In a hot market, NC reaches highest home price growth rate in almost 30 years
The unprecedented single-family housing boom in North Carolina reached a notable milestone in 2020: The state reached annual home price growth of over 10% for the first time in almost 30 years.
North Carolina shared this home price performance with eight other states in the nation in the last three months of 2020.
The state’s high of 11.38% year-over-year price growth in the fourth quarter of 2020 is nearly double the 6.42% growth rate in the fourth quarter of 2019.
Market experts say this is a product of the COVID-19-induced housing boom in the state. The pandemic lowered federal interest rates, making mortgages more affordable. People working from home increased people’s desire to move to the state as well as in-state migration.
This accelerated high demand, reducing already limited housing supplies to record lows, which spiked prices, while the pandemic also increased home construction material costs.
Stacey Anfindsen, a real estate analyst with Triangle Area Residential Realty, said the chart-topping house price growth in North Carolina isn’t a surprise, given the housing boom.
“The Triangle is probably the one responsible for that average being up, because if you go east, exclusive of the coast, they have not seen these prices,” said Anfindsen. “You’ve got significantly more people moving in [to the Triangle] than moving out, and inventory, both resale and in construction, can’t keep up with it. Whenever you have an imbalance of supply and demand — a housing shortage — you’re going to have housing prices go up at a higher pace than they typically would.”
The Triangle’s supply was at one month in January, and the average house price was $370,900 — an 11% increase from one year prior, data from the Triangle Multiple Listing Services show.
In January, housing supply was at 0.7, or 21 days, in the greater Charlotte market, according to the Canopy Realtor Association. The average house price was $339,984, a 13.6% increase from the year before.
Both Charlotte and Raleigh are classified by the Urban Land Institute as big markets that attract in-migration. The ULI’s annual trend report ranked Raleigh/Durham as No. 1 in overall real estate prospects and homebuilding prospects. It ranked Charlotte as fifth in overall real estate prospects and 11th in homebuilding prospects.
Otto Cedeño, executive director of Movil Realty and a director of the Durham Regional Association of Realtors, said he has received a surge of homebuyers from New York and the Northeast coming to the Triangle. Many suburban residents have been selling their Triangle homes to move to more rural areas, he said.
It’s no wonder house prices skyrocketed, Cedeño said, because “the pandemic has led to lifestyle changes and people migrate as a result. The real estate industry is the great beneficiary of that.”
Cedeño has worked to meet the demand in Wake, Durham, Orange along with surrounding counties, leading to his firm’s home sales more than doubling on average in the last year, he said.
“You had to stay shut in for months at a time, and you realize want a different kind of home,” Cedeño said. “So you sell your home and buy another. You’ve just generated two transactions right there.”
Supply drops, prices rise
North Carolina’s biggest markets — Charlotte and the Triangle — are mirroring all-time lows in housing supply nationally, with each reaching a supply rate of roughly one month, meaning it would take less than 30 days for all homes in these markets to be sold at the current pace.
The price of lumber has increased nationally, too, which also is driving up the costs of homes. The lumber price hike is not only due to increased housing demand, but supply production shortage stemming from COVID-19 as well.
The ULI report says the Charlotte and Triangle metros’ affordability in comparison to big city real estate markets, draws many newcomers. Their “dynamic economies” make them popular with developers and investors in 2021.
“If I’m working from home, why do I have to stay in New York City when I can move to the Triangle and have a better quality of life in addition to a lower cost of living?” Cedeño said.
As such, the main house price gains are concentrated in the Charlotte, Triangle, mountain and coastal areas in North Carolina, according to Anfindsen.
All of the constant upward trends mean that Anfindsen monthly Triangle housing market reports tend to repeat themselves more often than usual.
“It’s a challenge for me to have to write the same thing every month,” he said.
This story was originally published March 12, 2021 at 12:21 PM.
