Take Chatham County’s red-hot residential real estate market, toss in a pandemic, state-mandated stay-at-home order and the most significant economic shock of our lifetimes, and what’s the result?
As it turns out, a housing market that’s still pretty hot.
Coming off the worst financial quarter in history, with near-record national unemployment and joblessness — and lots of COVID-19-related uncertainty — you might expect those who make their living by working to help people buy and sell their homes to be panicking. Instead, the warming temperatures of the approaching summer are reflecting the housing market in Chatham: heating up, once again.
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Not unaffected
Real estate professionals from across Chatham will tell you that the local market isn’t unaffected by the novel coronavirus: as lockdown orders took effect in March, home sales dropped almost 18 percent nationwide in April. In this county, data indicates listings, showings and sales were also down as the pandemic stretched into these late spring, pre-summer weeks — traditionally, a busy season for home sellers and potential buyers.
But a small inventory of available homes, still-strong demand, low mortgage interest rates and a surprising desire from out-of-state buyers looking to relocate to Chatham County has created competition that’s once again driving sales — despite the pandemic.
“This market is unlike anything we have ever seen,” said Eric Andrews of Realty World in Pittsboro. “COVID-19 happened during a time when real estate sales were doing very well. Then, the world changed dramatically. We had dozens of properties under contract that still needed to close. During the [government-mandated] stay-at-home order, we were still quite busy. We have found that in certain price points it is still a sellers’ market.”
Median new listing prices in Chatham have increased slightly, according to various published data, and sales prices are up as well. The number of homes listed as “for sale” is down — related partly to sellers who’ve taken their properties off the market because of fears of the contagious nature of COVID-19 — but in an odd way, even that has helped stoke demand. Fewer houses with “for sale” signs means even more competition from potential buyers.
“Inventory is low in Chatham,” said Kris Howard, broker and owner of Chatham Homes Realty, which has offices in Siler City, Pittsboro and Apex. “Sellers are waiting on more stability of COVID before listing and allowing strangers into their homes.”
Numbers tell the story
Before the coronavirus began its rapid spread across the U.S., nationwide home supply was at its lowest point in seven years. A dearth of new “for sale” listings across the country — a 50 percent year-over-year decline during the second week of April, which narrowed only to 30 percent during the first week in May — means inventory is still low.
In Chatham County, Triangle Area Residential Realty data shows year-over-year overall average sales prices are up 12.78 percent after dropping in April — compared to increases of 5.26 percent in Durham and 1.87 percent in Wake. May listings compared to this time last year were down almost 25 percent. Housing supply — a number expressed as a ratio of total listings to the absorption rate of those listings — today stands at three months in Chatham County. For all of 2019, the housing supply stood at four months.
“Demand for homes has picked back up after hitting rock bottom in April, and that uptick, paired with a lack of supply, is a recipe for bidding wars,” said Taylor Marr, the lead economist for Redfin, a Seattle-based national real estate brokerage firm, in a recent news release.
“Homebuyers are getting back out there, searching for more space as they realize using their home as an office and school may become the norm,” he said. “But sellers are still holding off on listing their homes, partially due to economic uncertainty and concerns of health risks. In some hot neighborhoods, there may only be one or two homes for sale, with multiple homebuyers vying for them.”
Analysts at MarketWatch said last week the number of people applying for loans to purchase a home has increased for six consecutive weeks. Mortgage rates are at an all-time low, with the average of 3.15 percent last week, besting the previous record of 3.23 percent set at the end of April.
“The volume of purchase loans is up more than 50 percent since then, indicating that the earlier drop was not a collapse in the housing market but ‘a delayed spring home-buying season,’” according to the MarketWatch report. In addition, refinancing applications are up a whopping 176 percent nationwide.
Who benefits?
Lori Golden, a broker and owner of Carolina Lifestyles Realty in Pittsboro, said part of what’s driving the residential housing market is the highly unusual nature of the market itself. Typically, housing markets are described as “buyers’ markets” — meaning the negotiating and buying process swings in favor of home purchasers, rather than sellers — or “sellers’ markets.” She said the current market favors both parties in the transaction.
