Triangle home sales jumped 33 percent in January, a sign that the housing market is entering the upcoming spring selling season with a fair amount of momentum.
The January numbers show that the market dynamics that were in place much of last year – rising sales combined with a shrinking inventory of homes on the market – have continued into 2013.
There were 1,232 homes sold in Durham, Johnston, Orange and Wake counties, Triangle Multiple Listing Services data show. That’s the most homes sold in January since 2008.
Meanwhile, there were just 7,317 homes for sale at the end of January, down 20 percent from the same time last year and off 38 percent from two years ago. Only 20 percent of the price segments in the Triangle now have an oversupply of homes, meaning they have 10 months or more of supply, according to MLS.
“The inventory level is as low as I have on record,” said Stacey Anfindsen, a Cary appraiser who analyzes MLS data for area agents.
The fact that inventory levels have continued to decline while the market has improved is perhaps the best indication of just how much the economic downturn has changed the way people buy and sell houses.
The Triangle, for example, has historically relied on the so-called “move-up buyer” to provide a steady flow of new inventory to the market. The term refers to an individual or family that puts their house up for sale because they are looking to move into a larger, and more expensive, home to meet their changing needs.
A number of factors have now made moving up more difficult, which has changed the mentality of the move-up buyer.
“I think the move-up market has – I don’t want to say it’s evaporated – but it’s really a sliver of what it once was,” Anfindsen said.
Such a move was historically financed by the equity a homeowner had built up, but many owners have lost some or all of their equity over the past five years. While the Triangle has seen a strong increase in sales activity over the past year, it has not experienced the level of price increases that some other markets have.
Excluding distressed sales, home prices last year increased 3 percent in the Raleigh-Cary market and 0.8 percent in Durham-Chapel Hill, according to CoreLogic, a real estate data provider. That compared to 8.3 percent nationally.
“Some just say hey, ‘I don’t need to do it this year or next. I will wait until the market rises, and we pray that it does,’ ” said Kelly Cobb, a real estate agent with Fonville Morisey in Cary.
Cobb said many move-up buyers also may not be willing, or able, to make the necessary improvements to their home to get it sold. Most buyers today expect a house to be move-in ready, and sellers may balk at spending thousands of dollars to improve their home when it’s unlikely they will recoup that money in the sales price.
“If your house is not updated, to a certain extent you’re not going to be able to get a buyer,” Cobb said. “A lot of people don’t want to access their cash or don’t have access to the cash to go in there and put in granite, and do the other things that the buyer today expects and gets.”
The lack of move-up buyers means much of the resale inventory now on the market is either distressed properties or people moving out of the Triangle. This has created pent-up demand from buyers not able to find what they are looking for.
Cobb said she now receives daily emails from other agents asking whether she has listings in specific areas because the agent has an eager buyer. “We didn’t see that last year, or the year before,” she said.
If a property does have what buyers are looking for, it often doesn’t last long. The average days on the market of the homes that sold in January decreased 15 days to 115 compared with the same period last year.
The question now is whether the Triangle will see a measurable uptick in listings in the next several months. Cobb said her office is preparing to list “piles of houses” this spring.
Anfindsen said any increase in listings is likely going to be moderate given that housing prices have not recovered enough for the buyers who bought during the years leading up to the crash.
“It’s a slow healing process,” he said.