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, 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.”
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RALEIGH – Not only are homes in the Triangle real estate market more expensive than they were a year ago, the monthly mortgage costs have risen dramatically during that time as well. Further, many Triangle homebuyers are facing the stark reality that homes and borrowing money to buy a home are both more expensive and competition for the region’s most affordable homes is fierce.
Nationally, the monthly cost of borrowing money to mortgage a median-priced property has risen by about 60%, said Jeff Tucker, senior economist at Zillow, in an interview with WRAL TechWire.
“In Raleigh, it’s more like 80%,” said Tucker, who was a part of the team that worked on the new analysis.
The analysis and a corresponding statement shared by Zillow with WRAL TechWire noted that in Raleigh, the homes where homebuyers are facing the most competition from other potential buyers are in the most affordable segment of the housing market. The study’s methodology tracks homes in three price tiers, the most affordable tier, the middle tier, and the highest-priced tier.
And the most competitive segment is the tier of homes priced the lowest, Tucker said.
“The housing market this summer has hit a major slowdown after being on quite a tear for pretty much the previous year and a half,” Tucker said.
Raleigh-based Northside Realty Broker Jeanna Reeves has worked as a realtor for 29 years. She said she noticed a slowdown at the start of summer.
“I would say the market is cooling a little bit,” Reeves said. “We have a lot of buyers that were frustrated and they’ve left looking for homes.”
What’s happening in the Triangle real estate market
Here’s why, according to Courtney Brown, a licensed real estate agent with Hunter Rowe who works with clients across the Triangle. On the one hand, there are still many people who have been looking for their first home, often called first-time homebuyers, who still have not secured a contract, said Brown.
“Because there’s been such a low amount of updated inventory,” said Brown, “When you have a home priced under $350,000 or $370,000 that can fit a family of three, anyone within a reasonable driving distance that’s looking to buy a home will be interested.”
And on the other hand, the region continues to attract investors, whether they’re local or out-of-town, who are mostly interested in lower-priced homes in the market, said Brown.
“Cash buyers are now looking for a place to park cash,” said Brown, adding that real estate is often seen as a hedge against high inflation or a volatile stock market.
The analysis, and a statement from Zillow, shows that while 19% of the homes for sale in the middle tier saw a price cut, only 13.8% of the lowest-priced homes saw a price cut.
“We’re coming off the COVID madness where it was an extreme seller’s market, and homes were selling literally in minutes, and we’re now starting to get more of a normal market,” said Coldwell Banker HPW Realtor Jon McBride.
Even with market slowing, affordability dropping
And that’s just one measure of activity in the region’s housing market. Not only are homes in the most affordably-priced segment of the market more competitive, they’re also harder and harder for homebuyers to purchase as borrowing money for a mortgage is now more expensive than six months and a year ago, as well.
“Now, with higher mortgage rates and after more than a year of record price gains, the lowest-priced homes in each market are attracting the most buyers,” the Zillow analysis reads. “Inventory for these lower priced homes had a less-severe dip during the bulk of the pandemic and grew back up at a faster pace than the other price tiers.”
The typical mortgage rates for a 30-year fixed mortgage hit the highest mark since December 2008 in July 2022, at 5.81%, according to data from FreddieMac.
That’s happening even as there are signs that the Triangle real estate market may be slowing, or at least that there has been a return to seasonality in the local markets after three summers disrupted by COVID-19.
Triangle real estate market is slowing but agents warn it may just be seasonal
Affordability plunges more in Triangle than nation
With higher mortgage rates, and the continued rise in home sale prices through the end of the second quarter of 2022, affordability plunged again, according to the latest report from the National Association of REALTORS. Affordability is the lowest on record since June 1989, the NAR shared in a Tweet this week.
“Housing affordability had double-digit declines from a year ago in all four regions,” the NAR report noted. “The South had the biggest decline of 32.9%.”
And in the Triangle, even though some segments of the region’s housing market saw a decline in the median home sale price in July, the housing affordability index measured by the Triangle Multiple Listing Service, TMLS, fell again, reaching another all-time low of 65 by the end of the month.
Affordability is down by 34% in the Triangle, compared to a year prior, the TMLS data shows.
All data provided by Triangle Multiple Listing Service, Inc. Report © 2022 ShowingTime.
