SOUTHEASTERN N.C. — Like all other industries this spring (besides, maybe, Netflix) the residential real estate market took a hit when the pandemic arrived.
Partially buoyed by an ability to operate within government restrictions that crippled other businesses, local real estate proved nearly untouchable by the end of the year, as if there wasn’t a pandemic at all (or, some analysts speculate, Covid-inspired buying habits actually boosted home sales).
Meanwhile, commercial real estate has taken a blow nationwide, with investors and builders skittish to invest in new retail since vacancy rates are still high.
This year total sales volume is up 63% over last year in Brunswick County, with $2.094 billion, according to CEO Cynthia Walsh of Brunswick County Association of Realtors. “It is the busiest I’ve ever seen the agents and the members,” Walsh said. “You’re just trying to keep up with the inquiries and people wanting to move here.”
In Brunswick County, total units sold (about 6,000) is up 37% from last year. It’s even better than the pre-housing collapse high of ’05, when total volume was $1.2 billion between about 4,500 transactions.
“It’s like nothing I’ve ever seen — and I’ve been here for 15 years,” she said.
Major growth in Brunswick
Brunswick’s boom is boosted by its stubbornly high growth rate. The county ranked fourth in the nation in percentage growth between 2017 and 2018 at 4.6% and is likely to top national rankings once the new U.S. Census 2020 estimates become available.
Even before the pandemic, a large driver in Brunswick’s residential real estate market were northern retirees downsizing. This trend likely continued throughout the year, Walsh estimates, especially with the appeal of urbanized housing losing its luster amid pandemic-induced shutdowns. Plus, the rise of remote work opened up even more opportunities for buyers looking to relocate.
Walsh also guesses the general sentimentality of such a serious event may have prompted more buyers to take action this year. Perhaps the biggest lift to the industry — the part that Walsh said must be said “out loud” — has been record-low interest rates.
Just last week the 30-year fixed-rate average interest rate hit an all-time record low — the 16th time it’s done so this year, according to Freddie Mac. At 2.66%, this metric is the lowest since the firm began tracking rates in the ’70s.
“That’s the piece, too, that might be driving people to just say, ‘What the hell?'” Walsh said. “Look at these rates. We’ve never seen rates like this.”
Welcome home, millennials
Tom Gale, next year’s president for Cape Fear Realtors, also points to low borrowing rates as driving local and national demand. The new lows have motivated first-time homebuyers and other buyers looking for a change, Gale said.
Gale highlighted an unusual trend, at least for recent years, that stands out to him in 2020: millennial homebuyers. Due to stagnant wages, rising student loan debt and other unfavorable national trends, millennials have largely been financially boxed out of the opportunity of homeownership previous generations were afforded. Perhaps new rates mean access to bigger loans with less interest, giving these buyers a chance.
“Millennials are the largest group of home buyers this year and driving competition for single-family homes,” Gale said.
In the tri-county region (New Hanover, Brunswick, and Pender counties), year-to-date pending sales are up 22.1% and closed sales increased 16.8% compared to last year, according to Gale.
Pending sales (-27%) and new listings (-35%) took a big hit in the tri-county’s April’s figures, revealing timid buyers and sellers hesitating on making major transactions at the height of national economic uncertainty.
Local showings were never prohibited. As buyers, sellers, and agents regained confidence, both virtual and in-person showings ticked up. Last month, showings were up 50% compared to Nov. 2019 in the South, according to data collected by ShowingTime.
Gale attributes part of the local industry’s bounce-back to agents’ tenacity to keep business moving. “Our members quickly transitioned to doing business virtually to keep themselves, their clients, and the community safe,” he said.
Values up, inventory squeeze
Early on, Gale’s predecessor, Tony Harrington, said the main concern he was hearing from buyers and agents related to home values. This concern turned out to be moot.
In the tri-county region, the median sale price for single-family, townhouses, and condos is up about 12% year-to-date compared to last year. The median sale price for a single-family home is at $305,000 for the year ($329,000 last month), compared to $279,000 over the same time frame last year.
Gains in value can stimulate the local economy but also represent a larger, pre-existing issue especially present in the Cape Fear region: housing affordability.
Increase in values squeezes out the available inventory of homes under $300,000 or $250,000, making for a competitive and nearly untenable market for first-time homebuyers. Gale said this year, his members have engaged in the topic of workforce housing by serving on the county and city’s Workforce Housing Advisory Committee, which is tasked with coming up with solutions to the region’s affordability crisis.
“When will the average sale price of a home really exceed what is affordable?” Walsh asked. “Yeah, we have an issue with the quantity of affordable homes.”
Inventory under $250,000 is sparse — and it’s not just the builders to blame, Walsh said. After the pandemic, lumber costs soared, more than doubling in price, adding an estimated $16,000 to the price of a new single-family home, according to the National Association of Homebuilders.
“There aren’t many of them,” Walsh said of homes under $250,000. “At all.”
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