Tuesday, July 23, 2024

New study ranks New Hanover County 4th most difficult to buy a home in nationwide

As population increases in the Greater Wilmington Area, working class housing will continue to be a topic of discussion (Port City Daily photo/FILE)
A new housing index has ranked New Hanover County fourth in the nation for the toughest market to buy a home. (Port City Daily/File)

NEW HANOVER COUNTY — A new national report found New Hanover among the toughest markets for homebuyers in the nation. A local economic expert believes the ranking may be overstated, although a range of factors has undeniably caused tough housing conditions for residents.

READ MORE: One-third NHC residents cost-burdened by housing, more local funding needed

NBC’s Housing Index ranked New Hanover County out of 1,274 counties throughout the nation, with 88.1 in its April assessment. It puts the county ahead of the 82.4 national average. (The housing index will update monthly with the next report scheduled for June 20.)

The index uses four factors: cost, competition, scarcity, and economic instability. Competition served as the top component behind NHC’s ranking. The index defines competition as “how many people are vying for homes and how aggressive demand is.” In the competition sector, NHC received a 98.5 rank of the cumulative total.

The index calculates difficulty on a scale of 0 to 100, with values closer to 90 representing extremely difficult conditions. They’re caused by factors including competitive bidding, major hikes in home prices in comparison to median income, and high insurance costs.

The report found the home median list price doubled from around $250,000 in 2018 to $500,000 in 2024. The index — which uses data from sources including the Census Bureau, the Bureau of Labor Statistics, and real estate software firm Redfin — also cited a significant affordability gap between the county’s median income of $73,000 and the $105,000 salary needed to purchase a median priced home.

These prices come in higher than real estate tech firm Zillow’s estimate of $429,513 for the average home value.

UNCW economics professor Mouhcine Guettabi said he was surprised by the finding. Housing in the county had certainly become more expensive in recent years, according to Guettabi, who added costs have not risen as much as other areas that did not make the top of list.

“We’re in the same boat as just about every market,” he said.

Guettabi said a combination of factors had contributed to challenges in the national and local housing market: the influx of retirees and people from other states moving to the county during the pandemic, the need for more affordable housing development, Wall Street investment in housing, and the Federal Reserve’s recent interest rate increases, for instance.

“The fundamental question is, which of these contributes most and is there reason to believe there is some ‘quote, unquote’ market failure with that?” he asked.

Guettabi hasn’t thoroughly analyzed the NBC Housing Index’s methodology, but believed its method of calculating demand may not be up to date. He said housing demand spiked alongside a fast-paced population increase during the pandemic, but has since softened

Pender County ranked 71.3 and Brunswick County came in at  74.7; neither were in the top half of difficult counties in North Carolina or among the top 300 in the nation.

According to the Census Bureau’s 2022 survey of five year estimates, New Hanover County has a vacant housing rate of 12.8%, Brunswick County has a vacant housing rate of 32.7%, and Pender County has a rate of 23.2%. 

The professor noted the impact of growing investments in the housing market by hedge funds, real estate investment trusts, and other financial firms as a factor increasing costs in the housing market. 

The impact of investment firms in North Carolina’s housing market gained further public attention in March. Attorney General Josh Stein announced an investigation into RealPage, a real estate software and analytics company, following over a dozen suits across the nation against the firm for using private data in an algorithm to calculate housing prices for investors. Defendants argue it has allowed price fixing and increased housing costs. 

“Housing is already too expensive for so many North Carolinians,” Stein said in a March press release. “Companies cannot collude to illegally raise rents on tenants. My investigation into RealPage will shed light on whether this company’s operations violate the law and raise rental costs for residents.”

Port City Daily reached out to the attorney general’s office to ask if the investigation involves property managers in the tri-county region but did not receive a response by press.

Tips or comments? Email journalist Peter Castagno at peter@localdailymedia.com.

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