Triangle housing market: Demand at ‘all-time high’ but affordability at ‘all-time low’

RALEIGH – Homes across the Triangle remain in high demand amidst historically low levels of inventory.  Meanwhile, the median sale price of homes in Wake County rose again in January 2022 while one measure of the Triangle’s home affordability fell to an all-time low.

That’s according to the latest available data from the Triangle Multiple Listing Service (TMLS) and its executive director, Matt Fowler.

The latest market trends report from TMLS found that the median sale price of a home in Wake County was $434,140 in January 2022.

That’s up from $425,000 in December 2021 and up 25.4% from January 2021, when the median sale price was $346,315.

That’s a one-year difference of $87,825, which is more than the median annual household income ($80,591) in Wake County according to the latest U.S. Census data.  More homeowners in North Carolina are considered “equity-rich” than ever before, a recent report from ATTOM found.

As housing market booms, more NC homeowners now ‘equity rich’

Housing affordability

According to Matt Fowler, the executive director of the Triangle Multiple Listing Service, 2021 was a “rough year” for housing affordability.

TMLS calculates a monthly “Affordable Housing Index” and for the first time since 2007, the index dropped below 100, said Fowler.

“In June 2021, the index was 98, or median household income was 98% of what is necessary to qualify for the median-priced home under prevailing interest rates,” Fowler said.

According to Fowler, an index score of 120 “means the median household income was 120% of what is necessary to qualify for the median-priced home under prevailing interest rates.”

The index remained below 100 in July 2021, rose to 100 in August 2021, but finished the year under 100, with a score of 99 in September, 95 in October, 94 in November, and 97 in December.

A Redfin study published last week put Raleigh’s housing affordability concerns into hard numbers, finding that as mortgage rates increase, buyers could lose purchasing power, even as median home sale prices increase.

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All-time low

According to Fowler, the Affordable Housing Index is now at an all-time low of 92, based on January 2022 market data.  “Median household income was 92% of what was necessary to qualify for the median-priced home at current rates,” said Fowler.

“With inventory at an all-time low, affordable housing units are simply not present in the marketplace,” said Fowler.  While there’s no one set solution, and many routes can be considered, Fowler noted that in addition to an increasing number of new construction starts occurring in the Triangle, under-improved existing homes would need to be renovated and come available on the open market as well.

Redfin’s chief economist Daryl Fairweather noted that the homes in the “most affordable” category are particularly in demand right now due to the interest from would-be buyers looking for a primary residences competing with investors who are buying up properties “at record rates,” he said in a statement.

That’s especially true in the Triangle, an ATTOM Data Solutions report found in 2021, as the sale of properties to institutional investors during the second quarter of 2021 were up by 234%.

“Pretty much anything below $400,000, you’re going to have sight-unseen offers from institutional investors,” said Linda Craft, licensed real estate agent and owner of Linda Craft & Team REALTORS.  “You’re going to have pretty good offers.”

There is a silver lining, though, noted Craft.  “The silver lining for sellers right now is that they can sell anything,” said Craft.

Sales of ‘most affordable’ housing up, ‘luxury’ down, but home sale prices still increasing in NC

Demand historically high, supply historically low

Home prices continue to rise due, in part, to the relationship between demand and supply.

On the demand side, there were more than 1 million scheduled showings of properties listed for sale during 2021, said Fowler.  That mark is an “all-time high,” said Fowler.

“Marketing the home, scheduling, planning for the safety of the buyer and seller, managing pets, doors, and lights, all of that and more go into showing a house to a potential buyer,” said Fowler.  “It’s a lot, so using a professional to juggle all of that is just smart.”

In total, said Fowler, the members of TMLS scheduled an average of 22 showings per sold listing last year, which Fowler noted was another record.

“It’s not that there aren’t enough buyers, it’s that there aren’t enough houses to sell,” said Craft.

“We are still struggling with the same problem that we’ve had for two years,” said Craft.  “We don’t have any inventory to sell.”

Report: Number of Raleigh homes for sale down 50%, list prices up more than 9% in December

Median priced homes are actually pretty rare

According to Fowler, actually finding and securing a median priced home is pretty challenging.  That’s because homes priced within 10% of the median price in the market in either direction are “pretty rare,” said Fowler.  Based on the TMLS review of current active listings, within 10% of the median price, there are only 209 total houses on the market across the entire 16-county area served by TMLS.

There are just 85 in Wake County, 32 in Durham County, 43 in Johnston County, and only eight total among Orange and Chatham Counties, Fowler noted.

Wake County listing data

In Wake County, there were 1,270 new listings that came on the market in January 2021, down 27.1% compared to January 2021 when inventory was also at a historic low with 1,743 new listings.  In January 2020, for instance, there were 1,963 new listings that came on the market, and 1,870 new listings in January 2019, according to a prior TMLS report.

And there were 1,240 closed transactions, according to the TMLS data.

“Inventory is always low in January,” said Craft.  “But it is lower than it was last year.”

Some of that is because homes that would otherwise still be available on the market in January due to slow November and December markets in a typical annual cycle weren’t available, due to the fact that buying activity was high in November and December 2021, said Craft.

“People are wanting to put their money in real estate, especially with what’s happening in the stock market,” said Craft.  “I think pricing is going to keep going up, unless we start to get more inventory.”

Redfin: Raleigh ranked 7th for growth of real estate market in 2021

Mortgage rate increases may slow, but not change market

Triangle-wide, the median price of real estate sold in January 2022 was $370,000, which was also the median price of real estate sold in December 2021, according to TMLS reports.

But homes are still seeing winning offers at above listing price, according to the reports.  On average, the reports found that the sale price of homes listed on the open market are 102% of the original list price.

“People are bidding above asking price,” said Craft.  “Our listings, the ones we are listing for sellers right now, are averaging offers accepted that are 105% above list price.”

In recent weeks, the typical mortgage rate for a fixed 30-year mortgage has increased, and real estate brokerage firm Redfin is predicting rates will end 2022 at about 3.9%.

“With interest rates going up, there may be a pause in the market,” said Craft.  “That’s an emotional response to change.”

“But they’ll settle into it and still understand that it is still a historically great rate,” Craft noted.  “These rates have been historically low for a long time, but when you look at the whole history, they’re still historically low.”

Craft isn’t expecting there to be any notable change in the Triangle’s real estate market, and unless more homes become available for sale, she anticipates prices to continue to increase even if rates do as well.

“I hear people say all the time that they’re going to wait until prices come down,” said Craft.  “Well, they’re going to wait a long time or they’re going to end up paying way more for a home.”

“It’s still a good business decision to buy real estate,” said Craft.

Raleigh homes are about to get even less affordable, economists find

Triangle housing market: Demand at ‘all-time high’ but affordability at ‘all-time low’

Christin Hakim

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