The Raleigh, Durham, and Wake County, NC homes market recently made another list, but you can rest assured it’s not a desirable one. We’re going to break it all down for you and tell you what you need to know. In a sellers’ real estate market, the time to sell is now, but is it also the best time to buy a house? Durham and the Raleigh-Durham market has been ranked number one on another list, but this time it is not a good list. Zillow recently released a report stating that this market, in particular experienced the largest decline in housing inventory in the entire country from last year to this year. There are over 50% less homes available to buy this year than last year. Additionally, LendingTree recently released a report stating that Durham as part of the Triangle area, was the third most competitive market in the United States to buy a home, trailing only San Jose and San Francisco. So what does all of this mean to you if you’re buying or selling a house right now? There are currently 1850 homes for sale in the Durham and Research Triangle area, which sounds like an abundant supply except that we should have closer to 12,000 houses in a typical year. Additionally, those 1850 homes are in a population of 1.8 million people, and we’re adding a hundred people a day to the market, which makes it nearly impossible to buy a home in the Raleigh real estate community.
Buyers are paying significantly more in earnest money and due diligence to secure the house, and they are foregoing a variety of benefits, such as waiving their inspection report. The sellers will make no repairs to the house. This type of thing occurs on a regular basis. And in normal years, the asking price was always the starting point from which the price was negotiated down. Especially in today’s market. In most cases, the asking price is merely the starting point for bidding on a house. If you make an offer to purchase a house. In most cases, including the asking price in your offer will not win you the house. Now, if the house is in poor condition and has been on the market for some time, there is a possibility that you can negotiate the price down, and that is a little bit of the secret to throwing. L. to you early. That is if you are having difficulty finding the home of your dreams. Perhaps the home of your dreams should be purchased and the S. picked up. Yes, I thought, and on the seller’s side. Showers are being compensated handsomely for their home. And some are even becoming a little greedy, requesting additional funds. They are not required to make repairs, which is great for sellers but terrible for buyers. They are becoming increasingly nervous. They are extremely tense as a result of the situation. They are purchasing homes blindly. This means they are not permitted to enter the property prior to making an offer. And they pay top dollar and a substantial amount of good diligence fee money, which is frequently non-refundable. As you might imagine, this is a fairly toxic brew growing here. And as a result of all of this, approximately 20% to 25% of all homes under contract default. At the moment, buyers become extremely excited about purchasing a house based on the photographs and emotional irrational exuberance about the house. Once they secure the house, they can finally take a breath and realize what they’ve done. They take a moment, and then realize, that house is an hour away from my place of employment. Perhaps they gain access to the house and discredit your inspection narrative. Whether or not they are permitted to submit an inspection report to the seller, they may still conduct a thorough inspection. After buying, they conduct their owh inspection, during which they discover numerous issues with the house. Some buyers will head straight to court to obtain remedy if necessary.
As a result of this, numerous homes are falling out of contract, forcing sellers to re-list their properties. What options do sellers have in today’s hyperactive market? They don’t want those contracts we discussed a moment ago to be cancelled because they’ll have to go through the hassle of re-listing the home.
What can buyers do in this situation? To begin, you must calm down. Yes, it’s nerve-wracking and stressful. You need to be somewhere quickly, but relax and know that your real estate agent is there to assist you. A reputable agent will inform you of the same thing. Calm down, we’ll find you a place to live. The next thing I’d like to tell you, if you’re a buyer, is to begin earlier than you believe you’ll need to begin. If you need to be somewhere in two months, you should probably begin looking for a house three or four months in advance. Secure it immediately. Perhaps you can arrange for a rental back to the seller or whatever else is necessary. You don’t want to be up against a one-week deadline to be in a new town if you need to buy a house in order to secure it. Thirdly, if you’re considering purchasing a home, be completely candid about what you require in a home and what you desire in a home. Do not waste your time or your agent’s time, but especially your time, going out and viewing homes that do not meet your needs. If you require a first-floor master bedroom, do not waste time visiting houses with second-floor master bedrooms. Your rationale will be, “Perhaps we can make it work.” And while you may be able to make it work for a year or two, you’re going to find yourself in this situation again in a couple years, with prices possibly even higher. Don’t waste your time viewing homes with the master bedroom on the third floor if you require it on the first. The time you spend viewing those top floor master bedroom homes could be better spent viewing those with bedrooms located where you need them. The next thing is to be prepared to pay more than the asking price for the home we discussed briefly here; homes are generally selling for more than the asking price these days, and you should be prepared to pay more than that. If your maximum budget is $400,000, you should probably look at properties in the $350,000 range. Hopefully, you will not have to pay an additional $50,000 for that house, but be prepared to. Look for homes within your budget. Additionally, if you can afford to move up a price band, it is strongly recommended. From zero to $499,999 is our sweet spot in the Durham triangle market right now, which means that’s where the most activity is. That is where the majority of people are competing, so if you can afford to go to $500,000, $550,000, or even $600,000, you will face significantly less competition. It’s going to be much easier for you to secure that house, and you won’t feel rushed to see a house and make a decision in 15 or 20 minutes. Similarly, if you are not a resident of the Durham triangle, consult with your real estate agent. Determine the sweet spot in your market and for the house you’re considering buying so you can determine which price band will be the most competitive for you. And you’ll be aware of what to avoid if at all possible.
