Wednesday, June 29, 2022

‘Frenzy market’ fueled by lowest real estate inventory in 13 years, rising prices

Housing inventory in the Cape Fear region is at its lowest point since Dec. 2005. With less to choose from, buyers are bidding high, and some people are being priced out --- "We have a lot of people asking, are we at the top of the market again? Are we there?"

Available real etate inventory is being "gobbled up" according to Patrick LaJeunesse, spokesperson for Cape Fear REALTORS®. LaJeunesse said the month's supply of real estate inventory is the lowest he's seen since 2006. (Port City Daily/Johanna Ferebee)
Available real etate inventory is being “gobbled up” according to Patrick LaJeunesse, spokesperson for Cape Fear REALTORS. LaJeunesse said the month’s supply of real estate inventory is the lowest he’s seen since 2006. (Port City Daily/Johanna Ferebee)

SOUTHEASTERN, N.C.—It’s slim pickings for the locals and a steal for out-of-towners.

The Cape Fear region’s real estate is moving off the shelves faster than its inventory can be restocked.

RELATED: Sales of homes worth $1 million (and higher) hit an all-time record in New Hanover County

“It’s like a frenzy market,” Patrick LaJeunesse said. LaJeunesse dissects real estate numbers every day at Cape Fear REALTORS.

Lowest since ’05

Last month, the Cape Fear region saw the lowest housing inventory in 13 years.

“Inventory is almost at the base level – the lowest I’ve seen,” LaJenusse said. “We’re not replacing it fast enough.” 

Compared to December 2005, when 4,280 homes were on the market between New Hanover, Brunswick and Pender counties, last month the Cape Fear region had 4,365 available homes.

Inventory peaked in March 2008 with 9,700 homes for sale in the tri-county region, according to data provided by Cape Fear REALTORS.

With little to choose from, prospective buyers are squaring-off for the same properties. “Everybody is bidding on the same house,” LaJenusse said. 

Tim Milam, the president of Coldwell Banker Sea Coast Advantage’s 13 regional offices, said his agents have seen increased competition on the front lines. “I had an agent tell me yesterday that they were one of 11 offers on a house that was under $200,000,” Milam said.

Since buying Coldwell Banker Sea Coast Advantage in 1997, Milam has noticed that today’s trends mimic a similarly frenzied market–a precursor to the 2008 financial crisis.

“I do see that today’s market is very similar to 2005 in terms of the activity being brisk,” Milam said. 

Closed sales, a rolling average of yearly sales, appear to be hitting the same marks. In Dec. 2005, closed sales peaked at 12,054. Last month, closed sales reached its highest point since Dec. 2005, at 11,507.

While sales continue to rise, days on the market are plunging. Median days on the market, an indicator of health according to Milam, should fall around 120 days in a balanced market.

Last month, the median days on the market was 37. The last time houses were moving that quickly was in Jan. 2007.

“We’re consistently eating up more and more inventory,” LaJenusse said. “The appetite seems to be getting stronger.”

The biggest difference?

“We’re not going to dive down,” LaJenusse said.

Though some snapshots may appear ominous, both LaJenusse and Milam see today’s housing market as healthier than it was 10 years ago.

“The buyers that are buying today are better positioned financially to hold onto the houses that they’re buying,” Milam said.

According to Milam, lending requirements have tightened up, buyers have grown more conscious of their susceptibility to bad loans and the market–for the most part–has stabilized.

Still, appreciating costs can elicit déja vu.

“We have a lot of people asking, are we at the top of the market again?” Milam said. “Are we there?”

Brunswick boom

Low supply, high demand, matched with new players, has created a regional pricing squeeze.

Non-natives make up half the population in New Hanover County and outnumber native-born North Carolinians in Brunswick County – that’s according to a recent Carolina Population Center at UNC-Chapel Hill report.

This influx of newcomers is inevitably making its mark.

It’s that transfer value of money,” LaJeunesse said.

Particularly in the upper-tiers of the housing market, LaJeunesse said out-of-towners are getting a deal.

“These aren’t local people buying these properties,” LaJeunesse said.

From New Jersey to New York to California, LaJeunesse said people are flocking to the southern coast and away from higher property taxes. 

“They’re selling their properties at discount price and coming down here,” LaJeunesse said. “It’s almost like buying at a discount rack price.”

In Brunswick County, the fastest growing county in the state, Coldwell Banker Sea Coast Advantage’s sales are up 20 percent compared to last year.

“Brunswick is blowing through the numbers again,” Milam said. “The demand there, it just amazes me.”

The fourth-largest county in the state has more developable land than its metropolitan anchor in New Hanover County.

“More land, more opportunity,” Milam said. “They have a better supply.”

Affordability

Given current market conditions, the $300,000 and under market is getting hit the hardest. Cape Fear REALTORS is seeing less available options in the most affordable market tier, while the same properties are making their way into the $500,000 and under category.

“The question is on more of affordability issues and greed,” LaJeunesse said. “You’re going to start seeing people and prices go up just to see where that ceiling is.”

Author’s note: Graphs courtesy of Cape Fear REALTORS®. 


Johanna Ferebee can be reached at johanna@localvoicemedia.com or @j__ferebee on Twitter

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