To quote country music legend Hank Williams, Jr. from his 1982 hit songA Country Boy Can Survive“The interest is up, the stock market’s down, and you only get mugged if you go downtown.”
Fast forward 36 years and apply those same lyrics to the Tri-W readership area, and one of Hank’s statements holds true today. The interest is up, but is it having an impact on real estate sales?
According to aBankrate.comarticlepublished on October 18, 2018, the benchmark 30-year mortgage rate dropped slightly this week from 5.04% to 5.01%, which is just below the seven-year high.
This is nearly one whole percentage point higher than it was a year ago when the benchmark rate was 4.04%. Experts expect interest rates to hover around 5.1% in 2019.
The Outlook for Home Sales
Rising interest rates and a limited supply of resale homes on the market are already having an impact on home prices and the number of homes sold locally, but buyer demand remains high, especially in Union County where we have great schools and communities, a strong economy, and easy access to Charlotte jobs.
According to Mike Fratantoni, the Mortgage Bankers Association’s Chief Economist,“The unemployment rate is at its lowest level in almost 50 years, resulting in faster wage growth and more confident homebuyers.”
He continued, “While the Federal Reserve is expected to increase short-term rates further, 30-year mortgage rates should rise only modestly from here. We are seeing some deceleration in the rate of home price growth, but believe this is a healthy pause for the market, as it will allow income growth to catch up to the recent run-up in home values.”
Fratantoni added that with unemployment numbers continuing to decrease in 2019, buyer confidence will remain high and should result in a steady increase in home purchases throughout the next year.
Let’s Talk About Stats, Baby
Compared to the same time a year ago, the number of months supply of inventory – defined as how many months it will take to sell all of the homes currently on the market at the current pace – was down 7.9% to 3.5 months in Waxhaw and down 10.0% to 2.7 months across Union County at the end of September.
According to the latest year over year (YOY) numbers available from the Charlotte Regional Realtor® Association, new listings in Waxhaw are down (-2.8%) while pending sales (+2.0%) and closed sales (+1.7%) are up slightly through the end of September compared to the same time of year in 2017.
Across Union County as a whole, new listings are virtually identical this year compared to last (+0.3%) with pending sales (+3.1%) and closed sales (+1.6%) up YOY.
Local home price statistics from Carolina MLS as of October 18, 2018:
63.4% of single family homes sold in the 28173 zip code so far this year range in price from $300,000 to $599,999.
The average closed price of homes sold in 28173 so far this year is $476,911.
The average listed price of pending sales in 28173 is $506,656 and the average listed price of active listings is $656,226.
While some homeowners currently enjoying nearly record low mortgage rates will remain reluctant to sell in 2019, the slow down in the rate of home price growth will give many of those with considerable equity the confidence to make a move to their next home.
Overall, the outlook for the real estate market remains strong but will only become healthier when more homeowners have the confidence to make the moves necessary to meet their needs and when there are enough homes available to satisfy buyer demand.