Editor’s Note: Every Friday, WRAL TechWire takes a deep dive into the Triangle’s real estate markets, including the Triangle’s latest real estate market data and why the Triangle’s real estate boom may be over — or may not be — the topics of this week’s reports. WRAL TechWire reporter Jason Parker, author of the report and 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 use the Triangle Real Estate or Triangle Real Estate Market category tag.
RALEIGH – The fundamentals of the Triangle housing market have changed since the beginning of the year, and that could mean the Triangle housing boom is over — at least for now.
Local real estate agent Tony Fink of Linda Craft Team REALTORS in Raleigh told WRAL TechWire Thursday that there are four factors that combined have transformed the real estate market from a strong seller’s market earlier this year to a balanced market with neither sellers nor buyers have the upper hand in negotiating deals as we enter the fall markets.
But Jodi Bakst, owner and lead broker at Real Estate Experts, told WRAL TechWire that the overall market in the triangle isn’t slowing down, at least compared to other markets.
“The triangle tends to be the last to be hit by market developments,” Bakst said. “It remains to be seen whether we are bulletproof.”
And some indicators suggest that the region’s housing boom may be over, at least for the time being. But that doesn’t mean home sales prices will go down, Fink noted. Except that there are several indicators showing that changes in the market and macroeconomic climate are starting to accumulate and could have an impact.
The real estate boom in the Triangle is over: it’s now a buyer’s market, prices are falling and sales days are increasing
First, price increases have slowed.
“Home prices have gone up pretty sharply,” Fink said, regardless of whether you look at that as an annual gain or a three-year gain since 2019.
For example, the annual price increase from August 2021 to August 2022 in Durham and Wake Counties, as well as across the region’s housing market, still shows double-digit increases, according to TMLS data.
Prices increased 18.8% year over year in Wake County and 18.6% year over year in Durham County. Across the region, prices rose 15.4% year over year.
But the price surge is due to the annual gains TMLS posted in February 2022 compared to February 2021, when the triangle region saw a 23.9% jump in price.
Additionally, between February 2021 and February 2022, prices in Wake County increased by 23.6%. And in Durham County, between February 2021 and February 2022, prices rose more than $100,000 year-on-year with gains of 35.4%.
“Price growth has definitely flattened out,” Fink said, noting that the decline in median home selling prices since June 2022 is now showing “the first downtrend in a little bit.”
The Triangle’s housing market is slowing, but realtors warn it could just be seasonal
Inventories – and mortgage rates – continue to rise
Two other market factors that have transformed the Triangle’s local housing markets are an increase in the number of homes available for purchase and rising mortgage rates, according to Fink.
Again, there are significantly more quotes compared to February and interest rates have jumped.
Fink analyzes what he calls “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 where he’s tracking data, he said. That’s a significant increase from the 1,680 homes for sale in the same geographic region on Feb. 1, Fink noted.
And then there’s the rise in mortgage rates, which means for homebuyers an increase in monthly utility costs and long-term borrowing costs associated with financing a home with a mortgage.
According to data from Freddie Mac, the typical mortgage rate for a 30-year fixed-rate mortgage rose to 5.66% on Thursday, up 0.11% from the previous week and up 2.79% year-on-year.
In early February, data from Freddie Mac showed that the typical mortgage rate for a 30-year fixed-rate mortgage was 3.55%, meaning rates are up more than 2% over the past seven months.
That has changed the cost equation for some homebuyers, Fink said. And that has also changed what existing homeowners do to access home equity, even though 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% decline in refinancing activity in July 2022 compared to June 2022. However, this activity is down 31% from July 2021 when there was a growing gap in the housing market.
Home affordability is taking another slump in Raleigh — but buying demand remains strong, realtors say
The mood continues to be characterized by economic uncertainty
“These aren’t necessarily bad things,” Seth Gold, a licensed real estate agent at Bold Real Estate and Governors Club Realty, said in an interview with WRAL TechWire Thursday. “Our division has always seemed below what it should have been in terms of pricing and growth and I think we’ve just caught up on that.”
Nonetheless, the macroeconomic climate has changed quite dramatically since the start of the year, with persistent inflation and ongoing inflation concerns prompting the Federal Reserve to raise interest rates, leading mortgage lenders to hike rates as well. And continued volatility in stock markets, along with lingering predictions of an economic recession, have scared investors even as costs have risen.
With house prices slowing or flattening, mortgage rates rising and more homes for sale on the market, and ongoing concerns about the macroeconomic climate, Fink said “buyer sentiment has changed.”
But for those looking to buy this fall, the market could now be level. This means that neither the buyer nor the seller has the upper hand over the price or the terms of a sale.