It’s no secret that the real estate market is a “seller’s market” right now all over the country. Low interest rates are making it more affordable than ever to become a homeowner. It’s even busier here in North Carolina with our “middle of the road” weather and versatile topography.
When we zoom in on that map a little more, it turns out that Raleigh is one of the hottest markets in the country. Only a few hours to the Black Mountains to the west, and a few hours to the Atlantic to the east. Hit the zoom button again, and let’s turn the focus to southwest Wake County. It is arguably the hottest market in the country. But why? We all live here, so we already know it’s a great place to be, but who’s telling everyone else?
Well, go on Bing and search something simple like “best places to live in 2021.” You’ll see that bankrate.com is the featured listing. Number 1 on the list? Raleigh.
US News had Raleigh ranked number 11 (but when you see their top 10, we’re more like #2 or #3). The fact is that no matter what list you look at, Raleigh is always in the top 20, and often in the top 10. That’s the first factor of our storm.
A second contributing factor to the storm is commercial growth. There are a lot of high-end, large-scale facilities moving to the area and people are transferring here for work. Companies moving in are bringing high-paying jobs and can be considered a contributing factor to driving up real estate prices, as some of these residents can afford to pay over “market value” for a property that they really want. Of course, market value is dictated by what properties are selling for, but the current values could be considered a bit inflated.
A third contributing factor is I-540. Although it’s been easy to access 540 from Holly Springs, the trip to that access point from Fuquay-Varina isn’t always ideal. When 540 is complete, there will be entrances at Fayetteville Road, Old Stage Road and Bells Lake Road, making it much easier to get to RTP, the airport, and other destinations along 540 from Fuquay-Varina.
There are certainly more, but one final factor to mention is that unlike some of the other towns in the area, there’s room in Fuquay-Varina for expansion. New developments are being built at an astounding rate, giving buyers a choice between having a home built, or buying an existing home.
What does this mean to you as a homeowner, renter or potential home buyer in Fuquay-Varina? We went to some of our local realtors for their input on the state of the market.
Some Comparison Statistics
Usually, you can’t argue with numbers. They are cold, hard facts that paint a pretty clear picture. When you look at the number of homes sold in Fuquay-Varina in 2021, and their average sales price, and compare them to last year, the increases are remarkable.
Tracy Watson, broker and owner of Mission First Realty, shared numbers for the month of April. “April of 2020 saw 120 closed listings and an average sales price of $315,038. In April of 2021, we saw 130 homes closed with an average sales price of $363,735. This is an almost 9% increase.”
Krista Abshure, broker for The Abshure Realty Group, used a wider lens to show us how sales in these first few months of 2021 already dramatically outnumber all of last year. “[The number of homes sold] in 2020 was 1,519, with a median sold price of $242,000 and a median price per square foot of $144.79. Those sold at an average of 100% of the list price. Median Days on Market was three days. So far this year, 512 homes have sold since January 2021—291 were resales and 221 new construction—with a median sold price of $323,772 for a median price per square foot of $149.88. The homes sold at an average of 102% of the list price with a Median Days on Market of one day.”
Abshure also notes, “Another 452 homes are currently under contract. Although we cannot see the sold price per square foot, we can see that the median list price per square foot is $156.22. We also cannot yet see the average sold price percent of the list price, but we can see that the Median Days on Market is ZERO and the median list price is $371,475.”
So, not only are listed houses disappearing faster than sellers can get the For Sale sign into the NC clay, but buyers are willing to pay more than asking price. By Abshure’s statistics, “If you look at the resale homes only that have sold this year, they are selling at approximately 102% of the list price.”
It’s worth noting that Abshure’s data comes from “the Triangle Multiple Listing Service for homes in the Wake County portion of Fuquay-Varina and included the homes inside and outside of the city limits with a Fuquay-Varina mailing address.” She reminds readers that not all homes are sold through realtors or listed in the Multiple Listing Service (MLS), and not all builders list their closed sales in the MLS either.
New Construction
If you’re someone who likes the idea of seeing a patch of dirt give rise to a pristine house with sparkling features and never-before-trod floors, then new construction sounds great, doesn’t it? According to Abshure, “In 2020, the town [of Fuquay-Varina] only issued 1,031 new construction permits; however, from January through April of 2021, the town has already issued 682 new construction permits.”
