Editor’s Note: Each Friday, WRAL TechWire takes a deep dive into the Triangle’s real estate markets, including the latest Triangle real estate market data, 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 – There continue to be signs that the Triangle housing boom may be over, but the region is faring better than many areas across the United States, a housing economist told WRAL TechWire on Thursday.
According to Taylor Marr, deputy chief economist at national real estate brokerage firm Redfin, Raleigh and the Triangle are “not doing any worse than the national picture” when it comes to the recent fall off in home sales and falling median sale prices of homes compared to the prior all-time highs recorded earlier this year.
While some parts of the United States “are really getting hammered by rising interest rates,” said Marr, “We’re not seeing quite as dramatic a pullback in the Raleigh or Durham area.”
Year-over-year price appreciation, one measure of how hot a housing market is, peaked earlier this year at about 27%, said Marr. In April, for instance, data from the Triangle Multiple Listing Service, or TMLS, shows price appreciation in the region at 25.8% and at 26% in Wake County.
But the latest available data from TMLS now shows that year-over-year price appreciation between August 2021 and August 2022 was 15.4%, more than 10 percentage points lower than four months prior.
Prices have dropped
“The housing market always cools down this time of year, but this year, I expect fall and winter to be especially frigid as sales dry up more than usual,” said Daryl Fairweather, chief economist at Redfin in a statement last week. “Thanks largely to mortgage rates near or even above 6%, potential homebuyers and sellers are focusing on the back-to-school season and enjoying the last days of summer rather than getting into an uncertain market.”
So it’s not just that price appreciation has slowed in recent months. By one measure, prices may actually have fallen from earlier in the year.
In April 2022, for instance, the median sale price of residential property was $485,000 across 1,729 closed transactions, an even $100,000 higher than in April 2021.
But TMLS data shows that for August 2022, the median sale price of property in Wake County was $475,000 across 1,782 transactions.
And prices may fall again, now that mortgage rates as of today are above 6%, a weekly analysis of data on the primary mortgage market from Freddie Mac showed on Thursday. The data shows the average rate of a 30-year fixed rate mortgage at 6.02%, the first time in the data set since 2008 rates have risen above 6%.
Prices may be impacted by rising rates, said Marr, because higher rates raise the cost of borrowing money, and even the slightest change, perhaps a quarter of a percent, or even a tenth of a percent, can change a borrower’s monthly payment enough that it could make more sense to rent a house than to buy one.
Will mortgage rates rise more?
Marr said that the Federal Reserve is likely to decide to raise interest rates again at the next meeting of the Board of Governors in an effort to continue to tamp down inflation and rising prices.
“It is almost certain,” said Marr.
The Federal Reserve may choose to combat inflation by raising interest rates.
“There is still indication, about an 80% chance, that the Federal Reserve will raise interest rates again by 75 basis points,” Jon DeHart, a mortgage loan officer with Movement Mortgage, told WRAL TechWire last week. An increase of 75 basis points is equivalent to an increase of three-quarters of one percent on a mortgage.
But even if the Federal Reserve does decide to raise interest rates, it’s not a guarantee that mortgage markets will move upwards, said Marr.
That’s because mortgage rates tend to move in expectation of changes. Of course, said Marr, rates could rise again.
Still, Triangle is insulated from housing slump
Even as mortgage rates rise, the Triangle is likely to see a relatively stable housing market, Marr predicted.
Whereas some technology hubs like Austin or Seattle and pandemic boom towns like Boise may be seeing dramatic movement in housing prices and real estate activity, said Marr, Raleigh and the Triangle region are insulated a bit more, due to a slightly more diverse labor market.
It’s also a labor market that continues to attract workers from out of the region, and more growth is expected, said Marr, especially with multi-billion dollar investments from companies like Toyota, VinFast, and Wolfspeed, who together are expected to invest some $11.5 billion and hire more than 11,000 workers in the region in the coming decade.
“Every city is battling for talent,” said Marr. “Investing in these projects serves to bring in new jobs, bring in new talent.”
But the changes to the Triangle housing market may not be immediate, even though an increasing number of relocating workers may mean an increase in housing demand, said Marr.
Should someone be looking to buy a home but feel wary of the housing market’s potential volatility, said Marr, the section of the market that will be the most stable are single-family detached homes priced close to the median sales price in the area.
Editor’s Note: WRAL.com’s Maggie Brown contributed to this report