2020 in Review and the Flight to the Carolinas
Hindsight is 2020, and in this case, we're glad 2020 is in the rearview. The past year was hard in many ways, but for real estate, things were more productive than anyone could have anticipated during a global pandemic.
We're going to take a look at what happened in the Triangle Real Estate Market over the past year, and diagnose an interesting phenomenon we saw of homebuyers flocking to North Carolina from states like California, New York, Pennsylvania, etc.
Recapping a Record-Setting Year:
In October of 2020, we put out a report on the Raleigh / Triangle region's record-breaking real estate statistics. In that report, we broke down how recent trends and an influx of new buyers led Raleigh to become the #1 market for new home prospects in the entire country - surpassing Nashville, TN.
How did we get there in 2020? Well, we do believe the pandemic played a big role. After the economy had hit its snag with lockdown measures in place, the Fed stepped in to help reduce interest rates, thus creating an amazing surge of interest in homebuyers who were still employed, able to make a purchase, and who wanted to take advantage of low rates while they could. To prove how effective lowering the rates was for our real estate economy, real estate sales increased by at least 22% every quarter for the first 3 quarters of 2020.
September 2020 was a landmark month capping off a record-breaking Q3 in Raleigh. The Triangle Business Journal article featured our own Marshall Rich's take on the jaw-dropping statistics: "Last quarter, the Triangle housing market broke records in showings, home listings, pending listings, closed listings, overall sales price, average re-sale sale price and months of housing supply, according to an MLS data analysis."
The most mind-boggling part of all? YOY data from TMLS showed that in September 2020, average days on market were down 26.7%, inventory was down 47.4% but closed sales were up 33.3%! "Inventory is down, and total closed sales are up. It kinda doesn't make
sense," said Marshall Rich.
Want to see more? Check out our video:
The Flight to the Carolinas:
Raleigh/Durham has been growing at a nice clip for years, which certain county statistics will show you. According to most recent data from 2019, Wake county surpassed Mecklenburg county as the most populous in the state! However, we know the more recent uptick in sales and showings can be attributed to the "Great American Move," a new term describing the large influx of residents from northern states like New York, New Jersey and Illinois as part of a response to the COVID-19 pandemic. We saw clients from California set their roots in the Old North State as well.
According to the News & Observer and a survey from Move.org, North Carolina ranked 5th on the list of states that gained residents this year. Our state is home to 10.5 million people, 1,112,000 of which live in Wake county, home to Raleigh, NC.
The survey found a few interesting facts about out of state residents fleeing to North Carolina. Of those polled 33% of people who moved to a new state in 2020 said they hadn’t planned to move, and it was instead a reaction to the pandemic. “Over a third of respondents said their move was related to COVID-19, either from concerns related to health, work, housing, or money” (move.org survey). It is possible that North Carolina’s delayed spike in COVID cases compared to states like New York or California drew attention to our state as an optimal relocation destination. In fact, the website Curbed named Charlotte/Raleigh two of the best cities for people looking to relocate. And why not?
What’s not to love about North Carolina?
Mild weather and four seasons
Barbecue, pimento cheese, biscuits... 'nuff said
Mountains or beaches - why not both?
The friendliest people anywhere in the U.S.
The way states like North Carolina can draw out of state residents from larger metros is by providing them with the amenities of city life, but with more room to spread out at a lower price per square foot. Quality of life is a big factor for anyone, and finding a way out of the city to a larger home still in an urban setting is very attractive to those relocating. 45% of people polled by Move.org said “upgraded housing” was one of the main factors that prompted their move.
There's no question it's a more affordable situation either. We found that $1,319 is the median price per square foot for an apartment in Manhattan, meaning it gets worse, and not much better. Now let's compare that to Raleigh. Our firm ran the numbers and discovered that the average price per square foot for single family homes in Raleigh in 2020 was $173.07 - which was also up 12% from the year before.
These movers find Raleigh to be a great “petite city” or “mini metro” with amenities they are used to with more affordable housing, larger plots of land and more space. The extra room allows them to continue working from home, which is another factor enabling transitions from one state to another.
Recent Rich Realty Group clients that have relocated from out of state put a space for a home office near the top of their list. One of our clients moving from an apartment in Brooklyn to North Raleigh said the following were most important to them:
Room for their children to play outside
Extra space for extended family to stay when they visit from overseas
Work space for continuing to work from home
Close proximity to the city, activities for the kids, and the airport
Because of Raleigh's unique layout, quality of housing and relative affordability, we were able to check all of these boxes for them by finding a large home on a nice plot of land in Raleigh.
This is the story for many families coming from larger cities out of state. Our opinion is that this influx of homebuyers from larger metros, coupled with incredibly low interest rates, sparked the homebuying surge that propelled Raleigh's real estate market to break records.
2020 was a wild ride. We are glad it's over, but we do anticipate more good news to come on the real estate front.
If 2021 is the year you plan to buy or sell, connect with us. We'd love to work with you!
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