Any predictions that the Triangle housing market would start to taper in 2022 are proving to be wrong as spring moves closer. As the real estate market continues to boom across the Raleigh-Durham area, challenges remain as demand continues to grow and a lack of inventory strains the market.
A report from Zillow forecasts annual home values will grow through May, and according to their report, the rate would peak at 21.6 percent. By the end of December of 2021, Wake County had already reached historic highs in median real estate prices at nearly $400,000. If it meets that peak rate predicted by Zillow, that will put a median home price in the Triangle to more than $480,000.
The problem is the Triangle area is already seeing greater than 21 percent spikes in its median sales prices. In January alone, the entire region saw a 24.2 percent increase in median sales prices. In Durham County, that change was 28.8 percent, which was higher than Wake County’s 25.4 percent. While Orange County was significantly lower at 13.4 percent, it’s Johnston County that is seeing the biggest change, at a massive 30 percent increase in median sales prices.
In addition to median sales prices, there are a few additional situations that may put an added strain on the real estate market in the Triangle.
Search luxury home listings in the Triangle area from the Jim Allen Group using the interactive Home Watch map.
The supply inventory continues to shrink
In a healthy housing market, a six-month supply of inventory is available to meet the demand of buyers. In 2021, the Triangle saw an average of just under a one-month supply, even at the luxury home prices above $1 million. Already, and during the slower winter season, that number is down to a 15-day supply in 2022. Until more homes hit the market, in either the form of existing home sales or new construction, it’s unlikely those supply numbers will normalize this year.
Mortgage rates are expected to rise this spring
The Federal Reserve is expected to being raising interest rates for spring. However, those rates are only expected to climb by a fraction of a point. Realtor.com reports that an interest rate increase in 2022 will still be lower than where interest rates stood pre-pandemic. Still, as median sales prices increase, even a .25 percent increase may be enough for some potential buyers to see home ownership as just out of reach.
Russia and Ukraine may have an impact on the Triangle
While countries across the globe may seem to have little to do with what’s happening in North Carolina, the conflict in eastern Europe is causing concern within the real estate market and beyond.
“We’re already seeing more expensive gas,” said Paul Kane, executive vice president and CEO of the Home Builders Association of Raleigh-Wake County. He pointed to a current trend within the area: homebuyers are looking for affordable product with more amenities in the suburban and rural areas of the Triangle. “It makes that decision more complicated. The commute becomes a lot more expensive and counteracts the fact that you get a more affordable home across counties.”
Kane also pointed to the disruption the Russia-Ukraine conflict will have on the global marketplace, and in particular, on the ability to get the supplies builders need to complete the homes they’re selling. “Everything is so interconnected,” he said. “That’s all the more reason I’m of the belief that we won’t see a leveling off of home prices.”
Thinking about buying a home? Check out this list of local professionals with the Jim Allen Group.
The Jim Allen Group is a nationally-recognized and award-winning real estate team in Raleigh, North Carolina ranked the #1 Coldwell Banker HPW Sales Team in the nation.
See original post: https://www.bizjournals.com/triangle/news/2022/04/01/where-the-triangle-real-estate-market-is-headed-in.html