North Carolina Real Estate Market Explodes Following Pandemic | Regional
Real estate agent Winston Salem Jason bragg I can’t remember the last time he saw a domestic market as hot as North Carolina’s right now.
“I had a list two weeks ago where we had over a hundred screenings – everyone lined up for a few days,” he said. “An average home sells in a week or less – it’s pretty common for people to put their home on the market and receive multiple offers. “
One of the most unexpected effects of the COVID-19 pandemic has been its impact on housing in the United States. Shortages of residential building materials due to plant closures and other supply chain disruptions have pushed the price of lumber and other supplies to record highs – if available .
According to a May survey by the National Association of Home Builders and the Wells Fargo Housing Market Index, 90% of builders reported shortages of lumber, plywood and oriented strand board, and 87% reported a shortage of lumber, plywood and oriented strand board. windows and doors. These material shortages and delays have halted, or at best delayed and raised the price of, many new residential construction.
And a shortage of available housing coupled with high demand means this is a sellers’ market, with units staying on the market for a short time and often costing more than asking price.
Effects of reopening and vaccines
Given the dramatic change in stocks due to the pandemic, some buyers are wondering if the rollout of the COVID-19 vaccine and people moving more freely with the cancellation of many pandemic safety protocols could mean another change. in real estate in North Carolina. market.
The short answer: It seems unlikely that will change anytime soon. While COVID has certainly had an impact, the current market is the product of a long factor stew, according to realtors.
“I think the housing market is hot due to issues that have been increasing for years,” said Bragg, agent at Leonard Ryden Burr Real Estate.
“We haven’t built enough homes in recent years, they haven’t built enough homes during the recession, and it will take a long time to build enough homes to meet demand. “
What is driving this demand? One factor is North Carolina’s growing popularity as a relocation destination. Cities like Charlotte and Raleigh regularly appear on lists as US News & World Report’s Best Places to Live, ranking # 6 and # 11, respectively, for 2021. And while those lists can be arbitrary, data from moving companies hype.
According to the United Van Lines National Migration Study 2020, Wilmington ranked # 1 for inbound trips among US cities, the Charlotte-Gastonia metro arriving at # 13 and the Greensboro-Winston-Salem area at n ° 25. North Carolina ranked No. 6 among the best states for inbound movements, according to the study. A similar study by Atlas Van Lines ranked North Carolina at No.2 for inbound movements.
Announcements of companies like Apple and Google moving certain operations to the Triangle are expected to drive up housing costs in markets where affordable housing is already limited.
And in the aftermath of COVID, the flight of people from densely populated cities in states like New York and New Jersey has been fueled by fear of transmission of the virus, as well as new flexibility thanks to labor policies. home.
For those who have made the switch to permanent work-from-home status, the freedom to ditch high rents or mortgage costs in big cities for more affordable places like North Carolina has proven tempting.
“For a lot of people, the idea of retiring to the beach was something they had to wait for, but if you have the right job you can still retire in 20 years, but you can live anywhere you want. be right now, ”said Mark Bushnell, senior vice president of external affairs of the NC Realtors Association. “And Wilmington, no coincidence, is one of the hot spots for that.”
As the pandemic has triggered spikes in unemployment and financial ruin for some, those whose jobs have not been negatively affected are left with more money to spend after a year off, dining out and spending. in concerts and other events.
“This is the story of two economies,” said Brett Bushnell, Real Estate Agent and Owner, Tri Local Realty LLC in Chapel Hill.
“People who work in the service sector have been decimated in the past 15 months, and those who were not working in the service, their personal balance sheets seem to be in better shape. So even if they start spending money on travel again, they may have been able to pay off some of their debts during the pandemic. “
For those who have been able to reduce their debts or save during the pandemic, that means more funds available for down payments and in excess of demand – a good determinant of the stability of a bustling real estate market.
“The average down payment amount we’re seeing is 22-23 percent, which is one of the highest in the country,” Bushnell said. “It makes the market here less likely to go down due to the position in equities. ”
And the ever-inflated cost of raw materials like lumber and shortages of other building elements mean that the supply of available housing is unlikely to increase significantly anytime soon.
“Normally, if you have this big imbalance between supply and demand, the market will move to fill it,” Bushnell said.
“But it doesn’t turn on a dime when you have supply disruptions. Material costs and shortages are really pushing builders to stop for a bit – for example, a lot of builders in the Triangle area won’t go into presales because they don’t know where their prices will be.
While builders can’t anticipate their costs, buyers know they can get mortgages at some of the lowest rates in recent history. But with the threat of rate hikes later this year, it’s possible that buyers are less likely to take the plunge to a higher interest rate.
“The market is cyclical annually by season, and then there’s the cyclical supercycle,” Bushnell said. “We’ve been in the hottest time for home sales, which is spring, and hopefully we’ll see a more normal flow in the fall. And this will be due to the increase in stocks and also to the interest rates because they have been extremely low and it costs less to borrow. “
With fall and winter generally leading to a slowdown in listings and home sales, this, combined with a predominantly vaccinated population ready to travel and see their loved ones, could cause the housing market to cool as the year progresses. advanced.
But until material shortages are resolved and home construction can return to a more normal pace, realtors have said they don’t expect a significant change in the North Carolina real estate market. .
“In the short term, this fall and winter, we might see some people getting distracted by going back to their vacation activities and going to see Grandma and stuff like that,” Bragg said.
“There might be a slight slowdown this fall, but nothing would slow the market enough to stop prices from staying within the range they are currently in. I think we’re going to be like this for a while because there are so few homes on the market.