Buying a home in Raleigh and Durham is already difficult, but new economic considerations threaten to create the markets even more competitive.
“The virus has been controlling the economy for the last two years,” said NC State economist Mike Walden” Now that the infection has passed, we have another event over that we have no control: the Ukraine war, which is actually driving a large section of the economy.”
Gas prices have risen by roughly 21% across the country since the war began. This hike, along with the country’s already high inflation rate, implies that homeowners will have less money to purchase a home. Inflation and shortages are predicted to be affected by global tensions & rising oil costs.
“At the conclusion of last year, we had seen the inflation rate begin to gradually rise. The fighting in Ukraine has only served to exacerbate this “Walden said.
Inflation Has An Effect On Construction Prices As Well
The cost of several materials has already climbed fourfold, according to Steven Webb, director of legislative relations for the North Carolina House builders Association.
“I recently discussed a matter with a contractor in Moore County. A house he was selling for $179,000 this time past year is now listed for $259,000. As a result, that cost is passed onto property buyer. In addition, interest rates are rising. With rising property prices and rising loan rates, we’re in a bit of a pickle right now “He stated his case.
Webb also stated that the day-to-day operating costs, such as driving to job sites and workers’ wages, are rising.
According to the National Organization of Homebuilders, rising timber prices have increased the average cost of constructing a new home by about $19,000.
Because of how quickly this region is developing, Walden said, “I don’t believe home sales could definitely collapse, but I do believe they would not climb as rapidly as they used to, & that may take a little of the steam out of the massive rises in home values.”
According to Remax’s national study, the average house sale price in the United States reached a new high of $345,000 in February, up 3% from the previous month.
Despite the rise in construction prices, Webb believes that demands in the area will maintain builders building new developments.
If first-time homebuyers can secure a mortgage now, according to Walden, they must buy when interest rates high.
Aside from costs, global tensions are anticipated to have a detrimental impact on supply chain & shortages, which will slow the pace at which new housing is available.
Sarah Grace Clark of Raleigh bought a freshly built condo in the autumn, but due to supply difficulties, her closing date was pushed back two months.
We were informed that several products were taking a while to arrive. Washers and dryers were initially included in these unit as well. They stopped doing which since it would take months for the fridges to arrive, and some individuals would be unable to receive them “Clark remarked.
Increased Borrowing Rates Are Another Element Working Against Buyers.
“This year, interest rates are expected to rise. The big questions is how high you can go “Walden remarked. “Right now, the rate on a traditional 30-year fixed mortgage is roughly 4.5 percent. I can easily see additional two percentage points (6.5/7) being added to the equation “”Recent.”
If Walden were a first-time purchaser who could afford the mortgage, he would buy now before interest rate climb again, he added.
“Hopefully, we won’t reach a critical juncture. Increased interest rates will undoubtedly have an impact on the market. As a result, the market may see a correction. However, individuals will be left with higher property prices and mortgage rates for the time being, which isn’t what anyone wants to see “According to Webb.
With market circumstances unlikely to improve anytime soon, homeowners such Clark were glad they bought when they did.
“We’re grateful to be here and to have gotten in while we could,” she remarked. “I believe it will be well worth it in end.”
Walden believes that if nothing changes, high prices and a lack of supply will compel many people to migrate further away from city & their jobs.
Webb and Walden both suggested that municipal governments could be a solution. Walden proposed that authorities relax some building construction standards for all homes so that it can be built more quickly and easily.
The North Carolina Home buyers Association, according to Webb, is continuing to work with local officials around the state to change land use in cities and counties.