February Real Estate: Craven County's home inventory for sale not correcting itself anytime soon
Real Estate column by Rowland and The Home Sales Team.
Craven County’s lack of home inventory for sale will not correct itself anytime soon and is one of the main factors that will keep the real estate market and prices strong.
The law of supply and demand is the basis of economics. Currently, the demand for housing around here outweighs the supply of homes. Typically, this is known as a seller’s market. However, buyers are gaining leverage, which is unusual in a market with such a low supply.
Currently, in Craven County, 172 residential properties are actively for sale between $43,000 all the way up to $2,700,000. If we look at the real estate market as a whole, there is currently a 1.17 month supply of homes. This means that at the pace homes are selling locally, in theory, it would take 1.17 months to sell every home on the market at this time if no new homes came on the market.
This number is down from last year at this time when we had a 1.33 month supply of homes on the market. Economists have held the standard that when the supply of homes is below five months of inventory, we are in a seller’s market. When the supply of homes surpasses the seven-month threshold, the market is considered to be a buyer’s market.
As we dig deeper into the supply of homes, we must factor in price ranges. As always, less expensive homes sell faster than higher-priced homes. Right now in our area, we have an approximate .75 months’ supply of homes under $300,000. This price point is still a challenge to find homes for buyers. It also allows sellers to possibly demand a bit more because they have a limited edition product. We are still seeing multiple offers at this price point and very few days on the market, assuming the house is priced according to the condition and location.
As we move up in price, we have around a three-month supply of homes between $400,000-$1,000,000. Overall, this segment of the market points to a seller’s market, though we are seeing both median and average days on the market tick up, meaning it is taking a little longer to sell these homes. For more expensive homes to take a bit longer to sell than less expensive homes is not a new phenomenon and something we have seen in all markets. This is also proven once you cross the $1,000,000 threshold locally as we have a 14 month supply of homes at this price point.
We have a lot more $1,000,000+ homes than we did in 2003 when I started, and this is still not your everyday house for our area, which we see in some parts of the United States. The lack of supply of homes should not be a surprise to anyone who has followed the housing industry over the past 15-18 years. Prior to the Great Recession, builders were building a lot of houses with a large number of those being ‘spec’ homes. The builders were speculating that if they built the homes, people would buy the homes. Most of the spec homes were built by local builders and developers who lived and played here in Craven County.
The banks were lending money to everyone with a pulse and business was booming. Then the Great Recession hit. Banks and builders went under. The banks left standing lowered or took away lines of credit of most builders. Therefore, only custom homes were being built but not any spec homes. For a 10 year period, the number of new construction starts across the United States was one million units below where it should have been to keep up with population growth and housing needs. Now we are seeing the big builders and small builders starting to build again over the past few years.
However, we do not catch up being a million homes behind in just a few short years as builders can only build so many homes each year. Now looking forward to our area’s growth, how will supply and demand continue to impact the market? Cherry Point is planning on bringing around an additional one thousand Marines to the base, putting more of a strain on supply. Hwy 70 becoming Interstate 42 will spur the development and growth of businesses in our area and increase demand for homes. New Bern is showing up on more lists of places to retire and North Carolina had the 3rd largest population increase of the 50 states last year.
We have quality local builders like Maher Construction up to nationwide builders like DR Horton, and every size builder in between starting to build spec homes again. However, they can’t keep up with demand and definitely can’t turn back time to catch up with the number of homes that should be on the ground. The law of supply and demand will always be Economics 101. It drives the economy in all facets and the real estate market is no different. We have seen the median days on the market jump 133% from January of last year to January of this year in Craven County. Going from six days to fourteen days on the market is still really good. Ten years ago, our median days on the market was around 160 days.
We have also seen the average sales price jump 15% from January 2022 to January of 2023 and the median price jump over 21%. What we are seeing in the market is a positive for sellers due to the lack of supply. However, with the feeding frenzy over, days on the market ticking up and prices leveling off, buyers have more leverage. The list-to-price ratio has dropped down below 98%. For a lot of 2021 and the first half of 2022, we were seeing a lot of sellers get more than they were asking for their homes. Now buyers are negotiating prices down and, in some cases, getting closing costs paid. Sellers are getting more anxious to sell in some cases.
With real estate being a solid long-term investment, it is still a great time to buy as I have seen interest rates in the low 5% range this week. With the growth happening in and around Craven County, prices will continue to go up. Fortunately, they will not continue to rise at the rate they did in 2021 as that was not healthy.
The key to finding your home lies in being ready. Supply is low and demand is still high. This should not change anytime soon and will keep our market strong locally. If you are thinking of selling a home and curious about where your home fits into the supply of homes, I know a good realtor happy to answer those questions. Also, if you want to buy a home, going through that process can be tedious. Make sure you have a professional on your side to help.
This article originally appeared on Sun Journal: Craven County's home inventory for sale not correcting itself anytime soon
