Editor’s Note: Each Friday, WRAL TechWire takes a deep dive into the Triangle’s real estate markets, including housing affordability and the cost of buying a home which are the topic of this week’s reports. WRAL TechWire reporter Jason Parker, the author of the report and a licensed real estate agent in North Carolina, works with journalists from WRAL.com to track and present market data and report on how people are experiencing the region’s changing real estate markets. These special reports will use the category tag “Triangle Real Estate” or “Triangle Real Estate Market.”
RALEIGH – The cost of buying a home in the Triangle continued to increase in July, as housing affordability took another nosedive into a new record low, according to the latest data from Triangle Multiple Listing Service. But home values in the region may have dipped, as market conditions are changing, a new report from Zillow found.
The report found that typical home in the Raleigh area was estimated at $457,006 in July, down 2.5% since June 2022. Still, that’s an increase of 62.3% since July 2019, the study found.
That’s leaving some buyers in a better negotiating position than they were just a few months ago. But even if seasonal trends have re-emerged in local real estate markets, that doesn’t mean it’s any easier for Triangle residents seeking to buy their first home at a reasonable price.
“We are seeing an increase in inventory, but it is not coming in at a price point where I feel like the biggest hole is,” said Monique Edwards with NC Living Realty, in an interview with WRAL TechWire on Thursday. “Incomes have not moved up substantially for people to really purchase the home that they are seeking.”
Did cost of buying a home peak in July?
There may be some good news for would-be homebuyers, however. And that news is that the inventory of homes for sale has increased in recent months, including in lower price tiers.
While the typical mortgage rate for a 30-year fixed mortgage hit its highest mark since December 2008 in July 2022, at 5.81%, the most recent week of data from FreddieMac shows the average mortgage rate for the 30-year fixed of 5.13% as of Thursday. If mortgage rates are down from July 2022 highs, and home values have fallen, is it possible that home prices might decrease, as well?
That depends on how buyers act, said Edwards. And on what’s available on the market.
“Mortgage rates are a lot higher, and buyers are saying ‘yes, I want a house, but not under these conditions,’,” said Edwards. “For buyers to commit to the price and the mortgage rate, the house must be perfect.”
That’s one reason there may be inventory growing in the Triangle: buyers are becoming a bit more picky.
Buyers willing to wait could fare better with the cost of buying a home
And there may be room to negotiate, said Edwards. If not on price, perhaps on closing costs, or on repairs necessary to make the home move-in ready.
“They’re willing to help buyers get into the house,” said Edwards. “I believe agents are telling sellers that because rates are so high, if they want to sell the house, they’ll need to offer it.”
Some listings are even marketed with sellers agreeing in advance to provide thousands of dollars to replace flooring or to repaint a home, in order to attract buyers.
“We are finding, at least in my firm, and many REALTORS that I’ve spoken to, is having to talk to sellers that we’re no longer in the same market as we were in in February, or March,” said Edwards.
“There are a lot of people who are still looking, but it seems as though the buyers are more and more and more picky,” said Edwards. And because of this, buyers who are willing and able to wait may be able to negotiate better terms or better price, said Edwards. “Many sellers aren’t willing to come down on price, but they’re willing to open the opportunity to pay closing costs.”
Still, not enough homes for sale
Regardless of what a buyer may choose to do, they’ll need to find a property, first. And there are some signs that there may now be more homes available at price points below $347,000 than there were in previous months.
For example, in Wake County, the latest data available from the Triangle Multiple Listing Service shows that as of the last day of July, there were 248 homes listed for sale priced below $347,000, the most since November 2021.
And, that measure is just the number of active listings available for sale at the end of the month.
But just because there were more homes available doesn’t mean more homes are coming available on the open market, or that enough homes are, or that there are housing options for all would-be homebuyers, said Edwards.
And, not enough homes below $300,000 either
Edwards told WRAL TechWire that the area of the market where housing supply is most in need in Wake County are homes that are in good, move-in-ready condition, for sale below $300,000. But right now, there’s a dearth of properties available between $250,000 and $300,000.
“I’m trying to tell you, if people saw the condition of the properties that are offered at a quarter-of-a-million dollars, they would be disgusted,” said Edwards. “The public perception of clean, decent, and habitable, it just doesn’t match the condition of homes offered on the market at $250,000.”
Even at a higher price point, the data from TMLS also shows that the number of affordable homes has fallen significantly since last July. TMLS tiers the data in Wake County at homes priced below $347,000, and the number of new listings has dropped significantly since last July.
The data shows that 356 new Wake County homes came available on the open market as new listings during the month of July, down from 772 such listings in July 2021.
More good news, if buyers can go up in price
But 356 of 2,226 total properties, or just under 16% of all new listings in the county, were priced below $347,000.
Compare that to the prior year, when there were 2,191 new listings, when 35.2% of all new listings were coming on the market priced under $347,000.
What changed is that the Triangle’s housing market continued to experience rapid price appreciation, with the median home sale price in Wake County jumping 20.3% between July 2021 and July 2022, according to the latest market update from TMLS.
And those more affordable homes saw increased competition, as evidenced by a video clip shared on social media by real estate agent Monique Edwards with NC Living Realty in February, with dozens of people waiting to tour a North Raleigh home priced under $300,000. With more competition, home sale prices increased, as well.
There is good news, though, if homebuyers can afford houses at slightly higher sale prices and buyers are ready to strike a deal. That’s because the data from Triangle Multiple Listing Service shows that as of the end of July 2022, there were 641 available homes priced between $347,000 and $469,999, the first time there have been that many homes available on the market at that price point since October 2020.