A Home Buyers Journey

The following article comes from the Triangle Business Journey and follows the journey of home buyers in the Triangle area:

​Emily Torres and her fiancé, Nicholas Vitarella, have been looking for a home on and off since 2021. But the massively competitive home market in 2021 and 2022 wasn’t for them.
“We would go to an open house first day and by the time we got there, there were already multiple offers on homes due to low interest rates,” Torres said.
Because of that, they decided to put their home search on pause. They didn’t pick it back up until halfway through 2023, when they started to feel nervous that prices would get so high they wouldn’t find a home in their price range.
Their timing worked out. In November, they bought a home in Cary for $524,000, a time when the median sales price in the Triangle was down to $401,000, according to Triangle Multiple Listing Services.
That price has since bounced back up. As of May, the median sales price was $479,000.
Over the last five years, the Triangle has been one of the hottest housing markets in the country, and it has yet to cool down — or at least cool down enough to allow homebuyers to feel a little more relaxed in their search.
The housing supply shortage — the Triangle currently has a two months’ supply of homes — and continued demand from buyers has contributed to a housing market that is still competitive.
High prices and interest rates used to scare off buyers, but as the Triangle housing market settles into its fifth full year of high home prices, buyers are starting to jump back into the market.
As Bo Bromhal with Berkshire Hathaway Home Services said, buyers have adjusted to “a new normal” after waiting for prices to drop.
“They waited from June 2022 through June 2023, a full year of it and nothing happened to prices, except they went up a little bit,” he said. “So yes, it is that effect.”
And while homebuyers aren’t facing as many competitive bids as what Torres and Vitarella faced their first time around, it’s still a quick turnaround. Homes are spending only about 12 days on the market before being sold.
While the high interest rates were keeping buyers on the fence before, it doesn’t seem as effective as it once was. With how little the average 30-year-mortgage rate has fluctuated over the past 12 months, homebuyers are jumping in with intent to buy knowing not enough change is coming to make a difference.
Many are deciding that now seems like as good a time as any — no matter the price point.
Finding homes from $300,000 to $500,000
Nick Grubb, looking for a $400,000 home, struggled to find something in his price range that was in good condition and in the general area he wanted to live. He still bought a townhome in Northwest Raleigh for $415,000 even though he knew inventory was low and felt like homes were overpriced or in bad condition.
“It took me about four to five months. I was looking all over Raleigh and some in Cary. I had been outbid twice over asking price before closing on my current townhome,” Grubb said. “I spent more than I wanted to because of the competitive market. I went $15,000 over asking price.”
He also had to push his closing date back in order to provide proof of stable income for two years. At just 24, he hadn’t quite met that threshold.
Being so young, Grubb could have waited to buy. Why not stay in the townhome he was renting for $800 a month with a couple of roommates?
But Grubb said he figured, “Why not now?” He looked at his financial future and wanted to build long-term financial stability.
That financial stability comes with a 6.5 percent interest rate and a monthly mortgage payment of $3,100.
Johnny Chappell, owner/broker of Chappell, said, “From what we’ve seen, buyers have kind of adjusted to the higher interest rates that we’re dealing with. If anything, it felt like sticker shock around a year ago because rates went up so fast in such a short amount of time. It caused a lot of buyers to get on the fence or on the sidelines and reassess their budgets. The difference between a 3 percent rate and 7 percent rate in terms of your monthly mortgage payment is huge and that’s what caused a lot of people to reflect.”
The tough housing market led Grubb to decide to stay in the house for at least five years or until he has a family and needs more space.
Despite all this, Grubb still said that he feels like his experience of looking for and buying a home went well. Though he didn’t realize how much truly goes into buying a house until he was already thousands of dollars into the process.
“The only downside is that no one tells you how much it is really going to cost until you have already committed $10,000 plus,” Grubb said. “Buying a house is unbelievable with how many people you have to pay to get things processed and getting the deal done.”
Patience pays off in $500,000 to $700,000 range
The long and difficult process of buying a home is partially why Torres and Vitarella took more than a year break from looking for homes. And having to pay so many people to find and buy a house is why they decided to not use an agent when they resumed their search.
Interest rates played a big role in their home search — both in deciding to look for a home again and adjusting their price point.
