As of today, there are 6,718 homes “Active” for sale in the Triangle Multiple Listing Service (TMLS). TMLS covers 16 counties in the Triangle area, with the populous cities of Raleigh, Durham, Chapel Hill, and Wake Forest all under the same umbrella. This is a lot of property owners & renters using the same database!
Why Does Inventory Matter?
A term you’ll see quite a bit in the economics field is consumer confidence. This is an indicator of the average consumer’s degree of optimism regarding overall economic conditions as well as their personal financial situation at any given time. Confident consumers make lots of purchases and the economy thrives. Unconfident consumers tighten the purse strings and the economy contracts.
We are seeing and feeling the effects of plummeting consumer confidence since novel coronavirus and COVID-19 grew into a significant global threat. Folks are not as likely to buy homes during this period. Even in the early stages of contagion in North Carolina, we began to see consumer confidence decrease.
Inventory on TMLS helps us gauge the local Raleigh person’s confidence. Many homes on market means people feel good about the real estate market and they’re looking to buy or sell. Fewer homes on the market means people are not as ready to go forward with these large transactions.
Economic Crises: 2008 & 2020
As I recently told a client, it is easy to feel the purse strings tighten as the U.S. economy tanks and be reminded of the 2008 housing market crisis. In 2020, it is important that property owners be willing to weather the storm and remember that the markets will rebound. You could come out the other end of this pandemic with increased home value far above what you could get for your home by panic selling now.
As the DOW, S&P, and NASDAQ continually close at depressing numbers, it’s clear that stock is not currently a stable investment. Real estate is, as it has always been, is a stable investment which will continually increase in value over time. Raleigh has recently been ranked as one of the most pleasant places to live in the entire country, and we’ve seen a huge influx of new residents in recent years (I-40 wasn’t always a parking lot during rush hour!).
No market is exempt from feeling fallout from this coronavirus crisis. Home prices in Raleigh will dip in the coming months as people come to terms with their new financial situation and work out how to navigate this new reality. The size of the dip is dependent upon the severity of the viral pandemic.
As humanity comes out the other side of COVID-19, we will see that all aspects of life in Raleigh which make it such a wonderful place to live are still intact. The spirit of Raleigh and its growth mindset and progress that attracts so many now will prevail. If you are able, now is the time to put some elbow grease into your real estate investments. If it’s your personal home, fix it up and make it shine like new. If you have the capital, consider purchasing a new rental property.
Rates are still at historic lows as a happy result of this economic crisis not being a repeat of 2008’s housing bubble crash. Even a 0.5% change in your mortgage interest rate can significantly influence your finances. Reach out to your preferred lender if you wish to gather more information on these rates. If you don’t have a preferred lender, reach out to me and I’ll get you in contact with the finest FM Lending provider in all the lands: Donna Watkins.
Consumer confidence is going to fluctuate as national and global markets waver during COVID-19. Raleigh is and always will be a fantastic place to live and raise your family, but we will see a slow down of our thriving real estate market during this pandemic.
If you don’t need to liquidate your real estate assets to keep your family afloat, don’t! Maintain your investment. Repair that one step on the deck stairs that’s creaking. Take this mandatory time at home and invest in your future by maintaining your family’s home.
Lastly, you may be able to refinance your mortgage to save money as mortgage rates hit record lows. If you don’t have a favorite lender, I do! Local communities will get through this together. We will all get through this, together.
Like you, I am actively monitoring the developing situation surrounding COVID-19. As an unprecedented public health concern, this is a fluid situation that is continuously changing. The long-term impact is not yet known, and truly cannot be known until the pandemic is under control. Here is a look at the world of real estate as of March 2020.
All-Time Low Mortgage Rates
Over the past year-ish, mortgage interest rates have been declining as money flows into the bond markets. As of March 12, Freddie Mac, the Federal Home Loan Mortgage Corporation, reported a weekly average interest rate of 3.36% for 30-year fixed rate mortgage loans. Around this time last year, that rate was 4.31%. A 1% change might not sound like a lot, but it can significantly increase a consumer’s buying power.
Appreciation Remains Steady
Real estate remains a solid investment with proven appreciation over time. While it is easy to remember the tribulations of the 2008 market crash and subsequent recession & housing crisis in this current time of economic uncertainty, it is important to remember that, this time, the housing market did not cause our economic conditions.
Housing is holding its value and, historically, we’ve seen homes increase in value nearly 5% annually across the nation. In times of stock market volatility, investors will often flee from equities and put their wealth into the purchase of real estate as they understand its value as an asset with multiple lines of revenue -- appreciation, tax advantages, and potential cash flow from rental income (where applicable) and paying down your loan principal.
Following the recent plummeting of the U.S. stock market, real estate investing will see increased interest from individuals who wish to put their remaining wealth in a steady, reliable place that will see a positive return. If you are looking to purchase a new home, whether you are a first time buyer, veteran real estate customer, or investor, you can enjoy record low mortgage loan interest rates if you act soon. Finally, you can rest assured that property you own now or buy soon will continue to increase in value over time.
We are living in a pivotal time in world history. Now is the time to hunker down, think about the big picture, and play the “long game.” I will be keeping an eye on world events as they unfold, as I’m sure you all will be as well, and am happy to help you navigate how Raleigh’s real estate market looks in our new reality.
Jessica Mohr is a licensed real estate broker working in her hometown of Raleigh, North Carolina.