Crystal Coast. The housing market along the Crystal Coast, is it good, bad or indifferent? What about mortgage rates? Are they still at historically low levels or have they started to rise? And even if they have gone up, will I be able to get a loan? These questions and many more will be discussed.
National and Regional Housing Markets
The housing market on a national average is doing very good in large part to the third round of quantitative easing (more on that later). There is a 5.2 month supply of inventory across the country, down from 6.4 months just a year ago. (The lower supply of inventory the healthier the market).
According to the National Association of Realtors the median price of a home sold last month was $214,000.
The Raleigh housing market continues to grow as well. The average sold price of a Raleigh home for June was $265,000 with the market seeing a very healthy 5 month supply of inventory.
Crystal Coast Housing Market
The Carteret County and Crystal Coast market place is different than the national or region scene. The good news for this area is that the supply of inventory, new on market and sold homes have been relatively consistent for the past couple of years. The bad news is that we are still working with a glut of inventory. Currently the Crystal Coast has a 16 month supply of homes for sale.
One of the reasons for the glut of homes is that often times new construction can cost less than a comparable existing home. Foreclosures are another reason for the glut. Unfortunately the Crystal Coast still has a steady stream of distress sales coming on market with no evidence of change in the near future.
A consistent problem the Crystal Coast real estate market has had is price. The price of homes adjusted up during the housing boom when financing was a signature a way. To demonstrate how radical the prices shot up just take a look back almost 10 years ago. Between July 2004 and July 2005 the average sold price of a home increased by 29 percent.
But the price never adjusted down to meet the reality of the situation once the bottom fell out. In July 2003 the average price of a home was $179,000 and we had a strong 5 month supply of homes. Today the average price of a home is $273,000 and we are glutted with a 16 month supply of homes.
For the Crystal Coast to return to the days of selling homes at a normal, healthy pace one of two things has got to happen. The price has to come down or signature loans have to be reinstituted.
There has been a high volume of cash sales here for some time now. Last month (July) saw 27 percent of all home sales paid for by cash. Believe it or not the percent has been much higher in prior months. While most folks have been taking advantage of current 30 year mortgage rates to by a home, 38 percent of them have taken out a conventional loan and 24 percent have obtained a VA loan.
Price ranges of the Crystal Coast homes bought have skewed down a bit. The $200-$300,000 range is usually where most purchases are made. Last month saw 24 percent of the homes bought in the $100-$150,000 range. The $150-$200,000 and $200-$250,000 both saw 17 percent of the purchases each.
30-year fixed-rate mortgage have averaged 4.54 percent nationally. This is almost an entire percent higher than what it was two months ago.
15-year fixed-rate mortgage are averaging 3.61 percent with jumbo loans (loans above $417,000) at 4.69 percent.
5/1 adjustable-rate mortgage or “ARM” have been averaging at 3.54 percent. With a 5/1 ARM, the rate is fixed for five years and adjusted annually thereafter.
Please keep in mind that the large rise in mortgage interest rates is due mainly to fears that the Federal Reserve would either cease or greatly back off of their third round of quantitative easing. The Federal Reserving has been buying up to $80 billion a month of mortgage backed securities (and other notes) in an effort to inspire growth in the housing market. But fears of the cut back are evidently unwarranted.
“Many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases,” reports CNN.
To wrap things up it looks like the Crystal Coast is in a comfort zone of sorts. Nothing is really changing too much in terms of inventory, new listings, sold homes or even price. Regionally and nationally is a different story. The biggest thing to keep an eye on is the Federal Reserve. How long will they continue to artificially infuse funds into the mortgage banking system and how severe will the market react when they stop? In my opinion we are looking at a two year window of opportunity at best.
Contact Margaret Hitchcock of Hitchcock Realty today if you are considering buying a home, condo, land or lot anywhere along the Crystal Coast. Margaret is an experienced Realtor representing buyers and sellers in Morehead City, Beaufort, Newport, Emerald Isle, Atlantic Beach, Pine Knoll Shores, Harker’s Island, Swansboro and all of Down east.