Finally, for buyers, if you intend to purchase a house sight unseen, where you will not enter the house, you must be extremely diligent in your research on the house. Examine the photographs. If you have the ability to pinch and zoom photos on your iPad, iPhone, or computer in order to find all the little nooks and crannies, please do so. If the listing agent has provided a floor plan, carefully examine it to ensure that the room sizes and configuration of the home are suitable for you. Hopefully, there will be a video available that will allow you to take a virtual tour of the home. That is all the more reason for the sellers to receive the property disclosure mentioned previously. Ascertain that everything appears to be in order if you have any reservations about something. There have been buyers who fell in love with a home and then discovered, after poring over the property disclosure, that there was a structural issue that the seller indicated they might or might not be willing to fix, which could have cost an additional $40,000. Of course, they did not make an offer on that home, but they would not have known if they had not combed through the property disclosure and asked the pertinent questions. If you live in the Durham area and are in the neighborhood, drive by the house and take a look at the exterior. Take a look at how the yard is maintained. That is typically how the interior will be maintained as well. If you are unable to do so, have your real estate agent conduct the inspection and video it for you. Agents who are competent do this on a regular basis. They film the exterior of a house they are unable to enter and upload it to YouTube in an unbranded, unpublished site that no one can access without the unpublished link. This way, buyers can get a sense of the home’s exterior, if not the interior.
Finally, and unfortunately, look at previous sales of this house and recent neighborhood sales to get a sense of how much you should pay over asking. To get a sense of how much homes are selling for above asking price in this neighborhood. So what are the possible solutions to the housing shortage? The first is for new construction to ramp up and more homes to be built. Unfortunately, this is a lengthy process; it frequently takes a couple of years to obtain permits and then at least five, six, or seven months to construct a house. Essentially, home builders are still trying to catch up from the great recession of 2008 through 2010, and they haven’t done so yet. Additionally, the pandemic has slowed down home building in general, as there are fewer vendors available to work as subcontractors on homes, and lumber and other material prices have skyrocketed and are in short supply today, all of which contribute to home building slowing down. The second solution to this problem is for more sellers to list their homes. Eventually, word will spread about the profit that can be made on a home, and more people will jump off the fence and list their home for sale, which will increase inventory. Additionally, the vaccine supply will increase to combat the pandemic. Finally, the silver tsunami that is about to hit is another solution to this problem for sellers. This is when baby boomers downsize by selling their current home and moving into a smaller one, which frees up inventory for people who require the larger homes that these baby boomers are leaving, and another solution to this problem is that fewer buyers will be out buying. Eventually, some of today’s buyers will become frustrated with the process. They’re going to become frustrated after making offers that are 20-30-50-60% higher than the asking price and still failing to obtain the house. They’re either going to give up and rent somewhere else, or they’re going to stay put in their current home situation until marketing conditions and inventory improve further. Interest rates will eventually begin to rise, reducing the number of buyers who can afford a home and thus the number of buyers available. Additionally, at some point, home prices will become so high that some buyers will be priced out of the market and unable to afford a home. As a result, the buyer population will be reduced as well. Thus, fewer buyers will be out chasing available homes, which should bring us closer to an equilibrium where there is a home for every buyer. To illustrate how much buyers have been willing to pay above the asking price to secure a home, we’re going to break it down by price band. Thus, all of the homes in these price bands have sold in Wake County, which includes Durham, and have done so within a five-day period. Without further ado, homes in the 200 to 300,000 price range sold for an average of 10,000 over asking price, while homes in the 300 to 400,000 price range sold for an average of 14,000 over asking price. In the 400-500,000 price range, homes sold for an average of more than 19,000 over asking price. In the 500 to 750,000 price range, homes sold for an average of $24,000 over asking price; in the 750 to a million price range, homes sold for an average of $23,000 over asking price; and homes over a million dollars sold for an average of $22,000 over asking price. This is an illustration of why it is critical for all home sellers to have their home looking great and perfect when it hits the market, in order to minimize the days on market. One home was listed for $765,000 and sold for $745,000 after 98 days on the market. Therefore, if you’re considering selling your home, it’s critical that you get everything right and that everything happens quickly so that you can get top dollar and avoid having to take a price reduction in this day and age. That is the current state of the market for buying a home in the Durham and Research Triangle area.