RALEIGH – One in every four homes for sale in Raleigh’s metropolitan statistical area in June saw at least one price drop, according to a new report from national real estate brokerage Redfin.
Plus: Inventory is slowly beginning to rise, with more homes coming on the market in May, and again in June.
The report found that in the Raleigh area, 25.9% of homes for sale in June saw sellers drop their asking price during the month. In June 2021, only 5.5% of home sellers dropped the price on a property they sought to sell.
“Home sellers are contending with a rapidly changing market, especially in places where they’re used to their neighbor’s homes getting multiple offers and selling for more than asking price,” said Sheharyar Bokhari, a senior economist at Redfin, in the report. “Higher mortgage rates and a potential recession are causing prospective buyers in popular migration destinations to press the pause button, and they’re also having a big impact on workers in big job centers who rely on their stock portfolio for down payments.”
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What’s happening in the Triangle
But the real estate markets in the Triangle don’t always operate in conjunction with what’s happening nationally, or in other markets. Demand for housing still remains strong in the Triangle, said Tony Fink, a licensed real estate agent and REALTOR with Linda Craft & Team REALTORS in Raleigh.
“I don’t believe it is signaling any softness in home values, which is different than list price,” said Fink. “Everyone, when they list their house, will try to sell the house above the price of the last comparable property sold,” he noted.
But it’s the buyers who set market price for property, noted Fink.
“In my experience, and as I expected, as the market begins to shift or rebalance, you would expect a higher percentage of homes to sell at or below list price, for the following reason,” he said. “The first three months of the year were hypercompetitive, with significantly lower supply.”
Kevin Lin is closing on a home in Cary after three months of tough competition.
“We made several offers but the buyer didn’t even take our offers, unfortunately,” said Lin.
Inventory slowly increasing
According to data from the Triangle Multiple Listing Service, TMLS, obtained by WRAL TechWire, there were 2,502 new listings that came on the market in June, with 1.1 months of inventory available. That’s up from 2,332 in May 2022 with 0.8 months of inventory and up from 2,162 listings in June 2021 with only 0.5 months of inventory.
“As inventory levels have started to increase, which they have been doing in May and June, it’s still a seller’s market, but as inventory increases buyers can become more patient, because they have more options,” said Fink.
And that’s what’s happening now, and it’s healthy, said Fink.
“We don’t have any devaluation occurring in home value, but we certainly have a leveling off of price appreciation, which our firm expected to happen, and is a necessary thing,” he added.
While inventory is slowing increasing, noted Matt Fowler, the executive director of Triangle Multiple Listing Service in an interview with WRAL TechWire, there’s still a dearth of supply for homes at affordable price points. And those listings, when they do become available, are also targets for cash buyers, including investors, which means that first-time homebuyers relying on a mortgage to buy the property may face strong competition.
“Rate of sales slowed marginally, but the number of listings went up,” said Fowler. That’s led to the increase in the months of supply indicator.
Still, said Fowler, you’d have to look back seven years to find a real estate market in the region that is one with normal balance.
“The velocity of the market remains at near record highs,” said Fowler. “We’re a little bit off of the peaks, which came in 2021, but we’re recovering slightly with more homes coming on the market.”
Wake County real estate market sees a price pause – agents still predict prices will rise
“Some of the sellers are really just trying to catch buyers, right? So, if I was listed at $510,000, we’re seeing some people that are dropping to $499,000 in an attempt to grab a new buyer pool that maybe they were missing by being just over that mark,” said Jason Kogok, the co-owner of Your Luxury Movers Real Estate.
Mortgage rates tick back up
In mid-June, mortgage interest rates for some would-be homebuyers rose above 6%. That put many homebuyers into a holding pattern, said Fink. But with rates dipping in recent weeks, there was a slight pickup in buyer activity, he noted.
“When interest rates went above 6%, it didn’t stop the market, but it did pause the market,” said Fink. “Some buyers had to adjust their target price as mortgage rates moved against them, moving from 4% to 6%.”
But the latest data from Freddie Mac shows that mortgage rates did increase this week after falling the prior week. Whereas a week ago, the typical interest rate on a 30-year fixed mortgage was 5.3%, the data from this week shows that the typical rate is now 5.51%.
“This is a great time for buyers. I know that a lot of them have felt a little bit of a squeeze with mortgage rates increasing over the past couple months and that has certainly affected of a number of them, but at the same time, if you look at it historically, these rates are not bad,” said Julie Toy, a real estate agent with Coldwell Banker Advantage.
And while mortgage rates did not spike yesterday in response to the release of the consumer price index by the U.S. Bureau of Labor Statistics, which found a twelve-month inflation rate of 9.1%, the Federal Reserve may now increase interest rates again, said Jon DeHart, a mortgage broker with Movement Mortgage in Durham.
“The Fed is now likely to announce a 100 basis point increase at the next meeting,” said DeHart. “The odds of that last week were less than 10%.”
But now, with a strong U.S. jobs report last Friday, and higher-than expected inflation figures, the Federal Reserve may act to slow inflation by issuing a further increase in the federal funds rate. This in turn may increase the cost of borrowing for U.S. consumers, including homebuyers seeking a mortgage.
Mortgage rates fell last week, but decline provides little relief to Triangle homebuyers
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