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Over the past 30 months My NC Homes clients are selling homes frequently within hours of listing. The supply of homes currently in the Triangle is well beyond constricted and as a buyer, you may find yourself without many options. Buyers are frustrated putting in offer after offer, only to be outbid, or to make concessions that would not be prudent in normal real estate transacting circumstances. We would rarely recommend buying a home without inspections, but this is the advice we are giving to some buyers to secure homes. Leading us to one of the questions we get all the time, “Am I buying at The Top of the Market? On the one hand, interest rates are low and favorable to buyers, on the other hand, home prices have skyrocketed. Let's take a look at the 2021 market conditions, projections, and offer some of our practical advice for those who need to buy, right now
2021 Market
According to Realtor.com inventory has declined by 39.6% and demand has increased, yielding price increases for homes that at times can seem shocking. Hybrid work models are creating conditions that make it possible for some folks to work from virtually anywhere and North Carolina in general and the Research Market Triangle area in specific having been seeing an enormous influx of these types of buyers. Along with these buyers there's been a corresponding influx of investors drawn to the area to capitalize on the news of numerous top-tier Fortune 500 companies investing in the Triangle and bringing thousands of new high paying jobs with them over the next few years. Further complicating a constricted market is the hesitation of sellers to list, without first finding an alternative home, or those Sellers trying to time the market and concerned that the market will go higher and that they may be able to sell for more if they stay put a little longer.Additionally lenders are making borrowing a bit more difficult for developer/builders due to broader long-term economic uncertainties. Builders are also struggling with shortages and rising prices in lumber, sheetrock and labor. This has created a perfect storm of conditions benefitting sellers while creating stress and difficulties for home buyers
Top of Market, Housing Bubble, or 2006 Condition Questions
Nearly all housing experts agree we are not in a bubble or at the height of the market, however many are warning we're due for a correction. And there are already reports of some cooling off in various parts of the country. Locally we are in our third year of solid double digit appreciation and there's been no sign of a cooling in terms of demand or prices.;
The effect of a decade of under building combined with current labor shortages and ever escalating material costs (lumber alone has gone up roughly 300% since January) doesn't bode well for enough new construction to come on the market to fill the demand projected over the next 3-5 years. Locally the correction is most likely going to come in gradual increases in mortgage rates, some distressed properties hitting the market and possibly more individuals choosing to sell and relocate to other areas for personal reasons.
Why would you buy now?
Why would buyers buy, when prices are going up and up? Our personal belief is that here in the Research Triangle there are a number of reasons to buy a home right now. We believe that in comparison to comparable cities such as Washington DC and Atlanta for example it's clear we could easily handle 30-50% appreciation over the next 3 years and still be priced below these cities. When compared to nearby cities such as Richmond, Charleston, Charlotte that don't have nearly as much to offer in terms of accessibility to the ocean, mountains, a major airport, the arts, major league sports, education, medicine etc we still "giving it away" in terms of our pricing. Interest rates are still at record lows. Hybrid working scenarios are seeing more flexibility for workers and people are reimagining where and how they want to live. North Carolina and the Raleigh/Durham metropolitan area are likely to continue to be "in flow "areas (more people moving into the area than moving out) for the next 5-10 years. In short while it may seem crazy to have to offer 5-15% above list price for a home and accept it "as-is" we believe that if you're going to own it for the next 3-7 years you've got nothing to worry about.
Should you sell and wait to buy?
If you are considering selling your home, or have considered selling it in the past five years, you should list your home. We are using the 5
year logic for buyers, but in reverse for sellers, if you cannot see yourself in your current home over the next five years, get a home value here, and consider listing it. Buyers are paying over market value, offering great terms, and closing in short order. If you are concerned about finding another home give us a call we have our finger on the pulse of the market. If you're considering modifying your home to make it work for the next 5-10 years you need to realize that you're going to struggle with the same labor shortages and escalating material costs that builders everywhere are having to deal with
Bottom Line on Triangle Top of the Market
In the coming months, several factors are being closely watched by economists and industry insiders, to determine if we really are at the top of the market. These considerations are the strength of the economy, pace of new construction, the entrance of homes to the market from distressed sellers, and increases in mortgage rates. The Bottom Line is My NC Homes believes we're nowhere near the top of the market and now is a great time a good time to buy if you believe you're going to be here for the next 4-7 years.
Posted by Larry Tollen on
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