Market Watch Report – 1st QTR 2019

If you are looking to buy or sell a home in Lexington, Thomasville or Denton, you need to understand the local conditions that will affect your ability to complete a successful real estate transaction in the Davidson County Real Estate Market.

You need to understand that all Real Estate is local and each area has its own individual DNA factors.  The trend in other parts of the country is that inventory is starting to return to more normal levels.

However, our area continues to experience very low inventory levels.  It may take several years before normal inventory levels return.

The following chart shows how our listing inventory has continued to decrease in the last five years.

There was good news for homebuyers in March when the Federal Reserve Board held off on a rate increase in its March 2019 meeting.  The Board also stated it would be patient in rolling out futures rate increases in 2019, 2020 and 2021.

The Federal Reserve Board does not set mortgages rates; rather it is the rate at which banks and financial institutions lend money to one another.  When there is a rate increase, the banks pass on these additional costs to consumers in the money they charge for credit, auto loans, and mortgages.  A higher mortgage interest rate affects the affordability factor for home buyers.

In the first quarter of 2019, 423 residential homes closed including single-family and townhome properties.  Homes in the first-time buyer price point ($100,000 to $200,000) made up 43% (182 homes) of these closed listings.

Days on Market for a single-family home is 35 days and 10 days for townhomes. Analysis of the absorption rate indicates an inventory for single family listings of 2.9 months and 1.8 months for townhomes.

A good indicator of what type of real estate market the local area is experiencing is to look at the median list price ratio.  This ratio is a way to express the percentage of the list price that the buyer ultimately paid for the home.  This percentage shows how much the sellers are receiving from the homes list price.

Nationally, Realtor.com expects home prices in the U.S. Market to increase around 2.2% in 2019. Unless there is a shift in the market, there will not be a buyer’s market for the next five years.

Millennials will continue to make-up the largest segment of buyers in 2019, accounting for 45% of the mortgages.  Older Millennials moving-up will have more options in the mid-to-upper price points and will make up the majority of buyers who close in 2019.

1. Know what you want and be ready to make a decision quickly.
2. Have your financing in order and get pre-approved before you make an offer on a home.
3. Stay within your budget.  Don’t overbid on a property that doesn’t make sense for you financially.
4. Be patient as inventory will continue to be a challenge for homebuyers especially in the price point under 200K.
5. Stay motivated and keep saving for your down payment and closing costs.

1. Listing agents are asking their clients at the listing appointment how they want to handle multiple offers.
2. Have the home in showing condition before it is on the market and shown to buyers.
3. Price the property according to the recent comparable sold listings.
4. Have your next home in mind ahead of time because your home probably will sell quickly if priced correctly and in good condition.
5. Consider buying your next home first before you list if you are financially able to do so.

The continuing challenge for the Triad Real Estate Market in 2019 will be the supply of homes and the affordability factor for first-time buyers.  The largest percentage increase in home prices has been in the first time buyer price range pushing some first time buyers out of the market.  With the recent announcement from the Federal Reserve, mortgage interest rates should stay in the 4% range through 2019.

Homes will continue to appreciate at a rate of 2 to 6 % each year until 2020.  Millennial buyers will continue to be the largest share of homebuyers through 2020.