Cathy Sentgeorge

The Wake County, NC Real Estate Market in January, 2023 – Surprising Realization!

Welcome to 2023!

What does the year ahead have in store for the Wake County Real Estate Market? In speaking with clients making real estate decisions in early 2023, I have become increasingly bothered by some of their perspectives about how the economic climate is affecting them.

In fact, I was SHOCKED when I started digging into the statistics and headlines for what happened in 2022, as well as the predictions for next year. I believe that a lot of people are very confused by what they are seeing and hearing.

What Happened in 2022?

2022 started off like a feeding frenzy with many homes selling sight-unseen at unheard-of above-list prices, and with huge up-front deposits. That market came to a near screeching halt by mid-year, and all of a sudden it felt like things were “back to normal.”  But what is “normal” when it comes to the real estate market? I’m here to explain it to you!

We are entering 2023 in the middle of uncertainty – is the market hot or has it frozen? Interest rates are climbing, so what I’m reading must be true! But, what is true? Too many buyers and sellers are unnecessarily confused about what the real estate headlines mean to them. Data analysts and journalists are certainly doing their jobs well…I’m just not convinced that their predictions really apply to most of my clients.

While I’m not going to do a deep dive into the cost of money, interest rates are certainly a wildcard in this mix. The Federal Reserve seems to be as flummoxed as any of us with its rate accelerations.
ABC News weighs in here.

So Should I Wait to Make a Purchase?

However, if you wait for interest rates to go down, you’ll end up buying your house at a higher price due to historic appreciation rates. Keep in mind that interest rates are STILL lower than they’ve historically been, so if that’s the only sticking point in your real estate decision process, DON’T WAIT!

I follow several economic gurus and thought leaders in the real estate space. From what they are saying, regardless of interest rate hikes, low inventory, and economic uncertainty, our market will look different than last year. But, it is still HOT!

According to the National Association of Realtors (NAR) Chief Economist, Lawrence Yun, Raleigh is expected to outperform other real estate markets this year. In fact, he ranked Raleigh the #2 Housing Market to watch in 2023.
Historically, the Raleigh area has shown to be resistant to the bombastic national real estate fluctuations. I love this for the asset strength of my clients as well as my own investing prospects. Although as I write this, I realize that it goes against the point I’m trying to make here…but please give me a few minutes to explain.

By the way, I believe that If you don’t already own real estate in Raleigh or one of its surrounding towns, now is the time to grab a piece or two! If you are a home buyer who’s looking for a new place to call home or a savvy real estate investor who is looking for a strong ROI, then you should CALL ME!

Don’t Let Them Fool You, Real Estate is Still Local

So here’s the main crux of this article. I research real estate every day, and all the headlines regurgitate the same unhelpful stuff. Whether you’re buying, selling, investing, or even renovating a home, it’s disingenuous to look at broad regional real estate statistics with general time frames.

  • A deep dive into specific neighborhood areas is the only way to really understand your real estate market situation. Apples and oranges are both fruit, but they’re different…you get the point.
  • You might want to reconsider the headlines that spout year-over-year trends as the basis for making your 2023 real estate decisions. Even if you’re not a seasoned investor, it should be obvious that real estate decisions shouldn’t be based on yearly trends.

Statistics that are based on demographics are extremely deceiving and are not helpful in making real estate decisions. Does it really matter if a “Millenial” or a “Gen Z” (although you might want to stay away from “Gen Alpha” for a few more years) buys your house?

This is the stuff that everyone tells you – the year-over-year trends for the nation, region, state, county, or wherever. And mixed in are the quotes from an agent in New York City and an expert in Los Angeles talking about Millenials and trends. To be clear, I’m not disputing the data…I’m just questioning the analysis. Here are a few examples:

  • US News – Why you Should (and Shouldn’t) Sell Your Home in 2023  “In 2023, homeowners can expect to see a different market than they witnessed in the early years of the pandemic with rapidly rising home prices, or even in 2022’s depleted demand due to high interest rates. While 2023 may see a recession, interest rates are expected to stabilize and some buyers are expected to return to the market. Buyers who have been in their homes for at least a few years can expect to see that their property value has grown – though it may look less thrilling than the peaks of 2021.”

Takeaway: I don’t see this as untrue…just not really helpful.

Takeaway: Celebrity Real Estate Agents aren’t wrong, you just need more context – it always looks easier on TV!

Takeaway: I just don’t think that this is helpful on any level.

Takeaway: It seems like even our local news is stoking the tension.

Takeaway: Focus seems to be on real estate disenfranchisement versus the real real estate market.

Takeaway: Sigh…of course nobody likes “flippers”!

Are you starting to see this pattern of over-generalization in these articles? Like I said before, I don’t question the presented data. I’m just becoming increasingly amazed at the analysis that is being presented. I’m more specifically concerned because I hear similar perspectives from real estate clients! I do my best every day to present people with a REAL approach to their real estate decision-making process.

What’s in store for the real estate market in YOUR neighborhood?

2022 Wake County Housing Market Details

According to the latest analysis (Nov 2021 versus Nov 2022) of Wake County real estate data, conducted by the Triangle Multiple Listing Service:

  • New listings in Wake County were down 29.7%
  • Closed Sales dropped from 1,897 to 1,271, down – 33%
  • Median Sales Price increased from $425,000 to $470,000, up 10.6%
  • Average Sales Price increased from $477,609 to $542,182, up 12.9%
  • Days on Market Until Sale increased from 10 to 29, up 190.0%
  • Inventory of Homes for Sale increased from 1,129 to 2613, up 131.4%
  • Months Supply of Inventory also increased from 0.6 to 1.7, up 183.3%.

