Frenzied Triangle home market heads into the summer among most competitive in US
The turbocharged Triangle housing market is continuing its unprecedented streak of activity with an undersupply and rising home prices.
The number of homes sold above their asking price and homes already sold before they’re recorded in the home listing database skyrocketed in June, market figures show. Homes in Raleigh are typically selling in just four days, according to Zillow, which ranks the metro area as second in the U.S. for the fewest days a home is officially listed on the market.
That’s how long a north Raleigh home was up for sale before Aubrey McCarn and her husband bought it this month. They had been eyeing the home before it went live while navigating the market as first-time homebuyers.
“We saw three properties and we put an offer in on two of them,” McCarn, 25, told The News & Observer. “The first one we put an offer on, they only ended up showing it for one day because they had 20 showings and 15 offers in one day. And then that one sold for, I think, $40,000 over asking price.”
The average price of a home in Raleigh is currently around $333,255 according to Zillow home value data. It is roughly $327,000 across the greater region, Triangle Area Residential Report figures say.
That’s not far off the average U.S. home price of $350,000, an all-time high, the National Association of Realtors reported in June.
“With the market now, having to offer at least $10,000 (over asking price) and paying due diligence before having the home inspected, it’s kind of scary,” McCarn said.
Due diligence is the nonrefundable deposit that buyers give to the seller for the period to decide whether to proceed with the sale.
The competitive market
Raleigh is the third most competitive market in the U.S., according to Charlotte mortgage site LendingTree. That’s due to the share of its homebuyers having credit scores above 700, buyers putting 20% or more in down payment and shopping for a mortgage before looking for a home.
The McCarns were pre-approved for a mortgage and put down a roughly 21% down payment on their $300,000 home.
Three-digit figures from the first two weeks of June paint a picture of the high volume in sales activity: compared with June 2020, the number of homes sold above the list price is up 324% and homes with zero days on the market rose by 259%. Those are homes that sold before they were registered in the Triangle Multiple Listing Service database, according to the Triangle residential report.
These numbers point to the undersupply of re-sale housing that has resulted from the red-hot market, said residential report author Stacey Anfindsen, who reports that the sales-to-list price ratio for homes sold in the first two weeks of June was 106%. A ratio above 100% means homes were sold above their list price.
“I have been tracking the sales price/list price ratio for decades and it consistently indicated percentages between 97% and 99%,” said Anfindsen. “Not only have those percentages been eclipsed this year, they are increasing on a biweekly basis. The 106% ratio for the first two weeks of June was the highest since I have been tracking this metric. In my opinion, this is a key indicator to observe to determine a peak in re-sale house prices.”
More and more people are being priced out of the home-buying market since real estate agents are preferring preapproved conventional loans over Federal Housing Authority or Veterans Affairs loans and more sellers are asking for 20% down payments, according to the NAR.
Black and Latino buyers who use these loans more often are getting shut out, the Wall Street Journal reported.
Big demand, big prices
Nicole Bachaud, economic data analyst at Zillow, says that though around 44% of homes are selling above list price in the Raleigh metro area, the majority of homes sold didn’t, so buyers still have a chance at more affordable houses.
“Raleigh is pretty similar to a lot of other Midwest, Sun Belt, more affordable markets right now — it’s really in demand because prices are lower than some of more dense coastal markets and that’s putting a lot of pressure on inventory,” Bachaud told The N&O in an interview. “Raleigh did not experience any increase in inventory that we’re seeing in some other markets over the last month.”
Inventory in the Raleigh market, which includes the rest of Wake County, is down 50% year-over-year and home prices have risen 14%, according to Zillow.
“We’re still forecasting out pretty high appreciation overall for the next year and incoming years,” said Bachaud. “We don’t really anticipate prices going down at all.... Eventually we’re not going to see 10-15% appreciation, those prices are going to start to moderate and go back to more typical levels. [New housing] inventory is definitely going to help to keep that in check.”
This story was originally published July 1, 2021 at 12:12 PM.
