It’s getting hot out there! And we aren’t talking about this gorgeous spring weather, either!
The nicer weather is great, and the budding flowers, rising temperatures and chirping birds generally signal the beginning of the spring real estate market. But Mother Nature had no control over the start of the buying and selling season this year as the real estate market has been heating up since the turn of the New Year!
The start of this 2016 real estate market has the makings of a perfect spring storm. Low interest rates, an even lower supply of homes, an improving jobs outlook and rising house prices are swirling together to make for a tornado of activity between buyers and sellers.
In fact, the latest statistics show there is only a 2.8 month supply of homes on the market in the Charlotte area where Eastwood Homes is headquartered! To put that in perspective, a 6 month supply is considered a balanced housing market. That number means that if no more houses are listed for sale, the current supply of homes on the market would be purchased by home buyers in less than 3 months. Housing inventory – or the number of homes, new and resales, that are on the market – dropped in February by more than 26 percent from January!
In our Richmond division, the outlook is a little brighter with a 5.3 month supply of homes available in January. But that number is down 25 percent from 7.1 months a year ago!
For home buyers looking for move-in ready new construction, the forecast is even more gloomy with only a 1.4 month supply of finished vacant new homes. That’s the lowest that MetroStudy (which reports on the number of new homes and homesites available in metro areas across the country) has ever recorded in Charlotte since it began tracking the Queen City’s metro market area in 1998. Lots and housing starts statistics are growing in numbers, but they aren’t keeping up with the rise in demand. Factors such as the high price of land, a shortage of qualified construction and trade workers, and rising development costs and requirements are restricting the pace of the area’s new home builders.
The same story holds true in Raleigh-Durham, where more new homes are being started but it still not enough to keep up with demand. In Raleigh-Durham, there is a 2 month supply of finished new homes.
The depleting inventory of homes available to home buyers correlates to the rising prices that the market is also experiencing. Average sales price in the Charlotte market jumped 4.2 percent in February from a year earlier. Average list prices rose 10.8 percent from a year earlier. And sellers were getting nearly 95 percent of the asking price, also up 1.4 percent from the year before.
What do all these stats and numbers mean for the average home buyer in the Southeast, where Eastwood builds in six different markets? Quite simply it means fewer homes to consider, rising home prices simply due to supply and demand, and bidding wars when a buyer finds the perfect home. While that doesn’t sound like an ideal situation for most home buyers already experiencing the stress related to moving, the low interest rates for home loans can easily counter the argument and supports the notion that it is a great time to sell, and to buy.
It also means that those considering buying a new home should not wait until the market gets even hotter when the market hits its traditional peak of the spring buying and selling season. Prices will be higher, and the competition will be hotter!
The statistics also highlight the benefits of buying new construction. To build a new home “from dirt,” as we in the industry say, will take about 6 months. So if you are a buyer who is looking to move by the end of summer (such as before the next school year), now is the ideal time to find your community, homesite and floorplan! But prices for new homes are also rising due to limited supply, which is yet another reason buyers shouldn’t wait to purchase.
Not only does buying a new home provide homeowners the peace of mind that comes with new construction versus an older, used home that can come with a long to-do list full of weekend (or longer) projects, but buying new also gives home buyers choices in a highly competitive sellers’ market. Don’t settle for what happens to be left over on the resale market when you can buy new and have your choice of finishes and floorplans. The new home market, quite simply, has a great outlook!
We would love to help you find the community and floorplan that best fits your needs. Contact our internet New Home Specialist to begin that conversation today!