“If rates went back down, we just knew we were going to be in the same position we were in prior and I didn’t want to do that again, so I was like, ‘Let’s pull the trigger now,’” Vitarella said.
Originally, the couple wanted to land somewhere around $440,000, but between wanting to be in a single-family home rather than a townhome and live in Cary, they chose to go up a bit in price.
They adjusted their budget to $550,000 and received a full underwritten pre-approval from a lender and started looking for homes again.
“We knew they [interest rates] weren’t going to change much and we were like, ‘if we see something, we find, we need to go with what we like, and if we like it, as long as we feel comfortable and it’s something that we’re not overextending ourselves.’ Because the biggest advice that we got was, ‘don’t be house poor.’ And the biggest thing that we wanted to feel comfortable with was making sure we feel comfortable with this payment,” Torres said.
Their monthly mortgage payment went from $2,083 a month for a townhome to the $3,684 at 6.99 percent interest rate for the single-family home.
In addition to changing their price point, the couple had a checklist of non-negotiables, mostly because they were buying a home without representation. Those items were a roof, windows and HVAC system that had all been replaced in the past five years. They said that those “big ticket” items were necessary in order for them to feel comfortable enough with going up in price.
They especially didn’t want to fix things listed by an inspection, so if an inspection came back with items that needed to be fixed, that home was nixed from the list.
The townhome they lived in previously was a new construction build, a much easier process than what they went through with buying a resale home. The long and difficult process has led them to rethink how long they will stay in the new home.
While they don’t feel like the home is their “forever home,” they will most likely stay longer than originally planned because they have no desire to go through the home search process any time soon.
Home prices above $700,000
Even though there aren’t as many homes for sale in the higher price points, the competition is still there. There are fewer buyers but also fewer homes available. The market has seen an influx of homes priced $600,000 and higher, especially since the Triangle experienced the out-of-state migration caused by Covid.
These out-of-state buyers — mostly from California and New York — came with cash ready to buy larger homes but for significantly less than where they had lived previously. The migration has slowed down some, but people continue to be attracted to the Triangle — many of them being high-earners.
Chappell said that Compass has seen fewer cash buyers than during the height of Covid.
“Any time we get in that million dollar and up mark, we generally expect to see between 25 and 35 percent cash buyers there. So, one out of every three or one out of every four buyers at a million-plus tends to be a cash buyer,” he said.
Buyers with cash have a bit of an upper hand and easier time when it comes to purchasing a home. That often means the closing can occur more quickly, and sellers tend to be more attracted to all-cash buyers rather than someone who needs financing.
Sales in the higher range are rising, a reflection of the rising prosperity of the Triangle. Sales of homes priced at more than $600,000 in  Wake, Durham and Orange counties increased from 2,237 in 2018 to 7,191 in 2023 - a 221.4 percent increase in just five years, according to data provided by Bromhal.
Bromhal contributes most of this jump to employment growth in the Triangle. In a study released by creditnews.com, Raleigh ranked first for employment growth among 50 of America’s largest metros.
The workforce in the Triangle has steadily been increasing, which of course means more demand for homes. According to numbers tracked by the U.S. Bureau of Labor Statistics, the Raleigh metropolitan area had 778,811 employed people in April 2024.
That’s well above the number of 702,917 from February 2020, right before the pandemic.
Between employment growth and people moving here, the Triangle is thriving, making it more and more attractive to companies and potential residents every day. But it means the housing market will remain competitive and house prices will stay high.
The housing supply is low and will take a while to catch up with the demand of those who want to buy homes. It most likely won’t stabilize for another five years, according to Stacey Anfindsen, a residential real estate appraiser.
Because of this, those looking for a home will still face a long journey where they get outbid, compromise on what they want in a house and end up adjusting their price point so they can be the winner in the end.
Torres and Vitarella experienced just that. To get the home they wanted, they had to increase their house budget by $110,000. And they had to come to terms with the current interest rates, accepting that they wouldn’t be dropping below 5 percent anytime soon.
This is why so many homebuyers have started moving from the sidelines and into the search as the home market remains challenging.
Given the demand, now is as good a time as ever it seems. 

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