Triangle home sales rose 5 percent in May compared to the same period a year ago, as the market continues to show steady improvement while the inventory of homes for sale keeps dwindling.
The total number of homes on the market in May in Durham, Johnston, Orange and Wake counties fell 17 percent to 6,712 – the ninth consecutive month that inventory has fallen when compared to the same period a year ago, Triangle Multiple Listing Services data show.
The shrinking inventory continues to befuddle real estate agents who are now scrambling to find listings for their clients.
“I know I sound like a broken record ... but the lack of inventory is troubling, everybody’s just scratching their heads about it,” said Kelly Cobb, a real estate agent with Fonville Morisey in Cary. “And the homes that we list there’s just such high demand for them.”
Sixty-five percent of the existing home sales in May occurred in under 30 days. The average days on the market for all the homes that sold last month was 51 days, down from 66 days during the same period in 2014.
“If it’s an average or above property in a desirable to average community you’re typically getting those properties under contract in less than a week,” said Kevin Woody, CEO of Better Homes and Gardens Go Real Estate. “You’ve got a lot of agents who are frustrated trying to get in for appointments even before it’s ready to go. It’s as aggressive as I’ve seen it and I’ve been selling here for 20 years.”
Half of the 81 price brackets in the four-county region now have an undersupply of homes on the market at the current pace of sales. Three months or less is considered to be an undersupply.
The Triangle market has segmented with well-maintained and well-located listings being scooped up quickly while other homes languish on the market, said Stacey Anfindesen, a Cary appraiser who analyzes MLS data. Most of the homes that aren’t selling are in upper price points, particularly above $500,000, he said.
For lower priced homes, the competition is often intense.
“We’ve had amazing multiple offers on properties, the likes of which I haven’t seen in nine years – since 2006,” Cobb said.
Anfindsen said some homes in northwest Cary that are being listed for under $300,000 are selling for $20,000, $30,000 or even $40,000 above the list price.
Home prices in the Triangle have been rising in recent years, although the gains have been relatively modest. The average price of the homes that sold in May was $272,428, up 6 percent from the same period a year ago.
“Sellers are wanting to be pretty aggressive and we’re trying to coach them to stay within the area of reason,” Woody said. “You can get the best price in your neighborhood a lot of times if it’s comparable to other homes that have sold, but it’s not going to go for 10 percent more.”
Cobb said some sellers have been frustrated that their homes are not appraising for the prices that buyers are willing to pay.
For buyers, the scarcity of listings means it’s crucial that they have the ability to move quickly, which means having a pre-approval letter from a mortgage lender.
Some buyers are appealing to more than just a seller’s pocketbook in an effort to distinguish themselves from the competition.
“In many cases I’m seeing these letters that buyers have written saying why you should choose me,” Cobb said, describing a tactic that became popular during the housing boom last decade. “They’re back with a fervor and some include pictures of the family and even the family dog. It’s crazy.”
Few believe the Triangle’s inventory will rise significantly anytime soon. Woody said one problem is that the supply of new homes being built in the region isn’t keeping up with rising demand. He expects an increase in new home inventory won’t appear for another 6 to 10 months.
Another problem is that a certain segment of owners remains content to stay on the sidelines.
“The people kind of at the top of the heap that might move from the third home they own in the area to their fourth home,” Woody said. “They’ve got a good home and they know it will sell quickly but they’re not responding to the inventory that’s available.”
Since buyers typically move up to different price points over time, “that creates the bottleneck down through the price points,” he said.