Editor’s Note: Each Friday, WRAL TechWire takes a deep dive into the Triangle’s real estate markets.  That includes stories on how to win in the Triangle real estate market as a buyer and how sellers can prepare a home for sale in order to get top-dollar offers.  And despite a recent study showing it may be more prudent to rent than buy a home in the Triangle, today’s report looks at the latest market data for what’s happening with housing in the Triangle. 

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RALEIGH – Home sale prices may be moderating, with year-over-year price appreciation across the Triangle measuring 3.9% in January 2023 compared to January 2022, according to preliminary data from the Triangle Multiple Listing Service.  Still, in many areas of the Triangle, affordability remains a concern for would-be homebuyers.

“It’s a huge difference in terms of the bottom line, what your mortgage is per month,” says real estate agent Armand Lenchek.

He has seen buyers who were sitting on the sidelines resume their house hunt as interest rate hikes slow and prices moderate.

The data shows that January 2023 was the first time that price appreciation dropped below 4% year-over-year since April 2020, one month after the onset of the COVID-19 pandemic.

“Likely that sellers over the November and December period were a bit more anxious than buyers to complete a transaction,” said Tony Fink, a licensed real estate agent with Linda Craft Team REALTORS in Raleigh.  “The balanced market that we are in favored the buyers in these situations.”

What’s happening with Triangle home prices

Take note, however: home price appreciation is not moderating at the same levels across the region.

For example, the median sale price of homes sold in Johnston County increased by 2.9% year-over-year with the January 2023 median sale price of $350,000.

In Wake County, home price appreciation measured 5.8% year-over-year, according to the TMLS data. That’s as the median sale price in Wake County was $460,000.

In Durham County, the preliminary data actually shows a decrease in the median sale price in January 2023 compared to January 2022, dropping by 0.8% year-over-year as the median sale price last month was $372,100.

A $400,000 mortgage that would have cost around $2,300 ($2,318.45) a month a year ago when rates were below 4% would have cost almost $1,000 more when rates peaked above 7% in November.

With that rate down to 6%, the monthly payment is around $2,800 ($2,833.13).

“That definitely makes a big difference in somebody shopping for a house,” said Michael Martin, branch manager at Fairway Independent Mortgage Corporation.

His office in Raleigh has seen the number of people applying for a mortgage double December to January.

“There’s just a great amount of pent up demand. There’s so many buyers that want to buy but were scared away with higher interest rates,” Martin said.

Buyers are taking more time to decide

Along with home sale price appreciation moderating, the preliminary TMLS data shows that the average number that a home stays on the open market for sale before going under contract is rising.

Across the entire region, the average number of days that a home sold in January was listed for sale before being placed under contract was 28.

That’s the longest on record since February 2016, when average days on market was 31, and a 460% longer duration of time than one year ago, when average days on market in the Triangle was five.

“Buyers ultimately set the price and do not have to buy,” said Fink.  “Where sellers, excluding builders, only have one thing they can sell.”

Would-be homebuyers can, and do, look at more than one property when considering purchasing a home, Fink noted.  And buyers have been a bit more patient in the winter months of 2022, resulting in the increase in the average days on market.

“Well priced homes relative to the value they offer a new owner should sell in my expectation within four weeks, including four weekends,” said Fink.  “The housing market is dynamic, not static, so it’s always changing and there are no absolutes.”

 

 

Will affordability improve in 2023?

For those seeking a new place to live, buying a home may still seem to be a financial reach.  But renting can be quite costly, as well.

Earlier this year, a Redfin study found that in Raleigh, renting a three bedroom home might make more financial sense than buying that same home, given prevailing mortgage rates and home sale prices compared to rental prices.

But one in four households in Wake County are considered cost burdened, according to the latest reports from the North Carolina Housing Coalition, which were released last week.

According to the 2023 County Profiles, 26% of Wake County residents are spending more than 30% of their household income on costs associated with shelter – no matter whether they rent or they own.

Renters are much more likely to be cost-burdened, the report found, with 16% of households that own their home (43,560 families) considered cost burdened, while 45% of renters face difficulty affording their residence.

Housing crunch: Whether buying or renting, rising costs hammer Wake households

Mortgage rates will remain a factor

The latest data from Freddie Mac shows that mortgage rates fell last week for the fourth consecutive week, however, the average rate for a 30-year fixed rate mortgage, a popular mortgage product used by homebuyers, remains above 6%.

“Aspirational buyers who have a sub-4% mortgage rate are still challenged with trading up given the sticker shock on new monthly mortgage payments versus staying put,” said Fink.  But overall, the Triangle remains a strong regional economy, and in-migration relocation buyers continue to search for homes to buy or for houses to rent.


And, the Triangle Multiple Listing Service data shows that buying a home became slightly more affordable in December 2022 than it was in November or October 2022 with the Housing Affordability Index rising to 71 from 68.

But the housing market would be considered affordable at prevailing mortgage interest rates and prevailing wages with an index score of 100.  That means that a typical household in the Triangle may still struggle to afford buying a home.

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WRAL TechWire reporter Jason Parker, who is also a licensed North Carolina real estate agent, 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.