A RESEARCH TOOL PROVIDED BY THE CHARLOTTE REGIONAL REALTOR® ASSOCIATION
Although the data that is provided here is for Buncombe County (the county for Asheville NC, the largest City in WNC), these same reasons are playing out around the country.
I am always leery of providing what we can think of as 'broad brush' numbers. When you are thinking of buying or selling your home, always discuss with your agent. Remember, real estate is LOCAL, meaning it is best to look at statistics on a micro level for your neighborhood or area. That being said, it is useful to consider trends.
Call AllstarPowerhouse at 828 333 4483 for your micro-level evaluation.
Much of this data is self explanatory, and runs in line with the media headlines "the market is hot to sell". Of note in these figures, and a key indicator to watch is the DAYS ON MARKET. For July, these increased year over year by 20%, with a year to date increase of 8.5%. This is a trend to watch carefully, to see if it is a misnomer for July - or whether the trend continues toward longer days on market.
For many, this real estate market is one of the most confusing in history! As we all know, there is a regular economic cycle that occurs, every 7-10 years, that the housing market tends to follow. Based on history, we are well overdue for a market correction, where days on market for sales increases, inventory increases, and sale prices decrease. What could be causing the trends?
1. INTEREST RATES
After warning of interest rate hikes at the end of 2018 through 2019 - the FED has not followed through; in fact, there have been continual rate drops. Could someone be heeding the warning about the necessity of a strong housing market to shore up the economy? Most economists warn the low rates are not sustainable over the long-term. The irony is that as rates increase, the boomers (who have low rates), who are key to the inventory issue, are more likely to be locked into their homes, with their super low rates, thus creating an ongoing tight market. So what's the current inventory issue?
There is not a balanced market. As a general guide, when data shows under a 6 month supply of inventory, it is known as a sellers' market, likewise, when over a 6 month supply, a BUYER'S market. Year to date we have seen a decline in the homes available.
So why are there so few homes for sale? Here are a few thoughts:
3. BUILDERS tend to build outside of the first-time home buyer market's affordability. The tightest inventory is found in the first-time home buyer's price range. Builders also cite the lack of skilled labor and an increase in costs in building.
Three quarters of baby boomers own their home. The typical path of ownership is triggered by a 'millennial' moving up to a Gen Xer's home, and a Gen Xer moving up to a Boomer home, as the boomers 'right size' and move into homes that are often single level and perhaps smaller, (perhaps as they realize that the grown up kids with kids are not coming home to visit as frequently as they thought they would). Perhaps a longer life expectancy and healthier living is also a factor, making their current home work for them longer. Boomers are holding onto their homes longer than previous generations.
In case you are wondering, the PEW Research Center defines the generations as follows:
Baby Boomers: Born 1946-1964 (54-72 years old)
Generation X: Born 1965-1980 (38-53 years old)
Millennials: Born 1981-1996 (22-37 years old)
Post-Millennials: Born 1997-Present (0-21 years old)
5. 2007 Crisis
After the foreclosure crisis, millions of single family homes were converted to rentals. Those same rentals are gaining in value; plus in our WNC tight rental market, the lack of supply has driven up rents. Until there is a price correction, there will be less of an incentive to sell. When they do sell, regular purchasers will now be competing with other investors, as there is a rental history, and millions have been drawn in by TV shows advertising get rich schemes through investing.