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 and why the Triangle housing boom may be over – or not – the topics 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 – The fundamentals of the Triangle housing market have changed since the beginning of the year, and that may mean that the Triangle housing boom is over – at least for now.
Local real estate agent Tony Fink with Linda Craft Team REALTORS in Raleigh told WRAL TechWire on Thursday that there are four factors that, together, have changed the real estate market from a strong seller’s market earlier this year to a balanced market where neither sellers nor buyers have the upper hand in negotiating deals, as we enter the fall markets.
But Jodi Bakst, owner and broker-in-charge of Real Estate Experts, told WRAL TechWire that, overall, the market in the Triangle really isn’t slowing down, at least compared to other markets.
“The Triangle tends to be hit last by what’s happening in the market,” said Bakst. “It remains to be seen if we are bullet proof.”
And some indicators are showing that the housing boom may be over in the region, at least for now, in the short term. That’s not to say that home sale prices will plummet, though, noted Fink. Just that there are multiple indicators showing that changes in the market and in the macroeconomic climate have begun to accumulate, and could be having an impact.
Triangle housing boom is over: Now a buyers’ market, prices drop, days to sell increase
What’s happening
First, price appreciation has slowed.
“Home prices have risen pretty significantly,” said Fink, whether you look at that as year-over-year gains or when you look at three-year gains since 2019.
For instance, the year-over-year price appreciation from August 2021 to August 2022 in Durham and Wake Counties, as well as across the entire region’s housing market, is still showing double-digit increases, according to TMLS data.
In Wake County, prices rose 18.8% year-over-year, and in Durham County, prices rose 18.6%. Across the region, prices gained by 15.4% year-over-year.
But price appreciation is down to the year-over-year gains recorded by TMLS in February 2022 compared to February 2021, when the Triangle region recorded a 23.9% jump in prices.
Further, in Wake County, between February 2021 and February 2022, prices were up 23.6%. And in Durham County, prices rose by more than $100,000 year-over-year with gains of 35.4% between February 2021 and February 2022.
“Price growth has definitely leveled off,” said Fink, noting that the drop in median home sale prices since June 2022 now shows “the first downward trend in a little bit.”
Triangle real estate market is slowing but agents warn it may just be seasonal
Inventory – and mortgage rates – still rising
Two other market factors that have changed the local real estate markets of the Triangle, according to Fink, are an increase in the number of homes available to purchase and rising mortgage interest rates.
Again, compared to February, there are significantly more listings, and interest rates have jumped.
Fink analyzes what he refers to as “point-in-time data” on the first of each month for inventory levels.
As of Thursday morning, there were 5,102 available homes for sale in the region he tracks data, he said. That’s up significantly from the 1,680 homes available for sale in the same geographic region as of February 1, Fink noted.
And then there’s the run up in mortgage rates, which for homebuyers means an increase in the monthly cost of ownership and the long-term borrowing costs that come from financing a home through a mortgage.
As of Thursday, the typical mortgage rate for a 30-year fixed mortgage had risen to 5.66%, up by 0.11% since the prior week, and up 2.79% year-over-year, according to data from Freddie Mac.
Primary Mortgage Market Survey, week ending 09-01-2022. (Image and data: Freddie Mac.)
At the beginning of February, the data from Freddie Mac shows that the typical mortgage rate for a 30-year fixed mortgage was 3.55%, so rates have increased by more than 2% in the prior seven months.
That’s changed the cost equation for some homebuyers, said Fink. And, that’s also changed what existing homeowners are doing to access home equity, even as a record number of people in North Carolina are now considered equity-rich.
The latest data from the Wake County Register of Deeds shows a 15% drop in refinance activity in July 2022 compared to June 2022. But that activity is down 31% from July 2021, when there was a growing gap in the real estate market.
Home affordability takes another plunge in Raleigh – but buying demand remains strong, agents say
Sentiment still one of economic uncertainty
“These are not bad things, necessarily,” said Seth Gold, a licensed real estate agent with Bold Real Estate and Governors Club Realty, in an interview with WRAL TechWire on Thursday. “Our area always seemed to be below what it really should have been in terms of pricing and growth, and I think we just caught up to that.”
Still, the macroeconomic climate has shifted fairly dramatically since the beginning of the year, with continued inflation and continued concerns about inflation driving the Federal Reserve to raise interest rates, resulting in mortgage lenders increasing rates, as well. And ongoing volatility in the stock market along with continued predictions of economic recession have spooked investors even as costs have increased.
So, with home price appreciation slowing or plateauing, mortgage rates rising, and more homes coming on the market for sale, along with continued concerns about the macroeconomic climate, said Fink, “buyer sentiment has changed.”
But for those looking to buy this fall, the market may now be balanced. Which means that neither buyers nor sellers would have an upper hand in negotiating the price or the terms of a sale.
