Analyzing Available Home Inventory

REAL ESTATE

By Gary A. Miller

There is a meme making its way around the internet that features a fictional buyer’s agent submitting an offer on a home with an email that says, “Hi, attached is my buyer’s offer, please confirm that the seller has rejected it. Thanks.”

This may seem a little too true to be good for many buyers in the current market. It is common knowledge currently that inventory is low, which is making it more difficult to buy a home. In this context, I wanted to briefly analyze the homes that are currently available in Southern Orange County. All data presented here are from the Triangle MLS as of July 9.

There are currently 78 homes for sale in those parts of the 27510, 27514, 27516, 27517, and 27707 ZIP codes that lie within the boundaries of Orange County. Of these, 24 are townhomes or condos and the remaining 54 are detached homes.

The price distribution of these homes is as follows:

As this table illustrates, the current availability of homes is severely tilted toward higher-priced homes. There are only 37 homes of any type currently available below a half million dollars, leaving the remaining 41 above that price point. Notably, there are more available homes above $1,000,000 (13) than below $200,000 (9). The average list price among all homes in this search is $687,210.

This creates more competition in the market for lower-priced homes, making it especially difficult for first-time and lower-income buyers. There are many factors driving the competition buyers are experiencing at this price point, including two notable issues: 1) a general increase in prices for the area; and 2) an ongoing reluctance of owners to sell their properties. The latter, of course, also contributes to the former, since high demand and low supply push prices upward.

For comparison, I analyzed the currently available homes in the southern part of Durham County, specifically those houses in the ZIP codes 27707, 27517, 27713, and 27703 that lie within the county boundaries. There are currently 152 active listings, 37 of which are townhomes or condos and 115 of which are detached homes. Of these, 15 are listed below $200,000 and six are above $1,000,000. The average list price among all homes in this search is $446,991.

Historically, home prices are lower in Durham County than in Orange County. So, seeing a difference in pricing between the two is expected. However, the size of the price difference has not always been so large.

In August of last year, the month when homes listed in July likely would have closed, the average sold price among homes in Southern Orange County ZIP codes was $470,084. During that same month, in the Southern Durham County ZIP codes, the average sold price was $343,472 – a difference of $126,216. That difference, while still considerable, is much smaller than the $240,219 gap in average list prices of currently active listings as of this writing.

While some have been tempted to compare the current increase in housing prices to the housing bubble of the late 2000s, there are differences between that time and the current pricing spike. Specifically, the bubble of the late 2000s was primarily created by loose lending and appraisal standards, whereas the current price increase is driven by the combination of short supply and low interest rates.

Here in Southern Orange County, low inventory and the resulting price increases are certainly being felt by buyers. It is not clear when or how we will see an increase in supply sufficient to cause prices to fall, as many would-be sellers are now reluctant to come into the market due to the challenge of buying.

Perhaps if everyone considering selling would simply decide to do so at the same time, the bottleneck would be cleared. So, on the count of three…

Gary A. Miller is co-owner of Red Bloom Realty. He has lived and worked in Chapel Hill off and on since 1994 and is an avid musician, kayaker, traveler and former educator.