Sanford NC April 2023 Market Update

Sanford, NC inventory is up and housing prices are down year over year, but just like most headlines, that can be misleading. A lot of the inventory on the market right now is new construction, at various stages of completion. It's important to dig deeper, and that's just what we're going to do.

Yes. All right. So, um we're gonna do a market update. This is not gonna be one of those fast ones where it's a one minute video with just a couple of stats. We're gonna sit and talk a little bit about um where the market's at in sanford where we think it's headed. Um why, you know, and how that impacts you if you're thinking about buying or selling a house uh in sanford or the surrounding areas.So we're gonna dig into a lot of the statistics uh behind um the demand in sanford right now and what that means for you, if you're looking to buy or sell a house, so stay tuned. And if you have any questions, drop them in the comment, whether you're watching on youtube or linkedin or facebook, and we'll be able to put those on the screen and we can answer those questions.Um and if you want a copy of any of the stuff that we are talking about here right now, just comment market update in the comments and then we will reach out to you individually and get you all those things. So, um first off, we're going to talk a little bit about the national headlines that are out there right now.Um case shiller index home prices rise in february after seven months of declines. So this is national news, right? That when interest rates doubled, it obviously impacted the real estate market and that caused a lot of the markets in our country which were super inflated um after the, you know, frenzy that was 2020 and 2021 uh to decline, right?And for um a national uh on a national level, this is useful information, but real estate is hyperlocal and for uh a lot of cities, it's kind of a tale of two coasts right now that in um areas like the west coast, we are seeing uh that um you know, there are declining markets and in areas like, you know, the um east coast, especially north carolina, um we're seeing markets rise.So um I also want to show you uh that population growth, you know, in north carolina trailed only texas and florida in 2021 to 20 2200 and 33,000 residents, you know, increase in north carolina, those people need somewhere to live, right? This all impacts housing, right? This all impacts real estate prices.And if you look at sanford, um the projections made by the state demographers office show lee county's population will grow from 63,000 in 2022 to 90,000 in 2050. An increase of 27,000 people in just 28 years. And I don't know what you think about projections like this, but I bet we outpace this, right, because this is just based on projected developments and the developments we have going on right now, but 1000 people a year.So when you look at the fact that we've approved over 10,000 building permits, and you're wondering why we're building so many houses here. This is the reason why it is that we have a big migration of people to north carolina and we have a big migration of people to sanford as a result. So, um now let's get into the uh statistics in sanford specifically um march average sales price $339,219 which was down 1. 8%From march of last year. Now, I don't like to look at any one month, you know, to uh you know, in depth because it's a small sample size. If we look at the rolling three month average, you know, the last three months, the average sales price is 3 38 on a single family home and that's up 6. 1% from 3, 19 to 80 in 2022.So we also take a look at the trend line here that the overall trend of housing values is still going up. So we might have any one given month where because of, you know, some anomalies or, or some houses that sold that skewed the averages.Um, we might have a decline but we're trending up and, and that has not stopped. Right. So, although that national article states seven months of declines that does not apply here in sanford, you know, we are insulated from some of the national trends because of all that we have going on here in, um, our immediate local area.So, um, i, i, I also wanna show you that on the sales price. Um, we have the ability to, to show you new construction sales price averages. Those have gone up pretty significantly. Um, you know, the new construction that they're building in the area, they're really pushing the upper limits of the price points in sanford and lee county and they're still selling, you know, they're, they're attracting that rally buyer over here and they're attracting the people that aren't impressed with the resale market in sanford.So, um, that's jumped over $100,000 since 2022 which seems a little low and it's up over $70,000 on average from the house, new construction that sold in 2021. And then when you look at the resale market, um, it's down about $50,000 from last year, but still up from 2021. Uh and these are existing house resales and again, not looking at just one month if we look at that three month rolling average uh the markets, you know, down about 19,000.Um and uh I'm sorry, 18,000 in average home price from this time last year. So uh the other thing that we are going to take a look at here is is the month supply right now. If we look at the month to month change of supply first, let's look at all inventory, you'll see.And this is where the new construction numbers really can skew the perception of inventory and the perception of, you know what the market is doing here is that we see that under a month of inventory for 2021 2022. And that's increased by 240% to 2. 4 months of inventory in march of this year. That's a big increase.It's still a seller's market, but it's a big increase in inventory. But when we break down the numbers a little bit more, and you see that the resale market is only at one month of inventory and the new construction inventories at 7. 8 months. You see that this is skewed a lot because there are a lot of new construction listings in our market.And those new construction listings are at various different stages of construction, new construction, right, new construction, new construction, uh new construction and, and a lot of these houses they can't be moved into immediately. You can't move into footers, you can't move into framing and a lot of these are um in various stages of construction.So, just because they are listing doesn't mean that you can buy them and move in tomorrow. Right. So, um, the new construction inventory is way up, right. It's at 7. 8 months of inventory and the resale market hasn't changed whole lot. It has increased some.Right. But it hasn't changed a whole lot. So, um, the other thing that we're going to take a look at here is the number of new listings that are hitting the market and that on all construction types has remained pretty consistent from last year. Um if we look at the three month rolling average, uh it's actually up a little bit from last year.But again, if we take a look at the resale, there are not as many people listing their house for sale as there were in 2022. And we look at that rolling three month average, it's down pretty significantly 30% less listings in the resale market than this time last year. Why is that?Well, it brings me to the next point that we're going to talk about a little bit, which is interest rates. Um we have, have sellers that are, you know, locked in at a 4% 4. 