Spring housing rush? Think again. 7 trends shaping Triangle spring housing market
The Triangle’s spring housing rush is well underway, but it’s more like a slow march.
In March, inventory slipped by 12% year-over-year in the 16-county region, according to the latest report from Triangle MLS (TMLS), a real estate listings platform based in Cary.
That’s pushed down the 12-month total of under-contract sales by 14.3% year-over-year.
Even so, demand remains strong, say experts. Homes sold after 41 days on the market compared to 49 days last year, TMLS found.
“It’s not the chaotic pace of 2021 [during the pandemic], and it’s not the sluggish pace of 2011 [when the market struggled to recover from the 2008 housing crash],” said Sharon Gupton, a broker with Compass at Fenton and president-elect for the Raleigh Regional Association of Realtors (RRAR).
TMLS, in partnership with UNC Kenan-Flagler Business School, just released its quarterly market report. Based on their analysis and insights from local Realtors, here’s a snapshot of the latest trends:
1. Mortgage rates aren’t going down anytime soon.
Despite hopes for lower mortgage rates earlier in the year, rates have increased.
The 30-year fixed-rate mortgage stands at 7.3% as of April 24, according to Bankrate’s weekly national survey of large lenders. That’s the second consecutive week of rates over 7.3%.
Higher-than-expected inflation (3.5%) is adding further pressure.
Relief isn’t expected anytime soon, said Roberto Quercia, a professor in the school’s department of city and regional planning.
He pointed to the current 10-year treasury yield — to which fixed-rate mortgages are linked — which forecast “higher interest rates for longer.”
Jon McBride, a Realtor with Coldwell Banker Howard Perry & Walston in Raleigh, urged buyers against sitting on the sidelines.
“Waiting for a drop could be a strategic misstep,” he said. “When rates eventually decrease, we expect a rush of buyers to enter the market. Given the already-strained inventory, this influx is likely to drive up prices.”
2. Home prices continue to trend upwards.
In Wake County, the median sales price (mid-way point) was $480,150 in March. That’s up 5.5% year-over-year.
In Durham County, it was $409,823, a 2.5% jump year-over-year.
On the plus side: Investors have pulled back a little from purchasing homes, Quercia said.
Nationwide, individual investors or second-home buyers, who make up many cash sales, purchased 15% of homes in March, down from 21% in February and 17% in March 2023, according to the latest data from the National Association of Realtors (NAR).
First-time homebuyers also accounted for 32% of sales in March, up from 26% in February and 28% in March 2023, NAR found.
The market’s resiliency is due, in part, to demographic changes and the region’s rapidly growing population.
Much of this migration consists of college-educated workers moving to the Triangle for tech and other high-paying jobs. “That’s kept the floor in terms of prices and demand,” Quercia said.
3. Buyers should expect lots of competition.
The region’s long-running housing shortage is also propping up prices and driving up competition, say experts.
“The demand is there. We just need listings,” said Maya Galletta, a Realtor with Legacy Realty Partners.
Across the Triangle, new listings are actually up 5.2% year-over-year in March. But that’s still not enough, she said. In hot zones like Cary and Apex, listings are selling quickly with “multiple offers.” Buyers should expect competition and higher due diligence fees in these markets, Galletta said.
“The outliers are typically overpriced or not in selling condition,” she added.
Buyer interest, as defined by showings/listings, remains highest in Cary/Apex/Morrisville with a score of 13.4, followed by Chapel Hill/Carrboro at 8.8 and Wake County at 8.4, according to TMLS.
Wake County leads as the largest market with 21,024 total showings, followed by Raleigh at 9,662, and Cary/Apex/Morrisville at 5,976.
4. Homeowners’ insurance is on the rise.
The hidden costs of owning a home are also escalating.
Earlier this year, the N.C. Rate Bureau, which represents companies that write insurance policies in the state, requested an average 42.2% hike in homeowners’ insurance rates across the state. It’s seeking even steeper spikes for storm-prone areas along the coast.
That’s even with the state’s consent-to-rate threshold, written into law, that allows companies to charge rates up to two and a half times higher the state-approved rate.
Weather-related losses, inflation and the cost of the reinsurance market — “insurance for insurance companies” — are to blame, the companies say.
Behind closed doors, North Carolina Insurance Commissioner Mike Causey is negotiating with the Rate Bureau.
But experts warn rates will likely rise dramatically by year’s end. Those at the lower end of the income spectrum will be hit the hardest, they say.
5. House price-to-income ratio is not what it used to be.
A general guideline is to buy a house at about two and half times your annual income. That’s no longer the case.
In Raleigh, the home price-to-income ratio of 5.8, according to a new study by Construction Coverage — is more than double what people used to think of as affordable.
In Durham, the ratio is at 5.2.
That growing affordability gap is pushing many first-time buyers to turn to smaller, more affordable alternatives: townhouses or condos.
They’re also expanding their search to bedroom towns like Zebulon and Knightdale further east and Pittsboro out west, where deals are more likely to be found.
6. Resale remains challenging as buyers turn to new construction.
Listings may be up, but many current owners with low-interest mortgages remain locked into their lower payments, say experts.
As a result, new buyers are increasingly served by new construction.
While permits and housing starts are declining nationwide, North Carolina stands out as one of only nine states where permits either stagnated or slightly went up year-over-year, Point2 spokesperson Carmen Rogobete said.
The 98,086 new permits issued last year translate to a 7% year-over-year boost, a Point2 study found. Of the state’s largest metros, Raleigh experienced a slight 4% drop compared to 2022, while Charlotte’s housing market saw an 8% increase in new home permits.
The data suggests a “potential boost in multifamily housing options,” Rogobete said.
7. Buyers’ agency commissions are up in the air.
This July, sweeping changes are coming to the housing market after NAR agreed to rewrite several rules to resolve claims of price fixing in a landmark legal settlement.
The new guidelines could slash the standard 5% to 6% commission of a home’s sale price. According to TD Cowen Insights, it could fall 25% to 50%, driving down house prices across the board.
Others are not so sure.
“I don’t think people are going to list their houses for less just because they’ve opted not to pay a buyer’s agent commission,” said Cory Sherman, a broker with Homegrown Real Estate in Durham. “They’re going to be using the most recent sales data to make pricing decisions.”
Matt Fowler, executive director of TMLS, is also skeptical. “I doubt buyer agents will accept way less money for what they do. It’s valuable,” he said. “We’ll see what happens.”
NC Reality Check is an N&O series holding those in power accountable and shining a light on public issues that affect the Triangle or North Carolina. Have a suggestion for a future story? Email realitycheck@newsobserver.com
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