2021 First Quarter Report
2021 is off to a crazy start but 2020 was a crazy year…
Last quarter we predicted a slowing and then the rebound of the market, which happened.
So what’s next?
This report is about the real estate market of Southeastern North Carolina, specifically the Wilmington Metro Area.
Let’s take a deeper look…
All of the graphs are interactive so feel free to explore the numbers for yourself.
Tri-County Homes Sold
New Hanover, Brunswick, and Pender Counties
“Pandemic Demand”
This graph shows the number of homes sold per month in the tri-county area of southeastern NC.
The graph shows a huge spike in the number of homes sold from February to March. Big jumps are pretty normal as most people don’t want to buy or sell homes in the winter and wait for March’s warmer weather.
The interesting thing is that our winter numbers were stronger than most years Springs or Falls numbers. The demand for homes right now is simply staggering...
We are on track for another record year in the number of homes sold.
The next graph shows all homes, in all price points and is representative of the real estate market as a whole. The trendline of the graph on the right is still nearly vertical.
So why are we seeing record numbers of homes sold?
Clearly, home-ownership has become a top priority for many in the era of the coronavirus. Mortgage interest rates are still at historic lows and the economy appears to be recovering.
Renting an apartment and living close to strangers right now is not as desirable as owning a home. Owning a home gives a sense of security and control in uncertain times.
This graph shows the year over year number of homes sold in the tri-county area of southeastern NC. This graph is better for spotting trends.
Lastly, many people sense this opportunity to buy a home will end soon. At a certain point, this bubble will burst and buyers know it. Seller’s do too and those who’ve held off selling are now getting top dollar for their homes.
The whole story isn’t being told here…
NOTE: The graphs below are for homes sold in the “affordable range.” In this instance, “Affordable” homes are homes that sell for $350,000 or less.
Affordable Home Sales
In the Tri-County area
“Catching Up”
The next graph shows how the affordable housing market has started to improve versus years past. Midway through 2020 this segment began to take off like the higher-end homes that are driving the market.
This tells us a few things. It seems that more affordable housing is becoming available, more new homes and more homeowners looking to sell and cash in. Also, consumer confidence is going up. Especially for those who are middle class and lower middle class. As jobs return, so does consumer spending which is the basis of our economy.
This graph shows the number of “affordable” homes sold per month in the tri-county area of southeastern NC.
There is still not enough homes for sale for everyone that wants to buy one.
Supply for the overall market is currently 0.9 months as of March 2021. Supply for affordable homes is only 0.6 months as of March. You can see the breakdown for the individual price categories below, most have even less inventory.
Based on the two graphs above, we can see one thing is clear. Even though more affordable homes have been sold, there still isn’t enough of them to satisfy buyer demand. Combine this with the fact that most builders aren’t building affordable homes means inventory supply is going to get worse and prices will continue to climb.
Let’s take a look at all of the different price segments together real quick
The graph above shows the different housing price segments and how many homes sold in each per month. As you can see, homes over $350,000 (pink line) are showing incredibly strong sales whereas homes under $250,000 are weak and flat (red and blue lines).
The number of homes sold between $250,000 and $350,000 (green line) are steadily increasing. This tells me that once affordably priced homes are rising in value and are progressively less affordable.
Higher-end homes are often bought by people relocating to the area, especially from the Northeast or the West Coast. They sell a home and move down, often getting a much nicer home in the process.
The decline in homes under $100,000 (blue line) sold is most likely due to a lack of inventory, also investment-grade houses are selling for higher prices due to high demand and low supply.
The Big Picture
We’re off to a strong start in 2021
Coronavirus is still causing incredible demand for home-ownership
Home sales will continue to be strong
Home prices will continue to rise
High-end home sales are still driving the market
Affordable homes are becoming more expensive
What does this mean?
SHORT-TERM: Next 2-3 months
This Spring the market will continue to grow. More homes will be for sale and buyer competition is fierce!
Get ready for another record year in real estate. Because Southeastern NC is a very popular place to relocate to, buyer demand will remain strong.
LONGER-TERM: Next 3-6 months
This Summer we can expect to see the real estate market really take off and prices to get even higher.
It is always difficult to predict what will happen in the future. There are so many factors that can affect the real estate market and economy at large. Because of the vaccine rollout, things are stabilizing. This is good generally as it inspires confidence at all levels. Jobs are also returning and unemployment is dropping, heading back toward pre-Covid levels. The number of permanent jobs lost will depend on how long it takes to vaccinate most Americans. This will be the number one driver of the US economy for the next several months.
One strong driver of the real estate market is low interest loans and their availability. Demand for homes will probably stay high as long as interest rates stay low. In uncertain financial times, banks may slow down or even stop lending which would cause a sharp decline in home sales and prices to fall.
What does this mean for you?!
SHORT-TERM: Next 2-3 months
Now is still a great time to sell a home and an “alright” time to buy one. Sellers will still get top-dollar for their homes and buyers still have historically low mortgage rates.
LONGER-TERM: Next 3-6 months
I used to think buyers would probably see a rebalancing of power/leverage sometime in mid 2021 but I don’t think that will happen until 2022 now. Demand is too strong and banks are still lending. But that means we are heading towards another real estate bubble. When the bubble bursts, it’s going to be much more painful for a lot of Americans.
Longer-term will still be a great time to sell a home and an “alright” time to buy one. Sellers will still get top-dollar for their homes and buyers will still have historically low mortgage rates.
Ty Shaw
Realtor/Broker/Owner
SWELL home & living
If you have questions about this report or anything real estate related, please let us know!
