Market Watch Report for Davidson County – April 2020

Spring is usually a busy time for new listings, and many sellers hold off putting their homes on the market until the weather starts to warm up.  We keep track of how many listings are added each month in the multiple listing service to have a trend of inventory levels.  The two tables below show five years of activity from January through April for new residential listings and closings.  March figures for new listings do not seem to have changed from previous years.  However, new listings in April did show a drop compared to prior years.  Some sellers unsure as to what will happen decided to wait and see how buyer demand and home prices would respond during the shut-down.

New Residential Listings in April – All property types

The residential closings in April 2020 were slightly higher in April than March and more than in April 2019.

Closed Residential Listings in April – All property types

At the end of April 2020, there are 114 Single-Family Homes and 4 Townhome listings pending in Davidson County, North Carolina.  Inventory of homes at the end of April 2020 is 386 Single-Family Homes and 30 Townhomes available for sale.

The Average Sales Price for Single-Family Homes in this market is $ 210,600.  This is a .9% increase from the end of April 2019.  The Average Sales Price for a Townhome listing is $188,283. This is a 6.5% increase from April 2019 when the Average Sales Price for a Townhome property was $176,835.

Homes prices do not appear to have been impacted by the virus.  Listing prices will probably hold steady or only drop slightly if at all.  The reason for this is the shortage of inventory in all price points.  It will continue to be a Seller’s Market.

There has been some speculation that the effects from covid-19 will be similar to the 2008 recession on the housing market.  No doubt, our economy has been impacted and will continue to be as we slowly come out of this.  However, the factors that were in place in 2008 that caused the collapse of the housing market do not exist today.  Here are the factors that are different in 2020 and will work in our favor during this economic crisis.

• In 2008, the housing inventory had an 8 to 10 months inventory of homes for sale throughout the country. Today, there is a shortage of homes for sale.  In some cases, there is only a 1 or 2 month supply of homes.  The economic principle of supply and demand comes into play.  The shortage of inventory will cause prices to hold steady or go down slightly and then come back up.
• In 2008, homeowners were overextended and had cashed out the equity in their homes. This factor caused many homeowners to walk away from their homes, causing foreclosures to flood the market.
• Today over half the homeowners in the United States (54% of homeowners) have over 50% equity in their property.
• Banks have much stricter lending guidelines since the passage of the Dodd-Frank Act. It is harder for unqualified buyers to purchase a home.
• The cost of buying a home is incredibly low with the current mortgage rates, which will help buyers qualify for a loan.
• The federal government has been fast to backstop the effects on the economy.  Government relief packages have been much quicker to help relieve the burden on businesses.  That was not the case in 2008.

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A total of 165 Single-Family Homes closed in April 2020.  This is an increase of 13.8 % from April 2019 when there were only 145 closings.

A total of 17 Townhomes closed in April 2020.   This is an increase of 41.7% from April 2019 when 12 Townhome listings closed.

Analysis of the absorption rate indicates an Inventory of 2.3 months for Single-Family Homes and Townhomes in the Davidson County NC Real Estate Market.

• A buyer in this seller’s market will continue to be challenged by the lack of homes available for sale.  When a new listing hits the market, act quickly to schedule a showing, and be ready to make an offer.
• Understand that there will probably be many buyers going after the same home, and there will be multiple offer situations.
• Your offer on the home should be as clean as possible.  Avoid having a lot of contingencies.  Understand what your budget is and don’t get caught up in a bidding war.
• To have your offer stand out, write a letter to the sellers explaining why you want to buy their home.
• Have your finances in order and get pre-approved so that you can act quickly.

• Even though showing your home during covid-19 is challenging, it could be to your advantage to place your home on the market now because there will be less competition.
• Since homes are going under contract quickly, you need to have a good idea for your next home.  You might have to ask to rent back from the buyer for a short time so that you can find your next home.
• Check with your lender to discuss if it is possible to buy your next property before you list your present home.  It will be easier for buyers to view the property and less stress on you having to deal with two real estate transactions at one time.