Everywhere I seem to go these day whether it is at my real estate office, a Carolina Hurricanes Game, Community Event or just around Raleigh people ask me “Have we hit bottom yet?” Many know of friends, family or neighbors who have had their homes on the market for sale here in the Greater Raleigh area and have shuttered thinking about what they might need to go through if they needed to sell their house.
Home prices around the country have dropped for the past 3 years straight and many people believe we have finally hit bottom. The median national home price today is about $169,000, down almost 14% from a year ago and down 30% from it’s peak. By comparison Raleigh area real estate values are only down 11% from it’s peak with a median home price of $232,000. Those of us living in the Triangle and RTP surrounding area can all be grateful we own real estate near Raleigh the North Carolina state capital instead of other parts of the United States.
Right Now I am Seeing Two Types of Home Buyers in the Raleigh Market
Distressed Home Sellers
“Cash is King” and wise investors are taking advanatage of distressed home sellers. Short sales, foreclosures, builders and other highly motivated sellers with equity are top on their home buying list. I am envious of all the money they are going to gain over the next decade for buying now.
The move up home buyer is still cautiously waiting for… who knows what. Perhaps they are afraid to sell now and do not understand they are selling low and buying low and that is still a win win.
Here Are a Few Great Reasons to Buy a Home in the Greater Raleigh Area Right Now
The interest rates are low, there are plenty of well priced homes for sale and this opportunity, that could be once in a lifetime will pass by soon. When interest rates go up you may never be able to qualify for a mortgage to buy what you can buy right now with the low rates. The average national interest rate is 8%. We are still at 5% or below. If you wait to try and buy when your home price goes up 4% to 6% a year again the house you want to buy went up too. The waiting game never lets you win. Look at the math with me. If a $232,000 home goes up 4% in 12 months it equals a gain of $9,280 dollars. Let’s say the larger house you need to give your family all the space and comfort your desire is priced at $400,000. If you take todays price of $400,000 times 4% increase it equals a $16,000 increase costing you more money for the next 30 years. If interest rates go up along with home prices the increased difference you borrow will cost you 10% for every 1% increase in mortgage rate and may even push you out of being approved for the higher mortgage amount. It is a buyers market in most price points which means it is the right time to buy.
Where’s The Bottom
Raleigh Area homes priced $300,000 and below in certain locations are experiencing a sellers market. Many sellers in this price range are receiving multiple offers and bidding wars on their homes. $300,000 and above is soft and the bottom is still off in a distance. With another wave of option arm foreclosures coming, builders sitting on inventory going into winter and high absorption rates I see more price drops coming in the future for the higher price points in Raleigh. However, with that said, please keep in mind that the Raleigh area home bottom is not as low as other parts of the country so if it drops a little more you are still ahead. For example; if you buy now and home prices drop 2 to 4% next year you are still be way ahead of the money game. If interest rates go up 1% the same house you could buy today will cost you 10% more in house payment. One thing we know for sure is interest rates are going to go up.
If you would like to explore you Raleigh home buying options please give me a call for a free consulation. I will be delighted to work the numbers with you on your specific financial situation to see if selling and buying right now is a wise business decision for you and your family.
Have a great Wednesday!