August 2021 Market Update
WILMINGTON NC - In this video, Buddy Blake of Waypost Realty breaks down the latest trends in the real estate and housing market for Wilmington NC, and surrounding areas such as Hampstead, Leland, Castle Hayne, Rocky Point, Burgaw, Warsaw, Wallace, Whiteville, Oak Island, Southport, Carolina Beach, Kure Beach, Wrightsville Beach and more.
Hey, it's Buddy Blake here. Happy Monday to you and your family, wherever you may be. I just wanted to give you an update. Things are busy in Wilmington, North Carolina, and it's hot. It's hot, hot, hot. So stay inside and enjoy the air conditioning. But this week I'm going to jump into our monthly market stats, so that you can see what's going on.
Things are definitely... A shift is afoot, contrary to what you may hear or somebody may tell you. Nationally, locally, and regionally, things are shifting. And we're going to see that continue. It's been a wonderful ride, but the ride is just slowing down a little bit. The merry-go-round is slowing down, and just make sure you don't get slung off one of the horses.
So anyway, so we'll jump in. Okay. We're going to do a deep dive now into the latest happenings. And this is as of August 1st of this year, so it's really fresh, but I wanted to get in here and talk about this. First thing I want to talk about is pending sales in our three county area, which is pretty much Southeastern North Carolina, the coastal areas, and it actually reflects nationally, as well, if you look at the reports from the National Association of Realtors. You can see that the new pending sales, this doesn't mean what's closing now, what's closing last month or something like that, or next month. This is the tip of the spear. This is the number of new contracts.
And it peaked in April of this year in our three county area, and it peaked around May nationally, it looks like. But if you look over here, a lot of that is due to the new inventory that's coming on the market. Seasonally, people obviously slow down listing their house as you get through summer. So we've had that fall back.
But also, the other thing that has happened too, I think, is new construction locally and nationally, a lot of home builders, national and regional and local, have changed the way they do business. You don't see the pre-sale contracts, meaning that you go select a lot, and then you pick a house plan, you pick the updates. That mechanism doesn't exist in many areas now because the builders don't want to get behind the rising costs, nor do they want to miss any of the potential realized profits.
So, what's happening is they're not bringing them to market until they get to the cabinet stage or drywall stage, in many cases, when they have a really good idea of what their cost basis is, and allow themselves to be able to make sure they don't leave any money on the table for a potential retail price for the house. So, we're going to go through a period of time where we just simply don't see presale contracts. And that is a large part of the marketplace, and it has been during COVID because a lot of sellers, there just wasn't a lot of resale homes out or used homes out there. So people moved into that. And also builders, for many months, were the only ones that would accept flexible financing, or even now today, do VA loans, FHA loans, and things like that, just due to market conditions.
So I don't think that's going to change. I certainly think the market has peaked out, and also you've got the buyers' frustrations. A lot of buyers are pulling out of the market because they just simply don't want to deal with overpaying. And there's certainly the greed factor, where a lot of sellers have come to market higher than they should have, just to test the market, or quite honestly, listening to people that probably don't have a pulse on the market, and that's happened. Or some sellers go to market, and they'll go... Like I've always said, if you're going to test the market, I think you ought to test it as a for sale by owner if you're really going to crazily test the market, go way high. Because you don't damage yourself. Because what's happening now is we're seeing more price reductions than we've seen in well over a year. So people put it up there, and then it starts coming down.
But the problem is, in a normal market, if something's sitting on the market for four or five months, you start wondering what's wrong with the house. Now, if it's on the market for a week or two, agents and buyers alike are wondering what's wrong with it. So just be really careful where you price your house. Yes, I don't leave you to leave any money on the table, but just be realistic with it. And don't be too greedy, because you're going to start chasing off buyers.
And so, anyway, so next I think I want to look at is the absorption reports. This is in the New Hanover County area, which is where Wilmington proper is. And if you're not familiar with these reports, there's a link down below this video, you can click and actually see the PDF of all of these. You can see right here, just pay attention to this column over here. Gives you the ranges here. And this tells you that there's less than one month supply of houses. Let's pretend that not one more house was going to be listed in this area. That means when eight-tenths of a month, three weeks, we would run out of houses in that price range.
Now do keep in mind, a lot of these numbers are just skewed... Whoops. I went too fast. Are skewed because there's just very little act... In New Hanover County, there's only 373 listings whereas normally, we'd have well over 1,000. And 466 are pending, and you can see the 2,400 have closed in the last six months.
This is Brunswick County, the largest county in North Carolina. When this goes basically from the Cape Fear River all the way down to the South Carolina state line and inwards also a bit. But you can see that the price range is extremely hot, all the way up to a million.
Now there are a number of houses that are sitting because they were priced too high or there's something significantly wrong. So that is... These numbers are inching up again. So if you can call days inching up. And then you've got Pender County. You've got a gap here. You just don't have the real ultra high end that New Hanover County in some parts of Brunswick has in that area. But you can see, once you get to certain price ranges, once you get up to about 800, it starts slowing down in the Pender County area. Just don't have the big buyer pool for that.
