Editor’s Note: Each Friday, WRAL TechWire takes a deep dive into the Triangle’s real estate markets. This week, we take a look at the latest market data from the Triangle Multiple Listing Service—which, though preliminary for October 2022, shows a changing Triangle real estate market right now.
RALEIGH – Across the nation, housing markets are shifting, and though the Triangle real estate market remains one where demand for homes remains elevated due to continued job creation and in-migration in the region, the latest data shows that the market may be returning to equilibrium following more than two years of rapid price inflation.
Here’s the latest, according to preliminary data from Triangle Multiple Listing Service, TMLS, obtained by WRAL TechWire.
Median sale price has fallen
Across the Triangle, the median sale price of property listed on the Triangle Multiple Listing Service that closed in October 2022 was $392,000, the preliminary data shows. That’s the lowest median sale price recorded in any month since February 2022, and a drop of nearly $30,000 in sale price from the prior high of $421,757 recorded in June 2022.
Still, though, homes are more expensive in the Triangle than they were a year ago, according to the data. That’s because in October 2021, the median sale price of all homes sold in the Triangle was $365,000. The year-over-year price appreciation across the region was 7.4%.
But in Wake County, price appreciation year-over-year was 12%, according to the preliminary TMLS data.
That’s the change between the median sale price of property in October 2021 of $415,000 to the median sale price recorded in October 2022, $465,000.
Still, though, that’s down from a record high median sale price in June 2022 of $492,490.
Earlier this year, the Federal Reserve began to raise interest rates. Because of the increase in the federal funds rate, financial markets shifted, and the cost of borrowing money to buy a home using a mortgage loan increased as well.
According to the latest data from Freddie Mac, the average mortgage interest rate for a 30-year fixed rate loan is hovering at about 7%, though mortgage rates may increase in the coming weeks as a response to the Federal Reserve electing to again increase the federal funds rate by three-quarters of a percent at Wednesday’s meeting of the Federal Reserve’s Open Market Committee.
As interest rates rose, the cost of borrowing money to buy a home increased as well, and as a result, some buyers became priced out of the housing market. But with prices now returning to more cyclical trends, the market is tipping back toward a balanced market for buyers and for sellers, said Tony Fink, a licensed real estate agent with Linda Craft Team REALTORS, in an interview with WRAL TechWire.
“We’re hitting that seasonality period,” said Fink. “Historically, that November, December, January period is not a peak period for new listings.”
So while the number of homebuyers looking to buy in the Triangle’s real estate market may have fallen due to rising mortgage interest rates, there are also much fewer sellers interested in listing their homes for sale during the fall and winter months, perhaps also due to higher interest rates on new home purchases than their current mortgage interest rate on their existing home.
There’s no reason for alarm, however, said Fink.
“We’re in a very balanced market right now, Triangle-wide,” he said. “In a balanced market, you should expect to negotiate to or slightly below list price.”
Our local market
And the preliminary data from TMLS is consistent with this assessment.
After 18 months of homes in the Triangle selling, on average, for more than their list price, as homebuyers competed with other potential buyers to win a contract to purchase a property, the data from October shows that more buyers are now purchasing homes at or slightly below the list price of the home, on average.
Across the entire Triangle, homebuyers are paying 99% of the original list price to buy the property, whereas a year ago, homebuyers were paying, on average, 101.8% of the asking price.
“2021 was really an anomaly,” said Fink.
And in Wake County, the difference from a year ago is even greater. While in October 2021, Wake County homes were selling, on average, for 103% of the list price of the property, the preliminary data from October 2022 shows that homes in Wake County sold for 98.3% of the list price of the property.
For buyers, the most important question is a personal one, said Fink: “Can you afford to buy a home?”
What buyers can do
More and more, said Fink, buyers are able to work with their real estate agents and their lenders to identify a pathway toward homeownership. That includes using some financial products that buyers may have to ask for in order to receive, as WRAL TechWire previously reported.
“Now looks like the best time in the last 12-24 months to buy,” said Jon DeHart, branch leader at Movement Mortgage in Durham. “It appears market is transitioning from a sellers’ market to a normal market.”
That’s even with mortgage interest rates at 7%, explained DeHart. Because the price of renting has again increased year-over-year, with future year-over-year rental increases and future home value appreciation expected, a person who could qualify to buy a $350,000 property is expected to outperform buying as opposed to renting in our area, on a seven-year time horizon.
“As long as the buyer is able and willing to make the higher monthly payments with the higher rates,” noted DeHart.
But Fink said that buyers he is working with in the Triangle are now more aware of the current mortgage interest rates being offered on the market, and don’t necessarily see those as a hurdle in purchasing a home. Instead, they’re considering homes that fit their budget, and have an understanding that one day in the future, they may be able to refinance the mortgage to a lower interest rate.
And for most, buying now gives them an asset that they can own. Which could mean more options for the future, noted Fink.
“You can’t refinance a house that you don’t own,” said Fink. “If rates go down, you’ll either have a ton more competition, or something else will be going on in the market that may further adversely affect your buying position.”
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.”