A few months into 2021, the housing market in the Raleigh-Durham area is still in the midst of record-setting growth with no signs of slowing down. The Mortgage Bankers Association reports mortgage originations are set to grow by more than 16 percent nationally this year, which is a record rate. While many of the homebuying trends creating this demand can be seen across the United States, some of them are also specific to the Raleigh-Durham area, which means the region is poised for continue growth for years to come. Some of these trends will only continue to create more demand within the area.
If you’re wondering why the Triangle market is so hot, here are four reasons it’s booming in 2021 and how those trends that will continue to drive the area’s growth for the next several months.
Mortgage rates remain at historic lows
Historically low mortgage rates pushed homeownership into reality for many people as a low annual percentage rate helped new buyers significantly. For many, the ability to lock in such low rates over a 30-year mortgage was what initially drove the decision to purchase as they realized how affordable monthly payments would be. It was market uncertainty caused by the pandemic that initially created the rate drop, so as it stabilizes, the mortgage rates will start to move back up, too.
Don’t let that fact worry you, though. Current mortgage rates are estimated to stay steady, continuing to remain low for the near future. While it’s unlikely mortgage rates will fall under 3 percent as they did in 2020, the slow creep back up will keep it under 4 percent at least through 2021. As the market pushes to balance itself back out, those rates will stay steadily low, even if they are higher than they were in 2020.
Millennials have entered the market
Millennials, born between 1981 and 1996, now make up the largest subset of homebuyers in the country. As they begin to reduce their student loan debt and are starting families, many of them are looking to purchase their first homes.
The National Association of Realtors (NAR) reported Millennials currently make up the largest share of homebuyers, with the largest reason for purchase for that age group being the desire to own and that the time was right. They also reported 31 percent of all homes purchased were first-time homebuyers. There’s still plenty of room for Millennials to enter the market, too. With new first-time homebuyer programs entering the market in 2021, the Millennial market is expected to continue to grow substantially.
Millennials are also changing the trends buyers look for in a home. While they do one the modern amenities, a great location, energy efficiency, and room to grow, they are looking for smart technologies that will make their lives simpler and more streamlined. The market has answered that demand by building houses with tech-savvy amenities never before seen in homes on the market, including automated systems and artificial intelligence that reduces energy consumption. Technology is a real appeal for this market and builders and smart sellers are adapting to it.
Search luxury home listings in the Triangle area from the Jim Allen Group using the interactive Home Watch map.
Inventory is limited
Because there’s a nation-wide housing shortage, homes are staying on the market for short amounts of time, and often, buyers are receiving cash or multiple offers that are creating a competition war.
The Triangle MLS reported new listings across Durham, Johnston, Orange, and Wake Counties in the first quarter of 2021 were down by more than 9 percent from 2020. In addition, NAR’s latest Existing Home Sales Report shows at the current pace of sales nationally, there’s an average of a two-month supply of homes versus a three-month supply at this time last year. That two-month supply number is low; historically, a six-month supply is necessary for a market to maintain what is considered a normal market for buyers.
What are the solutions to a limited inventory? One solution is to encourage homeowners to sell their homes, which could potentially continue to create market shortages as some buyers look to move into a larger home. Another is new construction, which will be integral as the Triangle continues to grow. As the market returns to normalcy after the pandemic, supply chain shortages should even back out, helping to stabilize the new construction numbers.
There’s an influx of jobs and new opportunities
A report by the Urban Land Institute and PwC ranked the Triangle the #1 real estate market for 2021 due to its overall real estate prospects, which were driven in part by job prospects. Not only does the report state companies are gravitating toward Raleigh-Durham because it is a business-friendly, affordable area with a growing workforce, but it also highlights how cities like Seattle, San Francisco, Los Angeles, Boston, and New York City are losing people to smaller cities that offer numerous benefits.
As major tech companies like Apple and Google are drawn to Raleigh-Durham and new biotech companies and startups expand into the communities surrounding the Research Triangle Park, the Triangle is more of a draw than ever before. Many of these businesses have long-term expansion plans, but it’s expected there will be thousands of new jobs added to the region.
Also driving this trend are the outcomes of the pandemic. Major tech companies like Facebook, Twitter, and Google have announce post-Covid policies that allows employees to work from home permanently. That means homeownership isn’t locked into a work location anymore. Buyers can find a home with land, space, home offices, and all of the amenities they want in locations they didn’t have access to before. Buyers can get the best of all worlds by living in the Raleigh-Durham area.
Thinking about buying a home? Check out this list of local professionals with the Jim Allen Group.
The Jim Allen Group is a nationally-recognized and award-winning real estate team in Raleigh, North Carolina ranked the #1 Coldwell Banker HPW Sales Team in the nation.