(The Center Square) – Amid a struggling market, the chief economist for a national realtors organization says Durham and Chapel Hill could trend upward.
National Association of Realtors Chief Economist Lawrence Yun, at the organization’s annual summit Dec. 12, predicted those markets in Durham and Orange counties could “become the next Austin,” with the association listing the area among the “Top Pent-Up Demand Markets.”
Danielle Hale, chief economist for realtor.com, told The Center Square some “expect affordability to start to improve” somewhat next year with “a baby step in the right direction.”
Mark Zimmerman, spokesman for NC Realtors, told The Center Square that likely will not be the case in North Carolina, where the decline in home sales has remained in single digits due to sky-high demand and little inventory.
“We have not seen the pullback in the market” that has occurred in other places, he said, noting that many coming to the state are relocating from higher-priced markets.
“North Carolina is like the third-highest net in-migration state in the country and what that does is create a demand pool here in North Carolina,” he said. “We have a supply that does not meet demand, therefore our pricing is continuing to grow.”
That’s especially true in the Durham-Chapel Hill market, as well as other areas in the Triangle, Wilmington, Asheville, and the Triad, he said. He said Florida, Texas, Utah and others are experiencing a similar dynamic.
“That’s where the population is going, so those markets are going to have more inflation than others,” Zimmerman said.
Interest rates are one of several factors playing into the situation. Others include fewer new homes built over the past decade, and local zoning restrictions that are preventing homebuilders from catching up to demand, he said.
While lower interest rates in 2024 may convince more homeowners to put their house up for sale, “the supply will probably lag demand in North Carolina for the foreseeable future, therefore you can expect housing prices to continue to rise,” Zimmerman said.
“It’s ironic the success we’ve had creating a place people want to live is causing this housing crisis,” he said.
Real estate prices are predicted to soften across the U.S. in 2024. Yun says existing home sales are on track for the worst year since at least 2008’s recession, dropping 18% to just over 4 million homes sold in 2023.
That’s down from more than 6 million homes sold nationally in 2021, and the two-decade peak of more than 7 million in 2005. The trend is tied to benchmark interest rates the Federal Reserve has increased 11 times since March 2022 to cool raging inflation.
While the Federal Reserve is expected to cut rates next year, Yun predicts the U.S. mortgage rate to remain around 6.3% in 2024, higher than rates over the last decade but low enough to boost existing home sales by about 13% in 2024.
“What we are finding is that the areas with strong home sales growth potential next year in the South region will be Austin, Dallas, Houston, Nashville to come back,” Yun said.
And quite possibly, significant improvement in Durham and Chapel Hill.
