Have you ever heard of a ‘unicorn’ Real Estate market? No, it’s not a place where mythical horses roam free. In the world of real estate, a unicorn market is “something that is greatly desired but difficult or impossible to find.” And if you’ve been paying attention to the housing market over the past three years, you’ve witnessed such a phenomenon. Real Estate Sales for First Time Home Buyers in NC was very difficult in recent years, in part because interest rates were so low. Many Investors simply out bid the first time home buyers in NC.
The real estate landscape from 2020 to 2022 was nothing short of extraordinary. The pandemic created a surge in demand for homes that catered to our newfound lifestyle — one where a home office and a spacious backyard weren’t just nice to have; they were essential. Millions of people no longer drove to the Office! This shift led to a wave of buyer activity, including many first-time and second-home buyers eager to find their perfect home.
Real Estate Sales for First Time Home Buyers in NC
What’s caused this difficult Sales Process for First Time Home Buyers in NC?
Skyrocketing Demand: When we compare today’s buyer demand with the past ‘unicorn’ years, the difference might seem stark. Headlines might make it appear as if the buyers in NC have vanished, but that’s far from the truth. In reality, over 10,000 houses are still being sold daily in the U.S. The demand is strong, albeit not as frenetic as during the unicorn years. Yet, when benchmarked against typical years, like 2017 to 2019, current buyer activity holds up quite robustly.
Historic Home Values: The appreciation of home values during 2020 and 2021 was unprecedented, as evidenced by the data from Freddie Mac. While we’ve seen some stabilization and even minimal depreciation in late 2022, Fannie Mae suggests that home value increases are returning to what we consider ‘normal’. It’s important not to juxtapose current price trends against the anomalies of the unicorn years; doing so would misrepresent the stability returning to the market.
Foreclosure Misconceptions: Yes, recent headlines about increases in foreclosure filings can be alarming. However, these figures are rising from what were historically low rates due to mortgage forbearance plans that reduced foreclosures significantly. According to ATTOM, the current numbers, though higher, are actually aligning with the typical foreclosure rates seen from 2017 to 2019.
Government forbearance plans played a crucial role in shaping this unique market in 2020 – 2022. These plans significantly reduced the number of foreclosures, maintaining a stable supply of homes in the market. The reduced risk of foreclosures, coupled with the high demand, led to a steep increase in home prices. The end of foreclosure moratoriums means a return to normalcy, not a crisis. Real Estate Sales for first time home buyers in NC will be easier in some ways because of compeition, and harder because of payment shock.
The Future of Real Estate Sales for First Time Home Buyers in NC
The real estate market in NC is settling back into its pre-unicorn pace. For first-time buyers, this is a signal to look beyond the alarming headlines and understand the market’s natural ebb and flow. In the ‘unicorn’ years, the market conditions were exceptional, driven by unique factors that are unlikely to repeat in the same way.
As we move forward, it’s essential for buyers to have a trusted expert who can provide context and clarity about the housing market. Don’t let the fear of missing out on the next ‘unicorn’ year dictate you into decisions… In reality, we will probably never see mortgage rates in the 2 to 3 percent range again in our lifetime. Let’s hope that is the case. The Pandemic was HORRIBLE for the whole world. It takes THAT level of problem to force rates down that low.
Instead, focus on finding a home that meets your needs, budget, and long-term goals. Remember, while unicorn years are rare and enchanting, a stable and predictable market can be just as magical for the savvy home buyer. “Natural” Mortgage Interest rates are in the 5.5 to 6.5 range. When we get closer to those Natural Mortage Interest Rate numbers, demand will likely pick up again, and that means the frenzy to purchase will be back in the market – making it difficult for First Time Home Buyers in NC to buy Real Estate. Real Estate Sales for first time home buyers in NC are EASIER right now with less competition, but you need to budget correctly.
Did you know that a program with some of the lowest mortgage rates (no matter what market) is a USDA Home Loan? USDA home loans offer several benefits, including no down payment requirement and low interest rates. They are also available to borrowers with lower credit scores and limited credit histories. In general, the USDA Automated Underwriting System requires a minimum credit score of 640. However, we can get loans approved with lower scores with a manually underwritten loan.
What we’ve seen in the last three years has been extraordinary. But as with all things, balance is returning. For those of you on the hunt for your first home, take heart. The market may not be as frenzied, but opportunities abound for those with a keen eye and a bit of patience. We work with some of the best Realtors in the State of NC. Ask us for a referral to a Top Agent!
For first-time home buyers, it’s crucial to understand that the market dynamics during 2020-2022 were exceptional and not indicative of the long-term trends in real estate. While the market is adjusting and may present challenges, it is also returning to a more predictable pattern. But don’t forget – the folks who OWN real estate in NC are making money on that Investment every month. If you could have $400,000 making you a 2% return, just a 2% return annually, that gives you $8,000 a year. Plus tax writeoffs? It’s still better to own a home than to rent!
If you sre looking for knowledgeable guidance during your home buying journey, give us a call. We can help you navigate the market, understand the current trends, and make informed decisions. Remember, every market has its opportunities, and with the right approach, you can find your ideal home even in a post-‘unicorn’ market landscape. Call Steve and Eleanor Thorne 919 649 5058 for more information about the future of Real Estate Sales for first time home buyers in NC.