RALEIGH – Mortgage rates have risen again, slowing lending activity. The real estate market in this region is also one of the metropolitan statistical areas where competition for purchase contracts has declined year-on-year. Still, according to the Wake County Certificate, the median value of Wake County real estate sold in May 2022 has risen to a record high.
According to the report, the median selling price of real estate in Wake County in May 2022 was $ 462,000.
This is an increase of $ 8,000 from April 2022, when the median selling price was measured at $ 454,000.
The Wake County Certificate Registration Use statistics from legal documents recorded at Wake County offices
Certificate registration, and the value and sale price of real estate, are measured by excise taxes levied on the sale and transfer of real estate in accordance with North Carolina law.
The methodology is different from the one used in the released Triangle Multiple Listing Service. Wake County data Other areas of the triangle earlier this week. Median home sales prices in May 2022 remained at $ 485,000 in Wake County, according to TMLS data. This is the same as the median selling price measured from April 2022.
And the median real estate price in Dallam County is May 2022 It was $ 424,250 It goes down from the median selling price For $ 426,000 in April 2022, local realtors still expect it Triangle house prices It will rise over time.
30-Year Fixed Mortgage Primer
As interest rates on mortgages rise, so does the cost of borrowing money to finance a home purchase. Where homebuyers feel this is their monthly payments. Some may even choose not to pursue buying a home anymore. Costs and monthly payments are too high..
The 30-year mortgage will be amortized. That is, the debt will be repaid over time. Monthly mortgage payments mainly consist of interest payments (the cost of borrowing funds) and the sum of the principal borrowed loans. For many lenders, taxes and insurance are also paid monthly to the escrow account, but the majority of monthly payments consist of principal and interest payments.
So yesterday, as the federal reserves moved to raise interest rates by three-quarters percentage points, many analysts, investors and lenders curtailed inflation spikes and many consumer goods (typical mortgages). It exceeded expectations to curb the rise in prices. Interest rates were already rising in anticipation. Mortgage News Daily measured an average 30-year fixed loan interest rate of over 6% on Tuesdays and Wednesdays.
And yesterday Weekly report According to Freddie Mac, the average mortgage rate for 30-year fixed loans last week rose 0.55% to 5.75%.
A year ago, the average mortgage rate for a 30-year fixed loan for the week up to June 17, 2021 was 2.93%, while the average interest rate for loan products for the week up to June 18, 2020 was 3.13. %was. According to Freddie Mac data.
The impact of the triangle on the housing market
“Raising mortgage rates up to 6% has a big impact on who can buy a home,” he said. Greg brownAt a virtual briefing earlier this month, Saragra Ham Kenan, Professor of Finance, is a Managing Director of the Kenan Institute for Private Enterprises at UNC Kenan Fragler Business School. “I imagine it will move towards cooling price pressure.”
Therefore, as the cost of borrowing money increases, it is expected that fewer people will try to borrow money. In the housing market, rising interest rates can slow down competition for homes for sale.But the triangle is not yet Full of bidding wars Because homebuyers want to put their homes under contract.
Still, Mr Brown has other factors influencing the triangle housing market, Affordability is still a concern..
“But overall, there is a huge shortage of housing,” Brown said. “Housing costs are rising, it may continue to rise.”
Raleigh entrepreneurs believe there is another possible solution. Affordable small house..
and, New report According to data from national brokerage firms, Redfin data show that metropolitan areas are far less competitive in housing than they were a year ago. Last year, 82.9% of all homes had multiple offers in May, while in May 2022, 52.2% of homes made multiple offers. This is a 30.7% drop.
Lending activity in Wake County – but that doesn’t mean fewer homes sold
Data from the Wake County Certificate Register show a slowdown in mortgage activity as measured by trust certificates recorded in May 2022.
“Real estate lending activity in May 2022 was down 3.1% from April 2022 levels, down 31% compared to May 2021,” the report said. “There were 4,507 trust certificates in May 2022 and 4,680 trust certificates in April 2022.”
Still, the data show that more certificates were submitted in May than in April. That is, there were more closed real estate transactions in May. Therefore, the report’s conclusions show that mortgage lending activity has not slowed in the new buying market, but rather has fallen in the refinancing market.
“”[R]Financing activities continued to cool in May 2022, “the report said. The ratio of trust certificates to certificates used by Wake County’s Certificate Register to refinance or track newly purchased mortgages compared to a second mortgage activity was 1.29, down 3.7% from the previous month and the widest. It decreased from the measured value. The ratio gap in February 2021 is 2.5.
Buyers, do you pay attention?
Real estate economist Ken H. Johnson, co-developer of an index that measures real estate markets that are considered overvalued compared to historical pricing data, said Raleigh is one of the 15 most overvalued in the United States. Ranked in the market. Recent analysis Implemented at the end of May 2022.
“For now, I’m worried that if I’m looking at Raleigh and want to buy it, I’m worried that I’ll buy it at the peak of the housing cycle,” Johnson told WRAL TechWire earlier this month. Others disagree, including John Connorton, UNC Charlotte’s economist. Buy a house, The time it takes for interest rates to rise. However, Connaughton’s advice came before the recent rise in average mortgage rates.
However, according to Johnson, the market is likely to soften as mortgage rates rise. Collapses and crashes similar to 2007-2010 are unlikely. At least in Raleigh and other similar metropolitan areas where net immigration is still high and employment is being added to the local economy.
“Looking at the final peak of 2007, it will be until early 2016 before we can sell at the same value,” Johnson warned. “The holding period, or the period you own the property, would have been nine years.”
But the triangle could be isolated from the slump in the real estate market, even if it occurs in other markets across the country, he said.
This is due to the ongoing population growth in the region. Moreover, according to Johnson, housing inventories remain low.
“These two things are fundamentally different from 2007,” Johnson concludes. “There can be a long-term trend of softening prices and a shortage of affordable homes.”