We are proud to present you with this synopsis of the national, regional, and localized trends that matter most to you, found here in our Raleigh-Durham-Chapel Hill 2023 Annual Report.
From our vantage point as one of the leading firms in the area, the market forces dominating the story in the Raleigh-Durham-Chapel Hill real estate market in 2023 were sellers staying put because of their “golden handcuffs.” Many purchased their homes at historically low interest rates, which hovered below 4% for much of the last decade.
Homeowners looking to sell their properties have experienced significant equity increases but are faced with the one-two punch of doubled interest expense, compounded by the reality that the properties that they could look to buy have also appreciated dramatically. This lock-in effect kept sellers on the sidelines, reducing the number of would be “move up” buyers from leaving their current homes. Affordability for new home buyers presented another key theme in 2023: rates increased into the 7% range, causing many first-time home buyers to be completely priced out of the market, and heading into 2024, we agree with most experts who do not anticipate prices falling in any significant manner. Real estate economists are also predicting that interest rates will drop into the 6% range as we head into the spring market of 2024.
Supply (specifically a lack thereof) and demand from out-of-town buyers entering our market kept prices elevated in 2023. This historically low inventory of homes for sale, as we predicted in last year’s report, means that sellers who put their homes up for sale have yet to be forced to come down from current price levels. While economic headwinds continue to buffer the U.S. economy, our corner of a thriving North Carolina market in Raleigh-Durham-Chapel Hill continues to see prime inventory getting snapped up quickly.
MARKET OUTLOOK – NATIONAL LEVEL
Every year starts naturally with a focus on the near future, and 2024 brings with it a mixed bag of economic signals that may at times contradict one another and provide a somewhat murky view of our year ahead. At Nest we are committed to providing our clients with the best and most relevant information to help you make some of the most important financial decisions of your life. On a national level, we focus on three key economic indicators—interest rates, consumer confidence, and employment—to help us look forward to what we should expect. The fundamentals of our nation’s economy are solidly on the right path: inflation rates have stabilized, interest rates have retreated, low unemployment has continued as a bright spot, and real wages finally seem to be making headway in a positive direction. But while the data may look cheery, our nation faces some of the lowest consumer confidence in more than a decade, driven, we believe, from political frustrations at home and geo-political instability abroad. With real estate in mind, a quick conversation with your Nest advisor will help you understand some of the problems created by historically low inventory.
The year 2023 began much differently than it ended. During the first half of the year, we were seeing record-breaking inventory lows, coupled with low mortgage rates, and high buyer demand. In short, houses were selling quickly, often far over the asking price. By the end of 2023, we faced rising mortgage rates and a drastic cooling off, with more days-on-market. The fact that the market has cooled from the frantic highs of 2022 and early 2023 is not a surprise. But the speed of how quickly things shifted, is surprising. And while we’re not in the business of predictions, it is our hope that we’re heading toward a more balanced market where both buyers and sellers have the time to make well thought-out decisions. With that, let’s look through the 2023 data to gain a deeper understanding of where we’ve been and where we are now. In this report, we start off with an overall snapshot of the national market, then take a closer look at what’s happening in our local market. Understanding both the national and local trends can help us better interpret your home’s value and where the local market is potentially headed.
