Patterns and trends in North Carolina's local housing market are shifting- with higher home costs and reduced sales numbers. Record highs for mortgage interest rates are forcing sellers to adjust their pricing- giving the power back to the buyers and creating a more balanced market for the first time in a long time for this state.
A balanced market typically requires an even divide between seller and buyer benefits- which is something that experts have predicted for North Carolina in the coming years.
There has been an overall lack of growth- but not so much so that it sparks major cause for concern. The question of whether or not a crash is imminent remains, but experts do not seem overly concerned at this time.
Here is all you need to know about the North Carolina real estate market and the predictions for its future. Be informed about your property or the one on your potential purchase agreement.
Key Housing Market Trends in North Carolina
North Carolina mortgage rates have increased by 7.08%- a 20-year high that is reflected in the majority of the country and is a driving influence on the current real estate market.
North Carolina Housing Market Supply and Demand
Home supply in North Carolina is at a record low. There was a 16.5% drop in the number of newly listed homes, and a 1.5% drop in the total number of homes for sale.
Price drops have also increased due to demand- with an overall growth rate of -26.9 points.
Median Home Price in North Carolina
The median home prices in North Carolina have actually increased by 3% from the year before- but that is expected to change.
Currently, the median sale price for North Carolina homes is $350,300. The sale-to-list ratio at the moment is 98.1%- meaning that most houses sell for less than 2% below the listing price.
Average closing costs on real estate sales sit at a little over $2800- or between 0.93% and 1.4% of the total home price.
Number of Homes Sold
There has been a year-over-year decrease in the number of North Carolina homes sold. The most recent number is 13,703- an 11.7% drop from the previous year.
This is in line with the US trends- which have seen an all-time in recent years.
Average Time Spent On the Market
The median days spent on the market have shown an increase year over year in North Carolina. In 2021, it was 18; in 2022, it was 31. Currently- North Carolina homes typically sell after 35-44 days on the market.
The foreclosure process is when a person fails to pay their mortgage, and the home is repossessed. As it stands, North Carolina has the 15th highest foreclosure rate in the US- but the numbers are dropping.
Previous reports had the figure at one in every 2079 properties foreclosing- but the number is now one in every 3809. It marks a turn in the trend- after increases over the last few years.
Mortgage application rates have dropped by 41% from last year- meaning significantly fewer people are seeking mortgage loans to buy properties in North Carolina.
Factors Impacting the North Carolina Real Estate Market
- Mortgage interest rates: The significant increase in interest rates for NC mortgages has priced out many buyers and has an undeniable influence on the market overall. A home's sale price is closely tied to current interest rates.
- Changing demographics: As younger buyers jump to NC and the ethnic populations change, different interest change the trends in the housing market.
- The economy: Changes in the economy impact the real estate market across the US- including North Carolina.
What Is the Likelihood of the North Carolina Housing Market Crashing?
Despite the significantly cooling market, experts say there are no signs of a North Carolina housing market crash happening any time soon. Although prices are expected to drop further, numbers are not expected to hit lows anything like what was experienced in the Great Recession.
Here are the reasons why a market crash is not an immediate concern in North Carolina.
Strict Lending Practices
Lenders in NC place high standards on borrowers- meaning only those with excellent credit can borrow.
Low Inventory and Lack of New Homes being Built
The limited supply of existing housing- and a reduced number of new constructions- make it unlikely that prices will crash.
Reduced Foreclosure Rates
A lower number of foreclosures in North Carolina suggests a much stronger housing market- and reduced the likelihood of a crisis.
An Influx of New Buyers
Millennials are buying houses in NC- particularly in Charlotte- so the pool of potential buyers is on the up. The Hispanic population in North Carolina is also increasing- a demographic that is at the peak of its buying power.
North Carolina Housing Market Statistics
- The number of homes sold above market value in North Carolina in March 2023 was 26.1%- a decrease from the previous year by 26.9 points.
- 22.5% of homes sold with a price drop- a year-over-year increase of 15.5 points.
- Average home values in North Carolina have increased by 3.1% since the previous year (February statistic).
Housing Market Predictions for the US In General
Before looking at North Carolina specifically, let's take a look at the predictions for the housing market across the US.
Challenges with Home Prices and Affordability
The popular belief amongst experts right now is that home prices will not drop because of the currently limited supply. That said, others are of the opinion that the increased interest rates will leave sellers with no option other than to drop their prices.
As such, despite housing market analysts believing that home prices are likely to keep falling, we probably won't see a significant drop- at least, they say, not enough to balance against the high-interest rates. The result: home prices may be seen as less affordable, and the average monthly mortgage payment rate will stay relatively high.
Increased Mortgage Rates
Professional opinion right now is that the mortgage rates across the US will continue to increase. This comes down to geopolitical tensions, the possibility of a recession, and inflation rates continuing to rise.
Drop in Home Sales
Higher mortgage rates and increased interest are likely to lead to a drop in the number of homes sold across the US. As a result, the average number of days taken to sell a house will probably increase.
North Carolina Housing Market Predictions
Here is an overview of the North Carolina housing market forecast and predictions for the coming year.
Climbing Mortgage Interest Rates
In line with the predictions for most of the country, North Carolina mortgage interest rates are predicted to rise. The expected rates as it stands are 8.50 for 30-year mortgages, and 7.70 for 15-year mortgages.
Reduced Home Sales
Because of the increase in interest rates, experts believe the number of home sales may drop as much as 10%. This also means inventory will not run out as quickly, and the average days spent on the market could rise from 31 to 35.
Minor Changes to Home Prices
There is debate over what to expect the house prices in North Carolina to do over the next year- with some experts believing they will stay the same because of low inventory- and others stating a predicted 5-10% drop in the seller's market to combat higher interest rates.
Another impact the rising interest is predicted to have on the housing market in North Carolina is a drop in inventory. It may not be a good time to sell- causing people to hold off on listing their properties- reducing the supply- and possibly making houses unaffordable for many.
There could be trying times ahead for the housing market in NC, which has significantly cooled since its incredibly busy period immediately following the pandemic. The combination of increased interest and reduced supply could make it difficult to find affordable houses- although sellers may be forced to drop prices if they don't want to get stuck on the market.
A housing shortage is to be expected, which could see prices go either way. Higher prices could bring things to a halt, but lengthy market stays are likely to see prices drop later in the year.
Is now a good time to buy and sell properties in North Carolina?
Yes and no. Homeowners looking to sell could find themselves in a good position- due to the lack of inventory on offer right now. The competition is low- so there is a good chance somebody will want to buy. That said, due to the higher mortgage interest rates, some buyers may be looking for lower-priced homes, and sellers may have to drop their prices a little to confirm the close.
From the buyer's perspective, now may be slightly trying- given the lack of supply and high rates. If you can find a motivated seller looking to get their property off the market and into a new owner's hands, you could be able to negotiate a good rate. Just bare in mind that others may be trying to do the same thing- so there could be a best-offer battle.
Why are house prices falling in North Carolina?
The reason for the declining house prices in North Carolina is the rising interest rates on mortgages. People are having to pay more to secure a mortgage- so they don't have as much left over to spend on their property. Houses are spending more time on the market as a result- leading sellers to drop their asking price to secure a sale.