RALEIGH – A new analysis of real estate data from 90 metropolitan areas shows that Raleigh’s housing market is steady, even as other regions see indicators that their local real estate markets are slowing or are falling precipitously.
The study, published earlier this month by national brokerage firm Redfin notes that the 10 housing markets that are experiencing a cooldown are all western metropolitan regions, while many midwestern and traditionally affordable northeastern markets remain among the markets that have cooled the most slowly.
But that’s also because those midwestern and northeastern markets may not have seen a run-up in housing prices during a pandemic boom time experienced in places like Boise, Idaho or Austin, Texas.
Still, the Redfin analysis notes, “no market is heating up.” Even in the Triangle, where median home sale prices in Wake County hit a new record high last month, there are some indicators that the Triangle’s real estate market may be slowing.
What’s causing the cooldown
Why? One factor: Increasing mortgage rates for borrowers who rely on a mortgage in order to finance the purchase of a home.
The rapid run up in typical mortgage rates, which have nearly doubled since the beginning of the year, is among the leading factors of why real estate markets nationally are experiencing a cooldown, according to the authors of Redfin’s study.
The latest data from Freddie Mac shows that typical mortgage rates on a 30-year fixed mortgage increased compared to the prior week and is now 5.54%.
Nationally, the change in mortgage interest rates resulted in surging housing costs on a monthly basis, at 45% year-over-year, according to a Redfin analysis. As mortgage interest rates increase, the cost of borrowing money to finance a home purchase increases, as well, which could result in would-be homebuyers losing purchasing power. A study of Raleigh’s housing market released by Redfin earlier this year found that Raleigh homebuyers could lose $13,500 in purchasing power with a rate increase of 0.4%, and that was if housing prices didn’t increase.
“Our national outlook for the housing market is that sales will continue to slow,” said Taylor Marr, deputy chief economist at Redfin, in an interview this week with WRAL TechWire, “but some of the early indicators of demand are stabilizing.”
Raleigh: ‘Chugging along’
The current consensus among Redfin’s economists, said Marr, is that housing has largely already undergone a lot of the adjustments due to the country’s macroeconomic environment with higher interest rates and inflation weighing on housing.
So, said Marr, the rest of the economy may actually follow the housing market should the country enter a period of economic decline or a recession.
But while there are some metropolitan regions that have been highly reactive to rising interest rates, causing a significant cooldown in the indicators tracked by Redfin, Raleigh is not among them, said Marr.
“Raleigh is chugging right along,” said Marr. “Raleigh is basically the typical metro across the U.S. as the whole United States market has been adjusting.”
Of the 90 qualifying metropolitan areas analyzed in Redfin’s analysis of where markets are cooling the most, Raleigh ranked 42nd. For some measures of the metropolitan area’s housing market, the region outpaced the national average, and in other areas, the national average outpaced Raleigh.
“We have more inventory, but not enough,” said Courtney Brown, a real estate agent with Hunter Rowe based in the Triangle. “It’s a weird market, because if you price and prepare your home properly, it’s still a sellers market, and if homes aren’t priced or prepared well, buyers may have an opening.”
And, as more homes are available, the number of homes where sellers have chosen to drop their asking price has increased in recent weeks, as well.
How Raleigh compares
“There are many similarities between Raleigh and Austin such as the profound economic and demographic growth,” Adrienne Cole, the president and CEO of the Raleigh Chamber of Commerce told WRAL TechWire earlier this year. “But Raleigh is a unique community that offers some advantages over Austin.”
“As a community we enjoy a more diverse economy, are planning for broad transit solutions and are highly accessible to other large metros along the east coast,” Cole said.
WRAL TechWire and WRAL News analyzed Redfin’s real estate market data in the Raleigh, Durham, and Charlotte metropolitan statistical areas, and compared the data to the same measures of the housing markets in the metropolitan regions of Austin, Tx., San Francisco, Ca., and Nashville, Tn.
Of these markets, Durham's real estate market remains the market most likely to see a home for sale go under contract within two weeks of being listed for sale, with 44.2% of homes going under contract within that time period. Durham is also the market of those analyzed where there have been the least percentage of homes to see a price drop.
And in Charlotte, 42.2% of homes for sale are under contract after two weeks on the market, while in Raleigh, 41.4% of homes go under contract within 14 days of being listed for sale.
In Austin, comparatively, only 30.5% of listed homes went under contract during the first two weeks of availability, as of the most recent month of data in June 2022.
Median sale price, measured by two indicators
While San Francisco and Austin are seeing a decline in the percentage change of the median sale price per square foot, the North Carolina metropolitan areas are showing to be much more resilient, with price per square foot still increasing in the low- to mid-twenties. Nashville's market is similar, as this metric fell less in recent months compared to Raleigh, Durham, or Charlotte.
Further, Raleigh's median sale price of real estate continues to increase, with June 2022 marking another all-time record in Wake County, with the median sale price in the county approaching half a million dollars at $493,161.
And compared to the other markets analyzed by WRAL TechWire and WRAL News for this report, Charlotte and Raleigh's median sale price increased the most, year-over-year, as a percentage gained, between June 2021 and June 2022. Charlotte's market saw a 20.6% increase year-over-year while Raleigh's market experienced a 20% gain in the metropolitan statistical area, which includes Wake, Johnston, and Franklin Counties.