At the end of 2014 there was a noticeable shift in the real estate market. The pendulum had swung from a market that favored buyers to one that was beginning to look up for sellers. Before that time the only sellers who were listing their home on the market for sale were the ones who had too. They were the ones changing jobs and relocating to a new city or the homeowner who was right on the cusp of foreclosure. There were plenty of people who were a part of both demographics.
But then the spring of 2015 happened and some fundamental changes occurred in the market. Short Sales and Foreclosures, to a large extent, had cleared, home builders started building again, and re-sale inventory began to shorten. There were already whispers floating around the market stating that the climate was turning towards the favor of sellers. But not many people believed it until they began to witness homes selling in far less time than the market average.
The trend continued throughout 2015 with multiple offers that inevitably led to homes selling for thousands of dollars over list price. This was the beginning of the Triangle’s real estate boom. Although tens of thousands of homes were flying off the market at great prices, unfortunately, many were not appraising. This led to sellers, especially the ones who lived in prime locations, demanding conditions in offers that said that buyers would have to prove they had the cash to cover the difference between the sales price and the appraised value in order for them to agree to terms.
Buyers accepted the realities of the new market and started ponying up more cash to close and dishing out larger deposit amounts which was an abnormal practice just six months prior.
In 2016, the “flood gates opened” and it was pretty much a given, for prime locations, that if you were a buyer you were going to be paying list price or higher with no financial concessions. For secondary markets, if the home showed well online with great photos and was priced just right it could see multiple offers and if you were further away from the urban core you could likely sale for 96% of list price with the inclusion of concessions.
The 2016 market was hot! But not only in the spring, summer, and early fall seasons which are traditionally known as the selling season but in all four quarters. People were still buying homes during Christmas!
But now the year is 2017 and everyone is wondering will the trend continue? There is a high probability it will.
According to Wake County Economic Development approximately sixty-three people per day are entering Wake County. Additionally, major media outlets such as Forbes and Businessweek continue to name Raleigh-Durham and the surrounding areas as one of the best places to live, work, and build a family. Then when it comes to buying a home it is still considered to be one of the most affordable places to own a home.
With that said here’s what we can expect to see in the housing market for 2017:
- The Rise in Listing Prices – Sellers recognize they’re home is worth more and as a result they’re asking for more.
- Higher Sales Prices – Not only will homes sell for list price many will sell for thousands of dollars over the listed price.
- Less Days on Market – When supply is low and the demand is high it inevitably leads to product selling faster. Buyers will not have much time to consider their purchase before making a decision.
- Multiple Offers for Prime Locations and Homes Priced to Sell – Property that sits in a great location has always come with a premium. But so does homes that are priced just right. Savvy sellers understand that when they’re home demonstrates more value then what it cost it will always be desired by multiple buyers in the market.
But there’s another element at play that’s going to eventually change the market over the course of the year. Interest rates are expected to rise and there will be less buyers in the market place. They will be squeezed out by both the rising interest rates as well as the rising prices. This alone should lead to a balanced market where prices begin to stabilize. But I predict that we won’t see such a change until the latter part of the year.
Author – Steve Gunter is the Real Estate Team Leader and Editor in Chief for Urhous Real Estate and Media Group. Steve enjoys running, eating (especially a great slab of ribs), and although he can’t swim, going to the water park with his wife and kids.