Buyer beware, however, the smell of sawdust comes at a cost. In fact, ask anyone in the construction or handyman business about the current price of lumber and you’ll get an earful. The 2020 shutdown due to the pandemic is to blame for not only rising lumber prices and materials shortages, but, as Watson points out, “Many builders have drastically slowed what they are releasing for sale.”
Erica Anderson, broker-in-charge and owner of Team Anderson Realty, explained in detail just what is happening with new construction.
“The average new construction home has increased by about $40,000 just in lumber prices within the past year or so. Builders are struggling with meeting the demand and working with delays in materials and supplies due to COVID-19 supply chain complications. Some builders locally are only able to open up four or so lots per month to buyers, and the wait list exceeds current and future community inventory. Some builders are increasing costs by $3,000+ for every two homes that go under contract, so it’s not always in the next ‘phase’ that prices increase.
Many builders are moving into spec home sales, which means they choose the elevation, floor plans and finishes, and the buyers need to ‘yes or no’ what is presented to them. Some buyers are no longer able to choose finishes or any aspect of a property. In order for builders to sell more homes, they need to streamline a process which has become slower than usual. As costs rise, there are a select few builders who are adding a clause [to contracts] which will allow them to increase the purchase price by a certain amount, should costs rise. The most intimidating change is that some builders are allowing a ‘bidding war’ on their own properties, which is creating a very [unfriendly] landscape for buyers and agents alike.
New construction used to be a real estate agent’s ‘go-to’ for buyers who are not risk tolerant, and now some builders are taking full advantage of the housing shortage. [Fortunately], not all builders are doing this and they are the ones that many buyers are the most comfortable working with.”
As a result, Anderson is seeing new construction buyers shy away from these scenarios in favor of resale, sending resale prices soaring. “Not all buyers want to wait 8+ months to build a new construction home after waiting months for a lot to be released. [Builders] really need to open up more inventory and as lumber prices go down and more builder options become available, the resale market might level off slightly.”
Your realtor is the place to start if you’re not sure where to find new construction at certain price points in our area. And if you’re determined to go the new construction route, heed Abshure’s advice: “It is important to remember that the agent who is onsite at the new construction neighborhoods works for and represents the best interest of the builder; they are not your advocate. Bring your agent with you to tour homes. I promise you, they want to protect your best interests and they are not bothered by helping you. Experienced realtors know what questions to ask because they are familiar with common misunderstandings, product substitutions, plat layouts, potential easements, and reviewing covenants, builder contracts and deadline changes.”
More Pandemic Fallout
We know that new construction is hard to come by, costs more, and could take longer because of COVID-related delays, but there are other impacts to the housing market being felt as a result of the pandemic. Namely, our new work habits are influencing whether people choose to move or decide to stay put.
“Many folks are now working remotely, and plan to stay that way, so their location [options] have opened up,” said Watson, adding, “They’ve also found that their current home may not work for their new lifestyle.”
Anderson has noticed the same trend. “People are realizing that their homes do not always work for a ‘work from home’ scenario, which might be long-term or even permanent now. They also are more flexible in terms of where they live, so the commute to work may be a non-issue. Some sellers are moving to their ideal retirement areas before retirement. This is common for those relocating from the West Coast and up north; many have wanted to make the move here but did not have that ability [due to] work. Fuquay-Varina is a major hit for people moving in from out of state who want more land, space between houses and ‘bang for their buck.’”
For people with jobs, being able to work from anywhere is a luxury. But what about all those who lost their jobs in the shutdown last year? Sadly, many lost their businesses, and without income, their homes. Talk of a possible “foreclosure wave” has flooded news and media outlets for months. What might this mean for today’s market in Fuquay-Varina?
Anderson shared the following insight with us, based on numbers from the Mortgage Bankers’ Association (MBA).
“[The MBA] now estimates 2.2 million homeowners are in forbearance, less than feared when people started losing their jobs last year. Their Q1 delinquency report shows that the mortgage delinquency rate peaked at 8.22% in the second quarter of 2020 and within three quarters has now dropped to 6.38%.
Today’s [MBA] forbearance numbers show a decline for the 10th straight week, falling to 4.36% of servicers’ portfolio. Ginnie Mae loans fell to 5.82% ― a massive milestone as this is half the total portfolio share the MBA originally recorded (11.6%) last May. Fannie and Freddie are down to 2.32%.
It’s not all rose-colored glasses. More than 47% of borrowers in forbearance extensions are now past the 12-month mark. Those homeowners are likely in serious trouble. But a hot housing market means that they may be able to sell instead of losing the house to foreclosure.”
