Here we are, two months left in the year. It’s been an incredibly “fast” year in real estate and home sales because the Triangle Region remains one of the hottest and tightest in the nation.
It’s been amazing to write this column each month and compare/contrast what is happening nationally vs. locally. We truly are unique and stronger in real estate than most of the nation.
September was no exception. While the National Association of Realtors (NAR) recently reported that September home sales rose 3.9% over last September, the Triangle Region blew that number away. We sold 3,260 homes in September, a whopping 12.5% higher number than a year prior.
I believe what is fueling this continued buying spree goes further than the population growth, affordability, climate and all of the other wonderful things about our region. I believe the unexpected drop in mortgage interest rates is having an impact.
While most experts predicted rates would rise in 2019 into the low 5%s, the opposite occurred. We have instead dropped into the 3% ranges and currently stand at 3.75% for a 30-year fixed rate mortgage. While I’m going to simplify the costs in this chart, these lower rates are allowing so many to enter the market, buy “more house for the money” and even “move up”:
Let’s break this down a bit more:
First time buyers: Obviously, the lower the monthly payment over the 30 years, the better for you. Renters can now buy a home for below, at or slightly above their monthly rent payments depending the community you choose. Many will still have to trade lower prices for a longer commute, but they still can now afford the monthly payment.
Move Up buyers: Right after the recession, mortgage rates dropped to historically low levels into the very low 3% range. If you bought a home then, or refinanced, you had the lowest monthly payment in history. Most don’t want to give that up. But, as we enter the end of the decade, rates have dropped to near where they once were. As life changed and the need for a larger home, or one closer to work, became necessary, many stuck it out not wanting to give up that low rate from years prior. Now that is not a concern.
With that said we also have to realize that prices have also risen here. In September, the Triangle Region was up 5.1% over last year to a median price of $276,000. This mimicked what NAR reported nationally, $272,100, up 5.9% over last September.
These higher prices are largely a result of demand (which goes back to lower mortgage rates). While NAR reports that nationally those homes sold in the U.S. in September stayed on the market about 32 days, we showed 30 days here.
The good news for us is that inventory, which has been so low and remains problematic, showed a glimmer of improvement.
While our supply is still extremely tight at 2.5 months (6 months is considered “balanced”) giving the seller a huge advantage in negotiations, we saw an increase of 18.2% more homes come on the market in September compared to last year. There were 3,876 new listings put on sale in the Triangle in September lifting our overall number to 8,626 which is still exceptionally low.
This type of market doesn’t usually allow for “discounts” for the buyer and that is showing itself in what we call the “list to price ratio.” We are seeing homes selling at 98.9% of what they are listed for. That essentially means a home listed at $200,000 home will sell for at least $198,000.
To give you a sense of what is happening here vs. the nation, I created this chart:
You can see that while we talk about real estate in generalities, it often changes the closer and closer you get to where you live – or want to live.
I encourage anyone who has questions to reach out to me at email@example.com or any of our 350 Coldwell Banker Advantage agents and let us help.
I hope you enjoy the beginnings of the Holiday Season and you are enjoying these articles.
Rick Gregory - COO
Coldwell Banker Advantage