DURHAM, NC (WTVD) — For Durham resident Lisa Callaghan, it’s only a matter of time before she moves from a city center flat to a townhouse in Elliott Square.
“I thought it was perfect for my lifestyle,” Callaghan said.
The townhouse complex was born out of Lynn Solomon’s move in 2019.
“Where we’re standing here was nothing, just trees,” Solomon said, pointing to the nearby construction site. “Now we’re working on having a full block.”
Solomon said that although prices have risen a lot over the past three to four years, they seem to be stabilizing a bit.
“The frenzy during the pandemic seems to be calming down,” Solomon said. “So hopefully that will make it more affordable for first-time buyers.”
Durham City registered over 3,000 new residential units in the 2021-22 financial year.
Nationally, new home construction rose 12.2% in August, according to government data. But despite the rapid pace, construction applications have declined at the slowest pace since June 2020.
“Permits are being deliberately withdrawn right now because there is inventory on the ground,” said Richard Cohen of Movement Mortgage. “All of the production builders have less foot traffic, so they’re very concerned that that foot traffic translates into more inventory. And inventory is expensive.”
Builders are having to adapt amid labor shortages, supply chain issues and high land and material prices, according to Raleigh-Wake County HBA’s Suzanne Harris.
“Maybe they need to look at the price of the house, maybe provide some incentives to support their sales,” Harris said. “Like mortgage rate buyouts … free amenities or, potentially even price reductions in the house.”
Zillow economist Nicole Bachaud said homebuilders continue to adjust their expectations for what the future housing market will hold.
“Housing permits fell annually for the first time since the start of the pandemic and below consensus expectations, signaling that tight inventories can be expected to remain a key player going forward. of the housing market,” Bachaud said. “While demand is slowing at the moment, largely due to affordability barriers, demographic factors will contribute to sustained housing demand for years to come, and with the current trend of slowing activity construction, low inventory will continue to push long-term prices growth up and affordability down.”
The good news for renters, however, is that multi-family housing starts have hit their highest level in years as builders focus on the rental market, according to Bachaud.
“Because of the increased rental supply that will hit the futures market, rental vacancy rates will be less pressured and rental growth will slow,” Bachaud said. “Which will be good news for tenants who have been struggling for several months in a difficult rental market.”
Although buyers continue to face higher mortgage rates, real estate agents see no lack of demand in the Triangle area.
“Some buyers are actually feeling a little more comfortable with the market now and coming back, regardless of rising interest rates,” said AnnMarie Janni of Element Realty Group at Allen Tate Realtors. “Inventories are rising, but not at a bad pace. It’s just that the market normalization continues, which is great.”
The Federal Reserve is expected to raise rates on Wednesday, but Cohen said he thinks by then mortgage rates will be where they’re supposed to be.
“Any time there’s too rapid a change in rates, it usually goes right back to where it started,” Cohen said. “I don’t think the rates are going to go to 8% and 9%. I think somewhere in that 7% range you might have a few bad weeks and then I think we get back to that 5-6% level. .”
Cohen said people are also looking to new construction as a way out to get back to reselling.
“(New construction) has slowed in part because resales are more accessible,” Cohen said. “Now that resales are coming back, less of a frenzy…new builds are temporarily affected. There’s no shortage.”
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