5% some of them lower than that interest rate. And right now, you know, national interest rates are averaging 6. 591%For a 30 year fixed va and 7% on a conventional, that's the national average, right. The national association of realtors put out an article recently that says that economists predict to fall below 6% by year end. And they surveyed a bunch of potential home buyers and stated that the sweet spot was 5. 5% right?That 5. 5% is the tipping point for many would be buyers to come off the fence. They surveyed 1300 homeowners and said that 71% of prospective home buyers who plan to purchase their next home with a mortgage say they are not willing to accept a mortgage rate above 5. 5%. And so a lot of builders already, you know, look at this data, they know this, that's why they're offering, you know, different creative buy down options to buy down your interest rate and offering below market interest rates.Um but uh for resale properties, the good thing to know is that although, you know, your average rates are 6. 59% interest rates are hyper local also and they vary from lender to lender. Um we are actually in the process of opening up a mortgage, uh, arm of our business as well, opening up a mortgage brokerage.Um and new news is probably the first time I'm saying it publicly here, but we're doing that because we want to be able to, to share with you a lot more info and help our clients with every phase of the process. So right now, interest rates with no points at one of our lenders is 6. 45 on a va loan compared to the average of 6. 591.And what I want people to know is that if you're on the fence, in terms of selling your house or buying a house right now, because interest rates are too high. But you're that person that says, you know, if they were 5% I'd be all for it. I'd go for it.Well, you can get to a 5. 5% interest rate. You know, it just costs you about one discount point, about $3000 on a $300,000 home. In this scenario, we're running here $300,000 sale price, 2 85 loan amount, 700 credit score. So this is going to vary borrow to borrower, but $3112 in discount points and maybe you can get the seller to pay those will get you to a 5. 5% interest rate today.And that's a permanent interest rate, not a temporary buy down. And you can actually get all the way to a 5% or a 4. 5% interest rate if you're willing to pay, you know, almost $7000 in discount points or $12,700 in discount points. And again, maybe you can get the seller to pay some of those if their house is on the market, you know, longer than they want it to be.And for a lot of people, if you're doing a break, even analysis and you went all the way down to 5% interest and paid $7000 in discount points. Well, it dropped your payment by almost $200 a month, you know, $190 a month from 17 42 for principal and interest down to 15 52.And that is a big difference, right? 200 bucks a month, you do a break, even analysis here. If you're staying in the house for close to three years or more, then it makes sense to buy that down if you are able. So for all those people out there who are in line with this, that they're waiting for that sweet spot before they jump back into the market, just know that you can create that sweet spot on your own.You can have a 5% or even a 4. 5% interest rate permanent today. Um and so I think that, you know, us educating the market on this is going to help some of those sellers who have lock in syndrome, you know, get off the fence and come back to the marketplace.The last bit of news I'm going to touch on is one that's in the headlines. Right now, which is that mortgage fees are changing on may 1st. And some people, there's some misinformation right now about it saying that if you have good credit, you're going to pay more for a house than if you have bad credit after may 1st. And there is some truth behind the idea of that statement, but there's also a little bit of misinformation.So essentially starting may 1st upfront fees for loans backed by fannie mae and freddie mac will be adjusted because of changes in the loan level price adjustments, right? So what does that mean for you? Right. It means that um if you have a higher credit score, you are getting a bigger discount, you know, on your the fees you're being charged prior to may 1st and now that discount is going to go down and if you have a lower credit score, then the discount that you were getting on or the fees you were paying on your loan are going to drop after may 1st, right? It does not mean that if you have a lower credit score, you are going to have a better interest rate and better terms than someone with a higher credit score.It just means that the gap between those two things is getting a little bit smaller, right? And some people are really upset about that. You know, let me know in the comments below what you think about it. If you worked your butt off to have a 800 credit score and are mad that, you know, they're changing some things to sort of subsidize lower credit scores.Um let me know what you think about it. Let me know, you know, if you got a better solution for it, right? So, um so for example, if you a score of 659 and borrowing 75% of the home's value, you'll pay a fee equal to 1. 5% of the loan balance.Before these changes, you would have paid 2. 75% on the other end. If you have a credit score of 7 40 or higher, you would have paid a 2. 5 point 25% fee on a loan. And now that's going up to 250. 375% which is a 50% increase. So now in our area, I can tell you, um that I don't think this is going to move the needle a whole lot in terms of the affordability of houses.Our average price point is a little bit lower than, you know, the rest of the state and definitely the rest of the country. Um and in our area, we see a lot of um government-backed loans anyway, right? A lot of va f h usda loans in our area.So I don't think it's gonna move the needle a whole bunch. So um I'll give you a couple of last minute stats on the Sanford market and then we'll end this. And like I said, if you have any questions at all, just let me know um drop a comment below. Um even after this is aired live and we'll get back to you with those.So um the average uh the percent of sale to list price is basically 100% houses are selling for what they list for. Um on average, the amount of shows to pending in the area is it has gone down from 12 to 10 in the rolling three months if we look at monthly 13 to 9. Um and so houses are going under contract after an average of about 10 showings.I'm sorry, median average is 14. The amount of showings per listing is down. There are less buyers in the marketplace right now because of interest rates right. There is 12. 4 shows per listing in 2022. That's down to 7. 7. So it might take slightly longer to sell your house right now if you're looking to sell. But by slightly, I mean, very slightly, I mean, instead of days, maybe it takes a couple of weeks, you know, or instead of one day, maybe it takes six days, you know, to get an offer and go under contract on your house.So, um hopefully this was useful if you're looking to buy or sell in the near future, then keeping an eye on the market interest rates. The local real estate news is super important. You can follow us on youtube linkedin, facebook, instagram, any of those things and you can drop a comment if you need any more information.So I'm Walter Ciucevich, Sanford surrounded who helps you with your home matters.

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