RALEIGH – The residential housing market in North Carolina is now worth at least $1.1 trillion.
That’s according to a new report from Zillow, which found that due to the rapid appreciation of home values across the state during 2021, North Carolina is now one of 14 states whose total market value tops the $1 trillion mark.
In the Raleigh metropolitan statistical area, which includes Wake, Johnston, and Franklin Counties, the residential housing market is worth a total of $201 billion revealed Zillow’s data, which was shared with WRAL TechWire. And in Charlotte, the residential housing market is now worth $338 billion, the data shows.
That places Charlotte as the 25th and Raleigh as the 39th most valuable real estate market among the nation’s largest 50 metropolitan areas by population size.
But both North Carolina metros outpace their value ranking when it comes to valuation growth. During 2021, the value of Raleigh’s real estate market increased by $50 billion, the 29th most value added. Charlotte added $71 billion in value, the 22nd most value added during the year.
Hottest year ever
“The housing market nationwide and in North Carolina went through one of its hottest years ever in 2021,” said Todd Teta, chief product officer at ATTOM. “Prices hit new records across most of the country and the state.”
ATTOM data showed that the median price for single-family houses and condominium units “shot up 17%,” Teta noted, with the median price nationwide during 2021 of $301,000.
But in North Carolina, home values increased “as much as 22%,” Teta noted, hitting “new records in all eight metro areas in the state with enough data to analyze.”
According to Teta, values increased 7% in the Fayetteville metro area, where the typical home value hit $177,000 last year, and 22% in the Durham area, where the median rose to $335,000.
Other metro areas where median values went up more than 15 percent included Asheville, Charlotte, Raleigh, Wilmington and Winston-Salem, noted Teta.
More than doubled in a decade
Nationally, residential housing markets gained nearly $7 trillion of value, just in 2021, Zillow found. That shattered the prior record, the firm reported, adding that, in total, “the U.S. housing market is now worth twice as much as it was 10 years ago in the middle of the Great Recession.”
But in Raleigh, the market has more than doubled, adding $128 billion in value since 2012. Now, Raleigh’s real estate accounts for 0.46% of the value in the entire U.S. housing market.
And Charlotte’s residential real estate is now worth $242 billion more than in 2012, Zillow’s data showed, as the metropolitan statistical area now accounts for 0.78% of the national housing market.
An earlier Zillow forecast predicted that Raleigh will be the third-hottest real estate market of 2022, projecting an increase in typical home values of about 24% between November 2021 and November 2022.
And while Raleigh’s market is among the nation’s hottest, according to Teta, there may be “uncertainty in how long that will last for two key reasons.”
While the median home sale price in Raleigh during 2021 was $350,000, according to ATTOM data, prices are rising faster than wages in Wake County, said Teta. And, prices are rising — up 21% compared to 2020 and 34% compared to 2019 — in the region.
That’s leaving some workers and residents priced out of the market, as housing affordability is of critical concern to many, including the Wake County Board of Commissioners.
That’s because the second reason: major home ownership expenses on a typical home in Wake County now consume 30% of average local wages, as of Q4 2021, said Teta. That’s a 25% increase from the prior year, when those expenses consumed 24% of average local wages.
“The latest figure was right at one of the benchmarks many lenders use when deciding whether to issue home mortgages, so any more increase could be a red flag for the area’s housing market,” said Teta.
Interest rates on the rise?
The Federal Reserve has indicated it may raise interest rates up to four times in 2022, Teta noted. That could increase mortgage rates, which recently reached new highs since the onset of the pandemic, affecting the market for housing.
“In the short term, it may actually spur more buying,” said Teta. “Could easily prompt buyers to buy and sellers to sell before interest rates go up too much and start significantly cutting into what house hunters can afford.”
But as rates increase, housing affordability concerns may increase as well, as rising rates “are likely to push some buyers at the margins of affordability out of the market.”
Should demand fall, the “price run-ups” may dampen, said Teta.