Monday Coffee - May 2021 Housing Update
Hey, everybody. Happy Memorial Day week. Hope you guys are doing great. It is so awesome to see the weather is warmed up. It's going to be a beautiful week here. Going to be a glorious weekend coming up. It is going to be busy and packed.
And our family's headed down to Carolina Beach to enjoy a very long weekend. It's our kids' last week of school.
Things are very busy in the real estate market. I'm going to go over a market update, kind of a monthly thing that I do. I give statistics. I just shared this with our team here this morning, going over some stuff that we're seeing in the market.
So the good news is, the interest rate is still down there around the 3% mark for most loans, even lower than that for 15-year loans. Real estate has become by far the number one vehicle for people that are putting their money into it.
A lot of folks are slowly pulling their money out of the stock market. And they're putting it into what they know, they're putting it into the scarcest thing there is, which is land. That's the thing that isn't made anymore. You can't fake it. You can't make it.
I highly recommend, obviously, putting your money in real estate, especially now in the uncertain times ahead. This shows you a graph that since 2013, real estate has become the number one vehicle for folks for their true net worth savings. It has made more people wealthier than anything else out there.
Single-family homes, this is something that a lot of people don't realize. This '06, '07, that crash, created an environment where many home builders were not able, and developers couldn't get funding, couldn't get loans. And there just wasn't enough demand at that time to build new houses.
So the last 10 years, we've had half as many new homes built nationwide as in the previous decades before. So that's another issue that's leaned into and caused a lot of inventory shortages. Just keep that in mind. And the builders are trying to keep up with it now, but the problem is with all the shortages and delays it's making it a big struggle.
Year over year, this is listing inventory. This is national. Then I'm going to bring it down to local. National, we're seeing inventory finally come to bear. I actually saw a couple of posts in a couple of groups I'm in with other exp people from all over the country. And their areas are starting to report 20% increases in inventory.
So you have a couple of things going on. You have sellers feeling comfortable now. They're not worried about the COVID virus as much. So they're able to put their house on the market. Certainly, it's seasonal, you got the summer market coming. People want to take advantage of selling then. You also have the fear of missing out on sellers because it's an incredible time to sell. Certainly, you got to know where you're going if it's your primary residence.
But here's another one that we're seeing a lot of, people that have second homes, investment properties, and things like that, they're getting out now with the current capital gains tax rates. Or they're taking advantage of a 1031 exchange that there's uncertainty whether that's going to be there next year with the environment that's going on.
So this is a great time to sell, especially if it's an investment property because you can take your cards off the table, your chips off the table, and have a reasonably low capital gains tax compared to what it very well maybe in the future.
Freddie Mac is a big indicator for interest rates. They're probably the best at predicting it. You can see right now that it's already bottomed out. We probably won't see interest rates go down for a sustained period of time, back to where their low was, which was well below three.
But the good news is, it's still very good. And we're going to see the project. It's going to increase. And it is going to get more expensive to purchase a house. So now's a great time to buy and it's an amazing time to sell.
Homes forecast, this year is going to be another banner year, they're predicting. Next year is going to be really good, but it is going to start to slow some. A lot depends on certain tax rates and things like that, what happens. A lot depends on unemployment, what they do with some of the unemployment issues. So we'll have to wait and see.
But again, it's a wonderful time to sell. An incredible time to buy with the cost of money.
Days on market, this is local now, let's take it local. This is in Hanover County, which is our primary market that we serve right here. And our days on market are dropped down below a week. So for things that have sold, if a house is sitting on the market for weeks and weeks, or 30 days, or 60 days typically it's because it's overpriced. Somebody is pushing a bit too hard on the price, or there's something substantially keeping it from selling, whether it's a location, condition, or something like that.
Inventory is rising and Wilmington. This is Wilmington. It's going up month over month, a little over 3%, which is good because it's been plummeting, plummeting, plummeting. So Wilmington has been going up. The beach communities have been going up for a number of months. So Wilmington is following, just as we thought. Which is good. We need the inventory of houses to sell because we have absolutely zero shortage of buyers looking.
This is an absorption chart. Down below is a link where you can get all these broken out by counties and some of our major areas. This is the Wilmington market. You can see that we have less than two months supply of inventory all the way up through 1,000,002. And then once you get over that, you do see days on market higher than under, obviously.
But you can see there are very few properties under 200,000. For example, there are 13 properties for sale. And those are typically in need of a good bit of repairs and have some things that need to be done to them. But the good news is, inventory is coming to market. It is coming to bear. The builders are moving quickly as they can. The real thing that's out there is the investors that have properties, whether second homes, or whether it's a true investment, they are bringing them to market now because they want to take advantage of the current taxes, the capital gains tax rate, or be able to use the 1031 vehicle, even if they're going to pay more than they'd like on the buy-side of it, just to be able to pull their profit out and be able to better utilize it and deploy it for the future.
That's a monthly update here from Wilmington, North Carolina. And if you would like more information on our area, or anywhere in North Carolina, because we're able to service all of North Carolina with our EXP team now. We have a local team here and then I have a North Carolina team that's out and around all around North Carolina now, which is really good.
So if you have any questions anywhere in the state of North Carolina, please reach out and we'll be glad to make sure that we become a resource for you in your upcoming purchase, or selling your property.
Thanks a lot. Have a great Memorial Day weekend. Stay safe. Enjoy the beautiful, beautiful weather here. And enjoy seeing people's faces again. It's absolutely wonderful.
And if you're out and about in our area, or down at Carolina Beach on Memorial Day weekend, say hello to our family. We will be out and about and enjoying the festivities alongside everyone else. Thank you so much.