National Association of Realtor Economist, Lawrence Yun, forecasts modest price growth in 2019 between 2% to 3% instead of 5% or more as in recent years. We will still be in a Seller’s Market, but in high price markets, sellers might have to offer incentives to buyers. In these markets, in particular, there will be less bidding wars and multiple offers as seen in 2018. The lack of inventory supply is expected to ease some with inventory rising from 7% to 10%. However, this increase in inventory will go toward the mid to high-end market homes priced above $250,000. This inventory increase will not help first-time homebuyers. Interest rates are expected to increase to 5.5 per cent by the end of 2019 causing affordability issues for some first-time homebuyers. This April will be the first time people will see the results of the tax reform when filing their taxes.
Davidson County, NC Real Estate Market
The inventory of single-family homes in Davidson County continued to decline in the 4th quarter of 2018. In 2017 at the end of the 4th quarter, 563 single-family homes were available. At the end of the 4th quarter in 2018, there were 487 single-family homes available. That is a 13.5% decrease in single-family homes inventory.
In the 4th Quarter 2018, there were 405 pending sales for single-family homes in Davidson County. During this period, 458 single-family homes closed with the average days on market of 64 days.
Breaking it down as to what has sold in the 4th quarter, homes priced between $100,00 and $199,000 contain the highest number of sold listed at 186 homes. The second highest price range sold was between $200,000 and $299,000 at 104 homes. The average days on market for these listings was 53 days.
Our months’ inventory at the end of 2017 was 3.9 months. At the end of 2018, months’ inventory had dropped down to 3.4 months for single-family homes. The median sale price the end of the 4th quarter in 2017 was $150,000. The median sale price the end of the 4th quarter in 2018 is $157,500. This is a 5% increase in the median sale price.
Supply of Davidson County Homes
Active Listings for Sale
Months Supply of Homes
Factors Contributing to Inventory Shortage
- An entire generation of homebuyers (Millennials – ages 19-35) has finally decided to buy their first home. This group is putting down roots, getting married and starting families. This has been the force behind multiple offers and bidding wars across the country.
- Homeowners are staying longer in their present home and renovating instead of buying another property. Historically, the average time a homeowner stayed in their home had been six years, but that has risen to 10 years, which is almost a 50% increase.
- Another factor for the low inventory is that many homeowners are afraid they would not be able to find their replacement home. Instead, they have decided to renovate and stay in their present home longer. This makes sense as long as the homeowners don’t over improve their home for the neighborhood.
- Builders were slow to start building sufficient inventory after the recession years.
New Homes under 175K in Davidson County
Tax Cuts & Jobs Act of 2017
In April 2019, people will file their taxes for the first time and see the changes from the Tax Cuts & Jobs Act of 2017. Two changes that will have an impact on the housing market:
- The mortgage interest deduction reduced to $750,000 instead of the prior $1 million deduction cap. This change will affect high-end homeowners and buyers and those with multiple homes with mortgages.
- A limit of a $10,000 deduction for state and local taxes – known as SALT. This change will affect housing markets in high property tax states.
Stats for Townhome Sales
In the 4th quarter of 2018, there are 29 townhomes for sale. This inventory level is down 39.6% from the inventory of 48 listings the end of 2017.
There were 39 pending sales and 39 closed sales in the townhomes market in the 4th quarter of 2018.
The Median Sale Price was $189,900, and the Average Sale Price was $191,500. At the end of the 4th quarter, there is a 1.8 months supply.
What Does This Mean for Buyers
Buyers will find buying a home more expensive in 2019. Buyers will need to be preapproved by a lender and ready to make a decision. Prices will continue to increase, but at a slower rate. Limited inventory supply will still be an issue in homes priced under $200,000. Mortgage interest rate increases will affect the price range a buyer may qualify to purchase. Some buyers might be priced out of the market.
What Does This Mean for Sellers
We will still be in a Sellers’ Market in 2019. It will take quite a few years for current inventory levels to come back to normal levels for the market to swing back to a Balanced Market or Buyers’ Market. Sellers in the higher price ranges will see more competition and will have to price their home competitively and possibly offer incentives. If you will be selling a home in the first time buyer price range, be prepared for a quick sale and have a new home in mind.
Summary
Rising mortgage rates and buyer demand will characterize the housing market in 2019. The millennial generation will continue to make up the largest group of buyers in 2019. In fact, this generation will have the largest share of home buyers for the next decade as their housing needs adjust over time.
If you are thinking of getting into the real estate market, do your research to see what is happening in the local market. If you are a seller and thinking of moving up, check out the inventory of homes you are interested in purchasing as your next home. Are there enough homes on the market that you would not have trouble if your home sold quickly? One trend, I saw last year were sellers purchasing their next property before they put their current home on the market. However, some homeowners might not be in a financial position to do this.
Check out your financial health. An individual’s needs and circumstances determine if it is the right time for them to buy or sell a home.