Wilmington, this is mailing address. This isn't city limits. This is Wilmington mailing address, which would include unincorporated areas like down towards... If you know where Monkey Junction is, towards Carolina Beach. And it would also include Scotts Hill and places like that and the Ogden area. But you can see, and this is really the hottest area, there's only 322 homes available. 415 are under contract, most of those being under contract for only 30 days. So that is just a phenomenal number of velocity of sales. Under 600 is the meat of the market here. And once you get over 600, you've got almost twice as long days on market. And then once you get over a million two, it jumps even more.
Now that is dependent on location. Waterfront or true waterfront intercostal properties are still moving a unique type property. So even at the high end, they're moving, but there are some areas where things are starting to slow down, and it's becoming obvious now.
Let's see. Leland, this is the Leland market. So up until you get to about 500, you're pretty much less than 30 days on the market. The more meat of it would probably be around the three and four.
Now this is where we're at right now. This is national. This is a national chart. We're still deep, if you look down in here, we're deep in a sellers market, and this is nationally. But keep in mind, we've bounced a good bit. Well over half a percent or a half a month, we've increased in days on market. So, it's hard to even imagine this market here, which was where we typically operate for the last 25 years for me. But right now is still deep a sellers market.
So anybody has been thinking about selling, it's a wonderful time to sell still. You still got to deal, well, where are you going to go? But we're starting to see more inventory on the market, which is good. And we're going to see that come on more and more, because more, you're going to see some of the foreclosures come to market, now that the evictions have started again and the foreclosures. And you're going to see some landlords able to sell their house now. They've been sitting on a tenant that hasn't paid them because of the laws or the mandates. So now they're going to be able to free it up and be able to take their money off the table and do things like that and take advantage of this market.
Now this is going to be a big one for investors and for people who have owned property for, I would say, over two years. We've been riding almost a double digit appreciation annually for the last couple of years. It is already peaked in June this year, the appreciation. That doesn't mean prices have gone down. That just simply means the rate of increase has significantly changed. This is nationally and it's locally.
So what we're seeing is the rest of this year, we expecting, according to prognosticators, the people that are much smarter than me, around a little under 9% appreciation, but then it's going to almost cut in half. And keep in mind, normal appreciation is 4% to 5% a year. So we're going to be back to that next year or even... So what that means is if you've been writing your house up and you're trying to figure out when do you jump off this wagon? The answer was probably back in April of this year was probably the time to have done it, but it's not too late now. But waiting from now to next year is most likely going to make a really big difference.
Let me go right here. This is just an interesting scenario. And I don't know where you sit, but the average person in the last year, household has gained $33,000 in equity without doing anything else to their house, without improvements, just by having it. And the average household has $216,000 equity. And this is going to play into another slide that I'm going to share after this. But the real interesting thing is the ownership of homes. I've never seen, almost 40% of the houses in the United States are owned free and clear. So that means there's no mortgage on them at all. So that is just incredible.
Let's see. Home equity cash out. This is the slide I was talking about. Back in '05, '06, '07, you see the red. What that means is a lot of people, too many people, were pulling out every penny of equity they had in a property to go do something else, make an investment, to flip it, to do all that.
When you start hearing about all your friends, relatives, and agents, I might say, getting into the flipping business, that's when you start wondering if this thing is getting ready to have a problem because the music does run out sometime. So if you're starting to hear the word flip a whole lot, that's when you might want to say, "Is that a red flag?" Pulling equity out. But this time around, percentage of equity has not been pulled out. So if you're needing cash, and I am hearing some people, friends of mine, what they're thinking about doing is going out and setting up and doing a cash out, or getting a [inaudible 00:11:21] getting an equity line on their balance. Just for the rainy day. Not to pull it out right away necessarily, but to have it available and ready to deploy while the interest rates are very low.
So, that is something to think about. I know, perfect example, my wife and I are doing it to be able to position ourselves moving forward, because we do anticipate a tremendously different market. We're already seeing it in our business. Our numbers of contracts, typically, for our team runs anywhere between 30 and 50 contracts a month. And we're not doing that now. It's down around half of that or a little less in July, actually. It's not because we're not working hard. It's not because we're not doing a great job. It's just because there's a lot of people vacationing. There's a lot of people pulling back from the market, buyers, and the sellers, quite honestly, are just waiting and waiting because they don't know where they're going to go. And they also just... Some people are just greedy. Just the way it works.
So anyway, let's see what else we got. Mortgage update. If you have any information... We have a joint venture with Waypost Mortgage, Paul Bowers. So he's right in our office, which is wonderful. He does pre-approvals for free. And he also, what he does as a service, because we do believe in giving service away and hopefully earning people's business, he actually will... If you've got a preapproval on something, he will do an analysis on it to make sure that you're not paying points that you don't need to be, and that there's no junk fees or anything like that. And he does that for free. It doesn't cost you anything. So obviously, he's trying to earn your business, but it's just really good service because there are... We've seen some situations that sure seem predatory to me, especially with out of town and internet lenders.
So just be very careful, no matter where you're buying or refinancing, use a local lender. Period. I don't care who it is or what it is. Use a reputable local lender. So everything just goes better if there is a human that you can call and talk to, and especially if it's somebody in your market.
So anyhow, I hope that's helpful. You guys have a great week and a great August ahead. A lot of people going back to school, so that is good. Get some normalcy back. And in person, which we're super excited about in our house. But anyway, take care and thank you so much.