Dear Friends & Clients:
We hope all is well for you and your family. As the world begins to open up, we hope many of you are able to enjoy vacations and time with friends and family you may have missed over the last year. We are writing today with our quarterly update of where the real estate market stands in the Triangle and what we expect to see in the next 90 days. Housing continues to be in the headlines of the media and a frontrunner for the economic boom we are experiencing. We want to provide you with the facts of the local market and be your resource for all real estate information.
The frenzy around real estate acclererated in Q2 compared to Q1 to unprecedented levels. Fuel was added to the fire on April 26 when Apple announced that it would bring 3000 jobs to the Raleigh area and that the average salary for those jobs would be $187,000. That announcement was made on a Monday morning around 8:30 and by end of day on Monday we had received a high volume of calls of clients wanting to purchase as soon as possible to avoid competing with the buyers that may be coming to our market. As expected, many of our colleagues experienced those same calls and the Triangle, in what was already one of the most competitive markets in the country, grew to be the most competitive market in the country as noted by Zillow in a recent study.
Q2 Stats (Lagging Indicators)
- There were 7599 closings in the Triangle in Q2 and of those 7095 (or 93%) closed at or above sales price.
- 18% of homes were sold during the “coming soon” period, which means that the buyer did not walk inside the home prior to their offer being accepted. In most of these situations, the buyer likely had a large amount of non-refundable money at stake.
- The median sales price in the Triangle in January was $295,000. That number grew to $352,000 in April, $370,000 in May and reached $390,000 in June. Almost $100,000 of price growth in 6 months. We would have been happy to experience that in a 2-3 year period pre-Covid and we just experienced it in a 6 month period.
- The average sales price to list price in the Triangle in January was 102%. By the end of June, that number has grown to 107%. Remember, this is the average, we have and continue to see that number be well above 10% in many cases.
What do we see in the next 90 days? (Leading Indicators)
As crazy as the market has been in the last 6 months, we do believe that a slight slow down in price appreciation will soon happen. Granted, we have seen over 30% appreciation rates in Wake County (higher in certain submarkets) in the last 6 months, that number was bound to slow and needs to slow. Towards the last weeks of June and the beginning of Q3 we began to notice what we’re calling Buyer Protest happen. This means that many homes that were selling in days for well above list price yet had a major objection (highway in the backyard, extensive updates needed, etc.) were beginning to slow down. Builders also began to feel this protest as they raised prices on consumers. We received an email from a builder on a Friday in late June calling for best and final offers by the end of Sunday, then on Monday they sent an email telling us about a “great opportunity” because they had not received any offers on that home. Buyers were protesting the price, when looking at the community, location and offerings of the home.
We also have seen the effects of the “Vaccine Vacations”. As many people have become vaccinated, they have started to take the trips they had to put on hold. As attention turns away from real estate and people begin to live their lives outside of their homes, this has turned into a slow down in the number of showings and offers being made on homes.
In the new construction market, we are seeing a return to normal in lumber prices yet still seeing large pricing unknowns in many other materials including HVACs, windows and siding material. However, as mentioned previously, the buyer protest is starting to hit builders yet they are responding by building less homes. Building less homes at higher margins is the current path for them and this will not help us out of the current cycle.
All of that said, we are still experiencing an unprecedented market. It is still a sellers market. A normal market is a supply of 6 months of homes. As of this writing in early Q3, our Triangle MLS is at 1.5 months of supply and even lower in greater Wake County. However, this is a drastic increase from weeks during Q2 when we had less than a week of supply. We are still seeing the right homes, priced properly, marketed effectively and brokered well sell for above list price and oftentimes for prices never seen in that neighborhood. It is the sellers who are skipping the right steps (FSBO, not preparing the home for showing, poor marketing) who are not experiencing the returns the market is offering.
As always, know that we are thankful for your support of our business. A shameless ask we have, is that if you or someone you know is considering buying or selling, please share their contact information with us and we will take great care of them. We are finding creative solutions that involve both on-market and off-market properties for our clients. More than ever, an experienced, full-time, patient and calm broker is needed and we would love to be that for you and your friends and family.
Annette Holt & Davis Holt