And after COVID-19 threatened the viability of that unusual market — with a huge drop-off in residential sales activity in Chatham County just a couple of months ago — there’s clearly a turnaround now, according to Golden, who opened her firm two years ago.
“I am still feeling very positive about the market,” she said. “For me personally, I have been extremely busy.”
It’s a “buyers’ market,” Golden explained, because of those historically low mortgage interest rates — making it an ideal time to buy a new home or refinance an existing home.
“Many people are finding themselves working from home and are re-thinking how they ‘live’ in their home and are re-evaluating their needs and wants,” she said last week between home showings. “I’m noticing more clients asking for a dedicated home office space or deciding they want more outdoor living space.”
But it’s also a “sellers’ market” in Chatham County because of the low inventory, meaning less competition for those offering their homes for sale.
“If sellers work to price their home strategically, it can move fairly quickly,” Golden said.
“It has been a sellers’ market for quite some time and it still seems to be because inventory is so low,” Howard said. “The buyers who are qualified and ready to act quickly are jumping on homes as soon as they hit the market, and those priced reasonably are getting multiple offers and pushing the price up.”
Price points are a major consideration, Golden said. Higher-end luxury homes may take a little longer because the pool of potential buyers in that price point isn’t as large.
And new construction remains popular, with prospective new home builders requesting open-floor plans and fresh interiors.
Because of that, Golden said, it opens up “an opportunity to get an amazing deal on an older luxury home because the price per square foot most often is lower than the price per square foot on new construction. This is a great option for those who don’t mind doing some custom updating of their own if they find an existing home in the right location.”
Lonnie West of Chatham Homes Realty said Chatham’s inventory was so low as to be described as “acute” in certain price ranges. That shows no signs of changing.
“One sells and another new listing is added,” he said. “Our activity is about the same as expected; we have more calls from people driving by listings wanting more information.”
A different way to sell
Of course, COVID-19 has forced Chatham real estate professionals — like all businesspeople — to adjust how they work.
Real estate agents are still doing in-person showings, but across Chatham brokers have relied on video calls and “virtual” home tours with 3-D effects and FaceTime to show homes. “Open House” events, which stopped cold in March, are now just beginning to be held again. Masks, gloves, booties and hand sanitizer are new tools of the trade; staff sales meetings and some sales negotiations are taking place in front of computers.
“We all know how to use Zoom now!” Andrews said.
What are the best price points for sellers?
“I feel right now in the $350,000 to $450,000 range, it is still a sellers’ market because that’s a golden price point,” said Lisa Skumpija of Absolute Realty Company in Pittsboro. “Anything above $450,000 seems to be a buyers’ market. Prior to the virus the golden price point seemed to be up to $550,000, but I’ve seen that come down in the last few months.”
Location, location, location
What about for those who are looking to sell or buy?
The old real estate adage of “location, location, location” applies to agents as well as homes, according to Andrews.
“This isn’t the time to be using a firm or an agent from outside of the area,” he said. “You need to use someone local. Because we have so many buyers coming from our surrounding counties sellers think it is in their best interest to use a firm from those areas … They just don’t know the area like we do.
“Local firms support our community and we want to help,” he said. “This is our neighborhood. I was interviewed by our local Chamber of Commerce a few weeks ago and I told them, ‘When was the last time you saw a Raleigh real estate firm sponsor a local team?’ We will get through this. It is in your best interest to find an agent that genuinely wants your property to do well.”
And Chatham is blessed “to have a rural community with larger lots and garden areas,” Howard said. “The high density, big city folks are wanting some fresh air and space, we are seeing more luxury home sales right now than usual from just these types of buyers.”
As for Golden, she said she hopes the market will remain strong for everyone — buyers and sellers.
“Given the state of our country and our world I would love to dwell on the positive things that are happening,” she said. “People slowing down and enjoying their families and friends, creating the lifestyles that they wish to embrace and learning to love where we live and contribute to our communities. Hope is a powerful thing.”
Publisher/Editor Bill Horner III can be reached at bhorner3@chathamnr.com.