report reads.  “A higher number means greater affordability.”

In March 2021, the index was 108.

Last month, the index reached another all-time low: 82.

Triangle homes have never been less affordable

Home prices up – again

In Durham County, the median home sale price surpassed $400,000 for the first time on record, and is now $410,000.  Compare that to the median sale price in March 2021, $325,000, and the difference is $85,000 or 26.2%.

And in Wake County, the median sale price has increased by nearly $90,000, more than the typical annual household income in the county, in one year’s time.

Last March, the median home sale price in Wake County was $360,500.  In March 2022, that had increased 24.8% to $450,000, an increase of $89,500.

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Mortgage interest rates are up, too

Mortgage interest rates rose steadily throughout March 2022, and have done so again in April 2022.

As of Thursday morning, a weekly survey on mortgage rates conducted by Freddie Mac found that the average rate of a 30-year fixed mortgage is now 5%.  That’s an increase of .28 percentage points in the last week, and nearly two percentage points since last year.

At the beginning of March, though, typical mortgage interest rates were at 3.76%.

A Redfin analysis of the Raleigh real estate market found that an interest rate increase of just 0.4% would change the purchasing power of a homebuyer relying on a mortgage to finance the acquisition of the property by $13,500.  In six weeks, mortgage interest rates are now up by about 1.25 percentage points—three times the size of an increase the Redfin analysis used.

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Spring market ahead

“People think that with interest rates increasing, it will slow the market,” said Linda Craft, a licensed real estate agent and broker-in-charge of Linda Craft & Team, REALTORS, in an interview with WRAL TechWire recently. “But it won’t.”

Think about who is involved in a real estate transaction: one seller and one buyer.

And housing inventory remains historically low, with the Triangle Multiple Listing Service data showing that there were 2,093 homes for sale in the entire 16-county region in March 2022, enough for just two weeks of housing market activity.

Inventory remains low in Durham County and Wake County as well.  The reports from TMLS show just 283 homes in Durham County and 774 homes in Wake County.  That figure in Wake County is nearly 40 percent lower than at this time last year.

“Right now, we put a house on the market, and often, we’ll have 20 offers on the house, with two or three before it hits the market,” said Craft.  “That means if we got 20 offers on a property, 19 people lost.”

While some are hopeful that more homes will come on the “spring market,” there’s a possible conundrum: while potential home sale prices are high, the cost of buying a new home has increased as well.  So have interest rates.

That may change the equation for some existing homeowners, Craft noted, who would sell, but only if they were able to find an affordable option that better fit their needs.

“The only thing that would stop appreciation is if more homes come on the market,” said Craft.  “But even if more homes come on the market, it won’t stop appreciation, it could slow it.”

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