2021 Second Quarter Report
April, May, & June
Here’s what’s happened this spring and what’s next!
Last quarter we predicted the market would heat up and prices would continue to rise, which happened.
So what’s next?
This report is about the real estate market of Southeastern North Carolina, specifically the Wilmington Metro Area/Tri-county 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, & Pender Counties
“Bubble Bubble, Here Comes Trouble”
Closed Sales Month by Month
Click image for Interactive Graph
This graph shows the number of homes sold per month in the tri-county area of southeastern NC.
The Closed Sales graph shows the huge spike in homes sold this March. The spike is especially strong for the month of March. These kinds of big jumps in home sales are pretty normal because most people don’t want to buy or sell homes in the winter, they wait for the warmer Spring weather or when their kids are out of school.
Since March, the number of closed sales has started to level off. With home prices at record highs and inventories at record lows, we may be finally starting to see a slow down in the market. Maybe…
When compared to 2020, this year’s numbers seem not as strong but when compared to previous years, 2021 is still set to be a solid year for real estate sales locally.
New Listings
Click image for Interactive Graph
This graph shows the number of new homes listed for sale year over year, separated by price range, in the tri-county area of southeastern NC.
The New Listings graph shows a breakdown of the newly listed homes by price range. As you can clearly see, there are fewer and fewer affordably priced homes being added to the market over the last 5 years. This is due in part because entry level homes are getting more expensive and most builders don’t want to build affordable homes. The reason is the profit margins aren’t as big as they are for more expensive homes.
Much of what is considered affordable is selling for between $200,000 and $350,000, which is why this price segment is in the lead for new listings. As of June, the higher end homes have very nearly caught up. As I’ve said before, higher end homes are really driving the market right now. Many of these buyers are older and coming from out of state, which is why they can afford the more expensive homes. This is good and bad for reasons we will explore later in this report.
The next Closed Sales graph shows all homes, in all price points and is representative of the real estate market as a whole. The trendline of the graph has finally started to level off after 2 years of aggressive growth.
So why are we seeing this change in number of homes sold?
There aren’t enough homes being sold to satisfy all the available buyers. This drives prices up. These high prices and lack of inventory means people who might have considered selling their homes and buying another are now waiting. These people are afraid they will sell and then become homeless while trying to find a home to buy.
Closed Sales Year over Year
Click image for Interactive Graph
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.
Wilmington and Southeastern NC is a popular place for people to move to, especially from places like the Northeast and the West Coast. They are selling their homes elsewhere but that doesn’t help our inventory locally. Renters are also starting to understand the benefits of homeownership, so they are looking for homes to buy. Because they don’t have a home to sell, this doesn’t help our inventory either. Mortgage interest rates are still at historic lows and the economy appears to be slowly recovering, both are significant factors in increased demand for homes.
All of these factors have contributed to housing inventory reaching historic lows.
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
“Changes”
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.
Things have started to change.
Unlike the overall real estate market, affordable home sales have actually started to reverse course. This is subject to change, as there isn’t enough data available yet to make an accurate prediction of what’s to come.
If the trend continues and March 2021 is our peak month for home sales, then 2021 would be the worst year for home sales since 2015.
Closed Sales Year over Year
Click image for Interactive Graph
This graph shows the number of “affordable” homes sold per month in the tri-county area of southeastern NC.
There are still not enough homes for sale for everyone that wants one.
Supply for the overall market is currently 0.8 months as of June 2021. Supply for affordable homes is down to only 0.5 months as of June. You can see in the Months Supply graph the trend for all price points has declined significantly over the last 5 years. The supply of $350k plus homes have fallen by 83% over the last 5 years, from 14.5 months to 2.5 months. The supply levels for affordable homes was in the balanced range 5 years ago but has steadily gotten tighter and tighter.
Months Supply by Price
Click image for Interactive Graph
This graph shows the number of months supply for all price points year over year in the tri-county area of southeastern NC.
Let’s take a look at all of the different price segments together
The graph above shows the different housing price segments and how many homes sold in each per month.
Homes over $350,000: (pink line) are showing incredibly strong sales.
Homes between $250,000 and $350,000: (green line) were steadily increasing but have stalled.
Homes under $250,000: (red and blue lines) are weak and in steady decline for the last 5 years.
This tells me that the higher end homes are driving the market and the average cost of a home sold is going up.
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.
Closed Sales by Price
Click image for Interactive Graph
This graph shows the number of homes sold for each price points year over year in the tri-county area of southeastern NC.
The Big Picture
The market is starting to level off for affordable homes
Demand for home-ownership is still high
Home sales will probably level off
Home prices will continue to rise, but more slowly
High-end home sales are driving the market
Affordable homes are becoming more expensive
What does this mean?
SHORT-TERM: Next 2-3 months
This Summer the market will be much like the Spring. Many more homes high end homes will come on the market and we may see a bump in affordable homes listed.
Southeastern NC is a very popular place to relocate to, buyer demand will remain strong. Sellers looking to stay in the area will remain wary and we probably won’t see a huge jump in new listings, especially in the affordable range.
LONGER-TERM: Next 3-6 months
This Fall we can expect to see the real estate market slow even more but prices will remain high.
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 the economy at large. The economy and the world seem to be stabilizing which is good as it inspires confidence at all levels. Jobs are returning and unemployment is dropping, though not as fast as predicted or desired.
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. The federal government doesn’t want to raise rates because it could shock the overall economy while it’s still vulnerable. Interest rates may still rise as 10 year Treasury Bond yields rise. They rose first quarter of 2021, causing interest rates to go up as well. Bonds yields have slowly fallen over the second quarter and with them interest rates. If we see a strengthening America economy this summer and fall, we may see interest rates rise…
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 early 2022. Demand is too strong and interest rates are at historic lows. The real estate market is in bubble and when it bursts, it’s going to be much more painful for a lot of Americans. It won’t be as painful for us in Southeastern NC because demand to move to the area will continue to be strong for the foreseeable future.
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!
