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Data and graph provided by Canopy MLS and represents single family properties sold in the counties of Catawba, Caldwell, and Burke.
It’s no surprise that the housing market is shifting rapidly. If you are anything like me, you probably read something about it every time you go on social media or listen to the news.
Sometimes it can be hard to differentiate someones opinions from the facts, so in this article, we will be focusing on the facts and what they mean for our market.
The Cause of The Concern
For several years up until 2022, our entire nation witnessed skyrocketing housing markets. When Covid hit in 2020, it added more fuel to the fire with all-time low interest rates, and a still strong economy. Interest rates in the 3s became the norm, and at about this time last year, interest rates began increasing, and all markets have shifted as a result
A year ago today, the average interest rate on a 30 year fixed rate mortgage was still an incredible 3.76%. Since then they have risen past 7%, and have now settled at 6.12% at the time of this article.
Many buyers have decided to hold off on their purchase due to the rates, so the massive amount of demand dropped abruptly last year and has shaken up markets everywhere.
How Has Our Market Reacted?
Interest rates reached the 5% range around April of 2022, and it wasn’t much longer when we started feeling it in our market. Around August, our days on market started increasing, people became hesitant to list their homes, and transactions have been decreasing every month since.
Median number of days to sell for single family residences in the counties of Catawba, Caldwell, and Burke. Data provided by Canopy MLS
To most peoples surprise, our prices have hardly been affected. They are still increasing, but bidding wars and offers for tens of thousands over asking price are now a thing of the past in most instances.
Sellers are having to manage their expectations now, due to increased days on market and an increase in price reductions on properties. While prices are still strong, it’s important to understand the market has shifted. Most listings were selling for right at 100% of list price or even higher, but since summer of last year, they have been selling for about 97% of list price- or around $10,000 less on a median-priced house in the area.
Median sales price of single family residences in the counties of Catawba, Caldwell, and Burke. Data provided by Canopy MLS
As our market was rapidly growing until mid 2022, the flame was being fueled by low interest rates. Buyers were able to afford much more house, but since interest rates have increased, most are having to buy less house just to keep the same monthly payment. This might explain why a lot of the houses in the $500k-800k range have experienced a major increase in days on market, as seen below.
Median days to sell based on price point of single family residences in the counties of Catawba, Caldwell, and Burke. Data provided by Canopy MLS
What Can We Expect From The Market?
Currently, the data we are seeing does not indicate an upcoming crash. Most of North Carolina has continued to increase in values, and 21 out of the 37 metros are expected to continue to increase, and we are one of them. Even the 16 that are expected to decrease are expected to decrease no more than 4.5%.
As interest rates have put many buyers on pause, it makes sense that the drop of demand has increased days on market and made it a bit harder to sell. Despite this, North Carolina, and more specifically the Hickory area, still has a great quantity of people ready to move here. I’m sure you have noticed the numerous apartment complexes appearing overnight it seems, or all of the newly built houses. The truth is, even with our current housing prices, Hickory provides tremendous value for the cost. It was even ranked the #1 most affordable metro in the NATION last year.
Charlotte, the second-largest financial industry city in the United States (behind New York), is a lead contributor to the growth of Hickory. As more businesses are introduced to Charlotte, many individuals are going to choose to live nearby where the cost of living is significantly cheaper and they don’t have to deal with the busy roads of a bustling city all the time. Where else is better and more convenient than Hickory?
In addition to still having a strong demand on the buyers side for our area that will maintain strong prices, there are some other facts that should also provide some reassurance for us.
Many people think we will witness a housing crash similar to 2008, but that incident was primarily caused by lenders having regulations that are unrecognizable compared to common practice today. “Liar loans” were loans that buyers could obtain by basically lying to their lender about their finances, since proof was not required in most instances. Foreclosures are significantly less common in our current market thanks to thorough pre-qualifying processes, and without an influx of incredibly cheap housing such as foreclosures on the horizon, it seems unlikely that our market would come tumbling down.
What Does This Mean For Us?
With no serious opportunity ahead for our market to crash, and interest rates not showing any signs of dropping back down to the 3s, it’s not a great idea to postpone buying in hopes of change.
The initial shock of increased rates has put so many buyers on the sidelines, which is understandable. If we take a look back at rates from the past we can see that these rates really aren’t ridiculous, rather they just seem high compared to what was regular in times of the pandemic.
Graph and data provided by FreddieMac
Many buyers decided to wait until rates drop again, but as the Federal Reserve continues to increase rates to combat inflation, the data doesn’t support the idea that they will be dropping significantly anytime soon.
So as they continue to wait, rates wont change much, but prices will. I think in the upcoming months and years, these rates will be viewed as normal again, and many people will regret waiting to buy, since prices are expected to continue to rise.