TAR TP Q2 Questions

Erica Anderson: 

Would you purchase or invest in real estate in this market, with the rising interest rates and the  unknown implications of inflation? Why or why not? 

Yes, but I am a believer in holding long-term, if necessary. I do believe prices will continue to increase overall, just not at the level it had previously. Once buyers understand that this is not only the “norm” for now but the long-term norm, the market should find balance. It is still an incredibly sought-after place to live in the country, and I feel so lucky to be here. While rental prices are the highest we have ever seen, owning a home can be the most “stable” way to know what your monthly payment will be, when you lock in a rate. Buyers need to remember that if rates ever drop, they can consider refinancing, but if home prices increase, waiting does not always equate to a lower overall monthly payment. There is no crystal ball to consult, we  

only know “now” and as long as we make smart choices and do not overextend ourselves, there is a level of security that home ownership brings, no matter in what market we buy in.  

 

Do you feel the Triangle area, overall, is different than other areas in a recession, regarding the  housing market?  

The tech industry is considered one of the most recession-proof industries, and we are in an area that is heavily supported by tech and pharmaceutical companies, both of which are unparalleled in terms of job security and overall demand. Even in the 2008 recession, which was largely housing-focused, there were still homes being bought and sold. Yes, there were more foreclosures than usual, but it was not inundated, and overall, compared to most of the country, it was relatively stable. This area, in my opinion, is a bit of a protected “bubble”, from which we can expect a relative level of stability, due to the industries and job opportunities present in the  Triangle area. 

 

Melody Tate: 

Are prices going down? 

This is such a great question because we hear and see so many different opinions all over the media and social media. I do not foresee home prices going down. I think seeing a cool down in the market doesn’t equal prices going down.  

For the past two years, we have seen homes going very quickly; sometimes in the coming soon market, or just one day on the market. Because of this, a lot of buyers had to stop their search because they couldn’t compete in this market, where properties were regularly going over the asking price, requiring capital needed to bridge appraisal gaps, and where high due diligence fees were required in order to win a bid. 

Now that rates have increased from what they have been over the last few years, some buyers have stepped away, but the other buyers that had to stop looking will come back into the market.  While they won’t have the lower rates and may have lost some buying power due to that, they will be able to win a home and not need to be as aggressive with having to bridge appraisal gaps or having higher due diligence fees.  

 

To go back to the question “will home prices drop” 

I think we will see other buyers jump back into the market, and sales will continue to stay warm  here in the Triangle. We live in such an incredible area, with tremendous growth and no  slowdown in sight. With a good lender and agent, you can win a home with some negotiations,  and at a respectable price. Good advice for those buyers wanting to buy is: “Marry the house – date the rate.” Get the house you want and refinance when, and if, we see dips. 

 

Ladonna Carter: 

Are sellers able to make contingent offers in this market? Why or why not? 

Sellers are not able to make contingent offers with most new construction homes unless their home is sold and there’s a closing date in the near future. However, on resale homes, sellers are considering contingent offers because the homes are taking 3-4+ weeks to sell, so they are eager to get an offer. Earlier this year, sellers were rarely considering contingent offers because the market was so hot, that they didn’t have to wait for buyers to sell their homes.  

 

Are buyers waiting for prices or interest rates to come down before purchasing? 

Buyers are waiting for interest rates to decrease, and are willing to postpone their home search with the hope that the interest rate will be lowered. Because of the spike in interest rates, buyers are more likely to look at homes and research their area of choice, but slower to commit to purchasing. I do not see interest rates lowering anytime soon and buyers who are waiting should consider getting back into their home search while the market has increased inventory overall.  

 

Jenny Cohen 

I want to buy a home as a primary residence now and rent it out later. What are my options for  money down/loan types for this purchase? 

This is a great strategy for building your real estate investment portfolio. Primary residence loans, whether conventional, USDA, or FHA/VA, generally have both lower interest rates and down payment requirements than investment loans. This can save you thousands of dollars over the lifetime of the loan. For instance, those qualifying for USDA loans may qualify for 0% down. Generally, an investment loan, depending on your credit and loan type, is a 20%+ down payment. This is because it is a riskier purchase for the bank. 

 

How long do I need to live at the property until it can be a rental? 

This can vary based on your specific loan terms, but a good rule of thumb is that most primary mortgage loan terms require the property to be owner-occupied for at least 12 months before it can be used as a rental. Check with your mortgage lender for terms. The advantage of renting out your home in a fast-appreciating market, like the Triangle, is that it will give the house more time to continue building equity while the rent pays for your mortgage.  Always check with the HOA for any rental restrictions and caps. 

 

Joshua Vick 

Do you think the interest rates are going to go back down? If so, when? 

I believe the interest rates will hover between 6-7% for a 30-year fixed loan, but you could do a  7/1 ARM around 3%. The rates will eventually come down, at least I believe so, but it will be a  while for the economy to adjust itself. 

 

Are we in a seller’s market or buyer’s market? Do you anticipate it will change in the near  future? 

I think we are returning to a neutral market for buyers and sellers. Some homes still go fast and over the asking price, if they are perfect for the buyer and in the best location, but overall, we are seeing things come back to normal for a change. There is still very high demand in North  Carolina overall, so I think the market will continue to stay strong, especially in the Triangle and surrounding areas. 

 

Corey Chandler: 

What does buying, now while interest rates are up do for buyers if anything? 

It allows buyers to lock in the home price now. The longer a buyer waits to purchase a home, the more it will cost them in the long run. The Triangle was just named the third best job market in the country, and with that comes housing demand. We are still in a low inventory market and will be for a while, so with more and more buyers and corporations moving to the area, home prices will increase due to overall demand. Even if appreciation is not as high as in the past two years, we still anticipate overall prices will increase due to demand and home inventory shortages.

 

If I buy now with the interest rates the way they are, how hard is it to refinance if they come  down? 

It’s not hard at all. If it’s going to save you money, help you build equity, and pay off your loan faster, then it’s a no-brainer. For you to start seeing monthly savings from refinancing, your interest rate really needs to drop down at least one percentage point, and you need to plan to stay in your home for at least 2-3 years in order to make it worth it. One percentage point is a  significant rate drop, and it should generate meaningful monthly savings in most cases. I always recommend my clients work with a local mortgage professional since these lenders have the local market knowledge and can determine the best lending options for you and your situation. 

 

Cayla Morris: 

During the peak of the buyer’s market, vs now, how much are typical buyers putting down for  due diligence? 

Because of a decrease in buyers, I’ve seen a significant difference in due diligence between the peak of the buyer’s market and now. Obviously, with fewer buyers submitting offers, there are fewer bidding wars occurring. This has allowed many buyers to win with lower amounts of due diligence. During the peak of the buyer’s market, it was normal to see a due diligence minimum of $30,000, whereas now my buyers are winning with amounts of $15,000 or less. This significant change has a direct correlation to the increase in interest rates, whereas buyers now,  in my opinion, are more cautious with the money they risk.  

 

Are buyers waiting to see properties in person rather than risking sight-unseen offers? 

Yes. I haven’t had any buyers make sight-unseen offers since the peak of the market. The MLS  recently changed the “Days on Market” to include days that the home has been in the “Coming  Soon” period. Because of this, many REALTORS, like myself, have refrained from putting homes in “Coming Soon” status so that the property doesn’t reflect more days on the market.  Although this change has had a significant impact on the amount of sight-unseen offers we see, I  also believe that the decrease in buyers and increase in rates has allowed homebuyers to “buy time” and actually view properties in person.