Why Fuquay-Varina?
At the outset of this story, we named just a few of the enticements drawing people to Fuquay-Varina and southwest Wake County—consistently high national rankings, an influx of businesses moving to our area, easy access to I-540, and room for residential and commercial expansion. Our real estate experts weighed in on what they hear first-hand from their clients in regard to these factors and others.
Abshure finds that folks relocating from New York, New Jersey and California like our affordable housing and lower taxes. She adds that some family members come to visit and end up following those who moved here. “I used to joke with my clients who said they did not have any family here. I would tell them to just give it a few months and their family that came to visit would fall in love with the area and move here soon! I love the call that comes saying ‘you were right, and we need you to help our family/friends find their new home here!’”
Anderson agrees and adds that although Fuquay-Varina is already popular, it will likely become even more attractive given the recent (April) homes.com results ranking the town #6 on their list of “Top 10 Suburbs to Move to in 2021.”
Central North Carolina and southwest Wake County also made news with the announcements of Apple and FUJIFILM Diosynth Biotechnologies moving to the area. For Anderson, and no doubt everyone in real estate, “Apple is big news for North Carolina. They unveiled plans to build a campus and engineering hub in the Research Triangle, committing more than $1 billion in investments and creating at least 3,000 new jobs for the area. A median salary around $180,000 is expected. In neighboring Holly Springs, FUJIFILM is going to build a $2 billion cell culture manufacturing facility which is projected to create 725 jobs by the end of 2028. This is also a major factor in explosive predicted growth for Fuquay-Varina.”
Explosive growth usually conjures images of traffic nightmares, but Abshure notes that the completion of I-540 will make for an easier commute to Raleigh, Cary and RTP, and “the interchanges will help decrease traffic from the main roads and allow easy access points from so many areas in Southern Wake County.”
Advice for Buyers and Sellers
People have compared today’s market with the housing crisis of 2008. Watson disagrees, saying, “The main difference is that we have a shortage of listings on the market and, due to lower than normal interest rates, we have a high influx of buyers wanting to purchase.”
Wherever you are in the decision-making process, it’s important to be prepared if you’re contemplating selling, buying, or both. According to Anderson’s data, “A typical, stable real estate market has a roughly 4- to 6-month supply of inventory, but we currently have about two weeks of inventory in our area, if that. If we can keep a listing on the market more than three days, something is usually wrong [in terms of] price, condition, marketing, etc.”
If you are a buyer, Anderson says:
“Be prepared for upwards of 5-10%+ in Due Diligence money up front (fully at risk) in order to win. Many buyers, if they can and are willing to bridge any necessary appraisal gap, present this information in their offers and most resale properties are closing for 10-13%+ over list price. Cash is NOT always King! You have to be just as competitive in most offers. Only a select few sellers will sell for less for a cash buyer; most want to net the most.
Conventional loans are sought after since they are usually borrowers with less debt-to-credit ratios, more liquidity and higher minimum credit scores. Also, if they were prepared to put 20% down, and the appraisal is low, they can put less down and sellers understand that they likely “could” bridge any necessary appraisal gap.”
If you are a seller, she advises:
“Realize that selling at the ‘top’ of the market also means buying at the top. Unless a seller has an absolute need to sell (size, life change, relocations), more are choosing staying put. If a seller needs to sell in order to buy, they do not like the idea of intermittent housing, so we are recommending selling with a desire for a 30- to 60-day seller possession after closing, which allows them to not be a contingent buyer and to have the liquidity to put substantial due diligence down, if needed, to secure the property they want.”
Looking ahead, Anderson believes this market is here to stay for a year, possibly two. “With all these large corporations/companies coming to the area, bringing thousands of jobs, many with higher average salaries than we’ve seen before, I suspect we will have a 10-13% appreciation in home values within the next 12 months, based on how many homes are closing for over ‘market value’ set with prior comps. We had been seeing about 5-6%, but I do not see the demand going down and so my prediction is that appreciation will double to 10%+ for 12-18, possibly even the next 24+ months.”
In other words, no matter what your plans are, secure the sails and batten down the hatches! We could be in rough water for a little while yet. But take heart. As Abshure reminds us, “We are blessed to be in a town with lots of character! We have parks, community activities and great little stores!” If buying or selling a house in or around Fuquay-Varina feels frustrating or even impossible, be patient. Talk to your real estate agents—chances are good they have weathered storms before and their advice can be a safe harbor while you wait for the waves to subside and the winds to calm.
