Shocking Decline in Starter Homes Available in the Triangle

From the News & Observer...

There’s been a “shocking” decline in the number of lower-priced homes for sale in the Triangle over the past five years.

That’s how Stacey Anfindsen, an appraiser with Birch Appraisal, put it after combing through the numbers in his monthly Triangle Area Residential Realty Market Report.

Since June 2013, the number of homes available with a list price below $150,000 has declined by 92 percent, according to Anfindsen’s analysis.

The number of homes available between $150,000 and $200,000 has also been in a downward spiral, dropping 73 percent over the same time frame.

And for homes priced between $200,000 and $299,999, there has been a decline in for-sale properties of 40 percent.

To be sure, the Triangle’s housing inventory has been low for the past several years with the total number of homes for sale falling by 43 percent from May 2013 to May 2018, according to Triangle Multiple Listing Services. The Triangle currently has just over a two month supply of homes on the market.

Still, Anfindsen said: “The percentages are shocking. Having 92 percent less of anything is never any good. Really the new home builders have not been able to produce that product for the last five years, maybe 10 years. There has literally been no new construction houses added (in those lower price ranges). It’s been mostly re-sale.”

This is leaving potential home buyers who can only afford homes below $200,000 — often referred to as “starter homes” — in a precarious situation, as the Triangle housing market continues to surge on the back of a strong economy that is attracting thousands of new residents, Anfindsen said.

Those home buyers — people making between $25,000 to $35,000 — are having “to move out, way out” to find that price range, he added.

Only 29 percent of homes now on the market in the Triangle — which includes Wake, Durham, Orange and Johnston counties — are listed below $300,000 and only 8 percent are below $200,000, Anfindsen said. ...

The average sales price in the Triangle is now up to $307,319, according to the most recent data. A study by HSH, a publisher of mortgage and consumer loan information, found that an individual would need to make at least $57,521.42 a year in order to afford the principal, interest, taxes and insurance on a median-priced home.

The rising prices have caught the attention of city leaders across the region, as affordability has become one of the leading political issues.

“Either we build more houses or the price of housing is going to go through the roof, and we need more density,” Durham Mayor Steve Schewel said recently about increasing home prices in that city.

But, even as some cities start thinking about housing density, the number of condos and townhouses for sale in the Triangle keep falling. The inventory of condos for sale since 2013 has fallen 51 percent and townhouses have declined 33 percent.

”I would say around 90 percent of the condo inventory is priced below $250,000, and around 50 to 60 percent of the townhomes is below $300,000,” Anfindsen said.

But not enough of those denser developments are being built in Cary or north Raleigh, rather they are being built near downtowns at a higher price point, he added.

Anfindsen said local governments need to be doing more to alleviate the problem.

Since high land prices make it difficult to build new housing under $200,000, “alternative solutions must be explored from a development and governmental perspective,” he wrote in his report.

That could mean redeveloping malls and old big-box retailers into housing, changing zoning laws or decreasing the cost of permits, he said.
— Zachery Eanes - N&O
Brent Woodcox