One-third of markets examined report an upswing in Q1 2014 sales, while 78 per cent post an increase in average price
Growing consumer confidence, buoyed by a significant improvement in economic performance and a notable increase in employment levels, is expected to bolster home buying activity in the Carolinas in the days and months ahead, according to a report released by RE/MAX.
The RE/MAX Carolinas Lifestyle Report 2014 examined 18 housing markets throughout North and South Carolina. The report found one-third of markets experienced an upswing in unit sales activity in the first quarter of 2014, including Fayetteville (24 percent), Jacksonville (13 percent), Charleston (7 percent), Raleigh-Durham (5 percent), Wilmington (2 percent) and Greenville, NC (2 percent) compared to the same period in 2013. Several markets fell just short of year-ago levels, including Charlotte (-2 percent), The Outer Banks (-2 per cent), Aiken (-2 percent), Spartanburg (-1 percent) and Myrtle Beach/Grand Strand (-1 percent), but strong home buying activity reported in March should mark a turning point for most.
The housing market is clearly set to pick up the pace, with three major factors expected to influence home buying activity moving forward. Price appreciation is front and center. Average prices have firmed up and, in many areas, have strong upward momentum. For a homeowner, that will have a significant impact on his or her decision to buy and sell. The second factor is today’s low interest rate environment, a phenomenon unlikely to last too much longer, given the Federal Reserve’s intention to remove stimulus. And last, but not least, financial institutions appear to be easing up on lending criteria. All factors combined are paving the way to homeownership once again.
The report also found 78 percent of markets overall posted an increase in average price in the first quarter of the year, including Charlotte (6 percent), Fayetteville (1 percent), Greenville, NC (2 percent), Raleigh/Durham (8 percent), The Outer Banks (7 percent), Asheville (7 percent), Wilmington (2 percent), Brunswick (4 percent), Winston-Salem/Greensboro (6 percent), Charleston (10 percent), Greenville, SC (9 percent), Spartanburg (3 percent), Hilton Head/Sun City (7 percent), and Myrtle Beach/Grand Strand (1 percent). By year-end, most markets are expected to move ahead of unit sales and average prices reported in 2013.
By far the strongest markets in the Carolinas are powered by economic engines running on all cylinders. Charlotte, Raleigh and Durham have accounted for almost 70 percent of all new jobs created postrecession in North Carolina. The momentum has provided a significant boost to the housing market. In Charleston, a business-friendly environment is having a huge impact on the pace of recovery.
Vibrant housing markets and healthy economies generally go hand in hand—especially when you factor the Carolinas affordability, lifestyle, and the low cost of living into the mix. Although there may be some hiccups, the worst is likely behind us. Most markets have seen a substantial reduction in foreclosures and short sales. Monthly inventory levels are on the decline. Days on market continue to trend downward. It all bodes well for the future of residential real estate in both North and South Carolina.
- Baby boomers and millennials led the charge for residential real estate in the first quarter of 2014. The baby boomers have long contributed to the overall market, but now that the millennials have come on the scene, it’s not uncommon for the two to vie for the same product. Baby boomers looking for second homes or relocating to the area from the Midwest and Northeastern seaboard are fueling sales at higher price points.
- Home buying activity remained strongest at entry-level price points in 2014.
- Three markets—Charlotte, Western North Carolina (Asheville), and WinstonSalem/Greensboro—reported an increase in the number of multiple offers this year. Lower inventory levels have contributed to the uptick in bidding wars, especially in more urban areas.
- New construction continues to attract purchasers, but new housing starts in both states seriously lag pre-recession levels. The preference for new over resale product has served to hamper sales activity in some areas.
There are still some markets reporting issues with financing and appraisals. Flood insurance has also weighed heavily on coastal areas, particularly impacting purchasers looking for a second home (not covered under the new Homeowner Flood Insurance Affordability Act).