2022 Wake County Housing Supply & Demand Trends

Overall Wake County home sales fell in 2022 compared to 2021 sales by 16.7%. The average price of homes sold in 2022 was $542,182. That’s an increase of 20.1% over the prior year. According to the Triangle Multiple Listing Service, the average price per square foot was $222. The average number of days on market before a sale increased to 29 as compared to last year’s 10 days. This is an increase of 131.4%.

In 2022, new listings fell by 8.8% compared to the prior year. The months’ supply of inventory is 1.7 months. It refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.

Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly. Active listings continued to decline as we rounded up 2022. Listings dropped a whopping 33% in November 2022 compared to the same time the prior year.

Steady appreciation will continue because of high demand overall. According to Daniel Harmon of the Jim Allen Group, while we won’t see the eye-popping 17.6% like last year, we should still be around 12%…well above this area’s 5.5% history. Average prices in Wake County are solidly above $500,000 and are expected to continue on an upward trend, although not as much as last year.

As a point of clarification, the numbers and stats in this article are for all of Wake County – not just Raleigh. While some articles talk about the Raleigh real estate market, it seems that the numbers reported are just referring to the City of Raleigh proper. Raleigh proper, the second-largest city in the state and home to around a half million people, is just one of many towns in Wake County. Raleigh plus the surrounding cities and towns that comprise Wake County have a population of over 1 million people.

And, due to the employer base, educational opportunities, healthcare, and tech, the Wake County population continues to grow by leaps and bounds every year. While the consistent growth in this area is certainly a key factor in the real estate statistics in your neighborhood, I’ll dig into that topic in the next article.

Navigating the 2023 Real Estate Market in Wake County

As we enter 2023, headlines will continue to say the real estate market is slowing down.  Please don’t be dismayed – they’ll be reporting year-over-year statistics. Of course, the market will be slowing down compared to what happened in early 2022 – the 2020-2021 time period was a black swan event in real estate!

While listening to the Bigger Pockets Real Estate Podcast last week, David Greene and his co-host Rob Abasolo challenged us to look at things a little bit differently. I was curious, so what did I do? I dug into the numbers (of course) because I’m a numbers kinda girl.

I about fell over!

I compared 2019 pre-pandemic numbers to 2022 numbers for the month of November for the Wake County market. Other than a significant decline in sales, and an astronomical increase in home prices, we are basically in the SAME market! The same number of homes coming on the market and the percentage of list price paid for a home is so close you need a magnifying glass to see the difference. “Normal” is relative – don’t forget to consider the context of the past in considering your basis.

Take a look for yourself. Do you see some similarities between 2019 and 2022, versus 2021 and 2022?

 

Realtor.com Chief Economist Danielle Harris agrees with my take as well:

Housing Perspectives: What will the market be like for homebuyers, especially first-time homebuyers?

“There will be some things for buyers to look forward to in 2023. There will be more homes for sale, homes will likely take longer to sell, and buyers will not face the extreme competition that was commonplace over the past few years.

Home sellers should know that fewer buyers are expected to be shopping for a home in 2023, as high home prices and mortgage rates cause some would-be buyers to delay purchase plans. As a result, sellers can expect more competition from other for-sale listings, longer sale timelines, and more negotiation with buyers.

While time on the market is expected to slow amid fewer home sales in the year ahead, well-priced homes in highly desirable markets may still sell quickly. This means buyers shouldn’t feel undue pressure to move quickly but should consider acting with haste when a home that meets their needs and fits in the budget hits the market.

All real estate is local and while the national trends are instructive, what matters most is what’s expected in your local market.”

Excerpts from Realtor.com 2023 National Housing Forecast

With all that said, real estate is local.

Local, as in your neighborhood. Local, as in the communities that look and feel the same as yours versus the new construction fill-in development down the road. Local, as in your street versus the cul-de-sac at the back of the neighborhood.

Check out this “deep” data from the Triangle Multiple Listing Service! Wake County Months Supply of Inventory increased from 0.6 to 1.7, up 183.3% – which indicates a slowdown in the market. However, there is a significant range in this category. The 27609 zip code (North Hills) has the lowest Months Supply of Inventory at 0.75 months and the 27597 zip code (Zebulon) has the highest Months Supply of Inventory at 5.12 months. So, if you live in the North Hills area, you should probably expect to still sell very quickly!

Real estate trends are NOT the same in every neighborhood.

So what am I trying to say? General overall statistics are great but don’t get caught up in the headlines. Dig deeper to gain a broader understanding of what is really going on. When I sit at the kitchen table with a Seller and they’ve heard all the general statistics, it’s really difficult for them to wrap their heads around information about their piece of real estate that may not line up with the “headlines.”
You are doing yourself a disservice by making your real estate decisions after reading an article or listening to an overarching opinion via a news channel. If you have any desire or motivation to buy, sell, or invest in real estate, meet with a licensed Realtor who will dive deep into what is happening with the type of real estate in your area of interest. You’d be surprised how much it may differ from public opinion.
Buying or selling real estate is one of the most important decisions you will make. Choosing a real estate professional continues to be a vital part of this process. We are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

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