Cary, NC — Curious about how the realty market is doing in Cary these days? We asked a local real estate group owner, Leslie Douglas, to give us her take on it.
Are we in a Bubble?
I get asked everyday, “Are we in a Real Estate Bubble?” and “When will it burst?”
I understand the question. There was a market crash in 2008 that we all remember and it threw our country into a whirlwind. Who would think this wasn’t a bubble? I mean most listings have over 10 offers within a matter of 24-48 hours, if they are not sold sight unseen.
We’re seeing it takes offering 15-20% over list in some cases and possibly handing over the cost of a new car in due diligence to win offers. Right now, over 46% of contracts have the appraisals waived. So it seems natural for people to make the assumption that this is a bubble.
However, we are not in a bubble! Our little secret has spread to the rest of the country and there’s no way to put that secret back into Pandora’s box.
The Quality of Life Secret is Out, Folks
Think about this. We live in a place that values technology, education, good neighbors, protecting outdoor spaces, has ample access to innovative, well-paying jobs and a quality of life that many people in other areas of our country don’t have the opportunity to access with such ease.
Shoot, we live where you can put your toes in the sand in a 2-hour drive or go the opposite direction and drive 3 hours to hike a waterfall in the Appalachian mountains for a weekend trip. Trip to NYC or Disney World? It’s only an hour plane ride.
Plus, while it’s a common topic of conversation about how frequently our weather changes, guess what, we still get 4 seasons! Places in New York had snow just last week. I don’t know about you, but I’d rather live with our changing weather versus covered in snow half the year.
Factor in the Triangle’s Diverse Job Market
While everything I mentioned is fabulous, you may not live here if there was not a job for you.
The Triangle has a very diverse job market — bio/pharmaceutical, healthcare, engineering, gaming, technology and more, so our market has a solid foundation where if one industry fell, the Triangle would not fall with it like Silicon Valley fell during the dot.com bust.
It’s hard to go more than a week without reading an article about a new company moving in or a new startup that has taken off. These employers are looking for a place they can afford to operate, where people want to live with a good quality of life and where there is talent. Boy do we have talent!
Not only do we have strong workforce, these employers have access to graduates from NCSU, UNC, Duke, Meredith, NCCU, St Mary’s, Peace College, Shaw and more. A higher percentage of our students stay in the area after graduation because they can see themselves making a life here, so this is where the employers want to be. Steady job growth equals more people moving here and less people leaving.
It Boils Down to Supply & Demand
At the end of the day, your local real estate market is based on the basic economic principal of supply and demand.
Pre-2020, we already had a housing shortage with years of low inventory, but managed to achieve a steady rate of sales through our access to new construction. We had an average of 3-3.5% appreciation year over year, nothing too shocking, but slow steady growth.
We were sitting with an average of a 2.5 month supply of homes on the market at any given time, which means if we stopped selling homes one day, it would have taken us 2.5 months to sell all of the homes on the market at that time. Well, here we are a year into COVID and wow — our market is a sight to see.
Wake County is currently adding an average of 64 people a day (43 moving to the area and 21 born in the county)! That’s almost 2,000 people a month, but now our inventory is sitting at an average of a 0.4 month supply. If we stopped selling tomorrow, we’d be sold out of homes in less than 2 weeks.
Sellers Are King in Today’s Climate
So, our inventory has shrunk drastically, but the demand is higher than ever. This is why, from March 2020 to March 2021, home values in the Triangle appreciated an average of 12.6%. We are now seeing that same rate of appreciation month to month since February.
Home buyers are clamoring over each other to get into showings, which book up in an hour. Buyers making offers over asking without ever stepping foot in the house. They are waiving appraisals, repairs and offering so much in due diligence that they have no intention of walking away. In a climate like ours, sellers are king, especially when you live in a lovable town like Cary.
Growth Trends & Population Booms
So that has to be a bubble right? This can’t surely continue forever — can it?
Well, forever is a word I don’t like to touch with a 10-foot pole. I mean who would have thought something as powerful as COVID would have shocked our world in 2020? I definitely didn’t see that coming in my crystal ball. So, I won’t say this rate of appreciate month to month will continue forever.
There will be a time when we go back to an average appreciation of 3% year to year, but it’s hard to say when we’ll see that level out and that’s not an actual bubble. That’s just prices stabilizing. Something seriously cataclysmic would have to occur for housing prices to actually drop below current values and right now, there’s not an economic indicator out there voicing that concern.
So, there’s a lot of ground to make up.
Last year our inventory numbers hit the lowest since 1990 when Wake County had a population of about 430,000. We now have over 1,153,000.
We have almost tripled in population in 30 years, but have less homes to sell than they did back in the 90’s! It’s doubtful you’re going to see this growth trend stop anytime soon.
Remote Working Brings New Buyers
COVID has created a mass exodus of people abandoning densely populated areas like New York and California to move to places like the Triangle where even if you get quarantined, there’s plenty of things to do while social distancing yourself.
Plus, with people working from home now more than ever and that’s seeming more of a permanent trend, they are not tied to a specific location and want more space in their home, in their yard, more open fields to run through or trails to explore. We can offer that for them.
If you were working in the Bay Area in California and can now permanently work from home anywhere, why not Cary? You get to keep your salary, but instead of an average price tag of $1.36 million for your average home in San Francisco, you can move to Cary and only have to spend an average of $450,000 for a comparable home. Plus, we have a great quality of life, great education system, ample opportunities to be outside & are all generally working towards that American Dream.
Building a Way Out of the Supply Problem
With a population increase and low supply, a common solution is to build your way out of the problem with new construction.
We were doing that prior to COVID to counter our housing supply problem by developing new neighborhoods in areas like Holly Springs, New Hill, Fuquay, Wendell, etc. But COVID has brought it’s own set of challenges to the building industry.
It started early on in the pandemic with shortage of workers in the mills, but the problem has grown. The U.S. gets a lot of it’s wood from Canada, where there are high tariffs. Also, people have been doing projects around their home to make it more suitable for pandemic living. All of this has made prices on building supplies jump 180% in the past year.
Get in While You Can
A fair share of builders in our area have stopped accepting contracts from buyers to build from the ground up because they don’t know what the house will actually cost them to build.
They are now building inventory homes and waiting to release them to the market until they are about 60 days out from completion and actually know what it will cost them to build the house and determine a price. These new homes have multiple offers on them as well, which is unheard of in our market.
The Triangle has been turning into a Metropolitan Area for years. You may have missed it or thought that transition was going to take a little longer to occur. If anything, COVID seems to have sped up our transition, it’s happening now.
This is NOT a Bubble. Bubbles occur in markets where the increases in prices are driven by demand and not the economy. Everything about the economy of our area is strong and will continue to be for the foreseeable future.
So, get in while you can, be a voice in the community to continue to invest in our schools, parks, infrastructure and protect what makes our area such a desirable place to live and get ready for a fun ride.
Story by Leslie Douglas, Owner of The Douglas Realty Group.
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