(Originally written July 2017)
I’m not an economist, and I don’t pretend to be. But it doesn’t take a college degree in Economics to see what is happening in the Durham real estate marketplace.
The real estate market in this area is very intriguing. Our “inventory” is at record-low levels, especially for homes under $250,000. When a home comes on the market, it isn’t unusual for multiple Offers to be presented, and homes often sell for more than list price. I’m not an economist by any stretch of the imagination, but I find today’s market to be an interesting study. There is much pressure for these homes from many directions. Millennials, who have been paying record-high rents, are realizing that they can buy and enjoy the benefits of home ownership for significantly less than their rent payment. Baby Boomers are trying to downsize – they’re finding that they don’t need (or want) as much space as they’ve had, and they want to use their equity for retirement activities, such as travel. And, of course, there are many people who are trying to move to our area. Those are probably the three biggest demands on inventory. As far as supply, there just isn’t much right now. During the recession, REITs (Real Estate Investment Trusts) bought up much of the “distressed” (foreclosure, short sale) inventory. Now they are using those as rental properties and making money “hand-over-fist”. They’re not going to be selling anytime soon. Builders can’t build the lower price homes due to land, material, and labor costs. And homeowners don’t want to sell, because there is no place for them to go. Quite a dilemma, don’t you think? It keeps things interesting!
