Raleigh Housing Market Goes Boom
Real estate agent Jessica Wood opens the door to an apartment in the Cotton Mill condo development and leads a prospective tenant inside."This is a 1,700-square-foot, two bedroom unit here at the Cotton Mill," says Wood, describing the unit's characteristics. "This building was originally built in the late 1800s, remodeled in the late 90s into condos."
The Cotton Mill is emblematic of the entire Raleigh housing market, says Ann-Cabell Baum, who works with Wood at the Glenwood Agency, a real estate agency.
"To describe the Raleigh housing market right now, 2017, would be, 'Oh my goodness!" Baum said. "We have seen some accelerated home prices."
Houses are on market for hours, not weeks. In rare cases, buyers make unsolicited offers on houses not yet on the market.
Across the greater Raleigh area, the median sales price of houses has increased sharply since 2012. In a few ZIP codes, the price has more than doubled, according to data provided by ATTOM Data Solutions. That means higher profits for home sellers, said Daren Blomquist, a senior vice president with ATTOM.
Below is an interactive breakdown of median sales price increase by ZIP code. Scroll over an area to see the percentage change since 2012. Source: ATTOM Data Solutions.
Home sales prices have increased across the Triangle, as well. In looking at the entire Triangle Region, the average sales price topped $300,000 for the first time ever in June, according to the Triangle Multiple Listing Service.
The sharp increases come in large part because of the influx of people to Wake County.
"We grow by 72, 73 people per day in Wake County," Baum said. "If only one of those people want to live in Raleigh, we need to find them a place, and so, more people moving in to the area means that we literally have no place to put them."
New construction can't keep up with the fever pace. That's driving up prices for existing homes. For Stacey Anfindsen with Birch Appraisal Group in Cary, it's the simple law of supply and demand.
"So when those houses do come on the market, you've got three, five, 10, 15, 20 people that are interested in it," Anfindsen said. "So it's just like the old loaf of bread before a snow storm. The last person that gets it is going to pay whatever it takes to get that loaf of bread."
With all signs pointing toward dollar signs, it's only natural for people to remember the last time the housing market went gangbusters. But Baum argued the Raleigh housing market is different.
"The interesting thing about Raleigh, and the Triangle area overall, is that we have a very slow appreciation," she said. "It's not jumped like marketplaces like Vegas did, and Phoenix did and Seattle and all of those others that literally homes were jumping twenty and thirty-thousand dollars a month."
Even if the Raleigh housing market is more than a bubble, agents say they still deal with another hurdle: that of high expectations. Homeowners in the $600,000 market and above market see big increases and begin to dream about early retirement. Anfindsen said he works to correct that perception.
"The number one thing though, is the tale of two markets," he said. "The people in the upper price ranges are the ones who read. They are the ones who are aware of what's going on nationally, what's going on locally. And they're the ones who probably need the most counseling in terms of, 'Hey this is what you're reading but this is what the market is actually like'."
Of course, these houses are still appreciating in value, but just not at the high rates of the real estate at the lower price points.
Everyone agrees a market correction will happen at some time. It's the simple reality of a cyclical market. No one knows exactly when it will happen, and it's impossible to know the depth. Until it hits, sellers in Raleigh are going to continue to ride the current wave.