12/17/2020 5:29:00 PM Housing market buoyed by low rates, COVID-19 recovery
Combination of lower borrowing costs and demand for bigger living, working spaces boosting northwest Guilford sales, Realtors and builders say
Adobe Stock photo | With interest rates remaining low and many employees continuing to work from home for the foreseeable future, homeowners are searching for new houses with more private work space as well as outdoor living amenities.
Photo by Chris Burritt/NWO | Pallets of bricks await construction of another house in The Farm at Oak Ridge where Realtor DeDe Cunningham said historically low mortgage rates and the desire for more at-home work space are spurring sales. On average, fixed rates on 30-year mortgages are projected to fall to 2.8% in the fourth quarter, down from 3% in the third quarter, according to Fannie Mae. The government-sponsored mortgage loan company forecasts rates will stay at 2.8% in 2021.
by CHRIS BURRITT
NW GUILFORD - Some buyers are designing their new houses in the Farm at Oak Ridge with not just one, but two offices to accommodate couples working from home in response to the COVID-19 outbreak. Outdoors, others are building swimming pools and entertainment areas as they anticipate continuing to spend more time at home even after the threat of the virus wanes.
"I'm seeing more desire for home offices and outdoor space," said Keller Williams Realtor DeDe Cunningham, listing agent for the Farm at Oak Ridge subdivision on N.C. 150. One buyer told the agent her family wants to entertain at home because "we feel safer there."
The coronavirus essentially shut down the real estate market for several weeks last spring, but housing sales have surged in the months since as the economy has moved toward recovery. In the midst of it all, the lingering virus has shifted work and living habits for families, a trend that may gain as the holiday surge in COVID-19 cases is bringing back public gathering restrictions.
"You're going to see more people working full-time and part-time from home," said Gil Vaughan, a Keller Williams agent.
"I don't think we'll ever go back to the way it was. Too many people have gotten accustomed to working from home."
As a result, families are spending on bigger houses and renovations such as converting spare rooms into offices, confirmed other northwest Guilford real estate agents and builders. On top of that, historically low interest rates are fueling housing sales.
"You would have thought COVID would slow things down, but it really hasn't at all," said Phillip Stone, who owns A New Dawn Realty in Stokesdale with his mother, Dawn. "It has actually heightened activity as people working from home decided to remodel or sell and purchase bigger homes. As long as there are no major changes with the economy, the trends should continue."
Cunningham said she believes low rates are largely responsible for higher housing sales, and in some cases, renters are buying houses because mortgage payments are now comparable to rent.
"Whether we had COVID or not, we were going to have a bang-up year," Cunningham said. "The rates are causing people to move."
On average, fixed rates on 30-year mortgages are projected to decline to 2.8% in the fourth quarter, down from 3% in the third quarter, according to Fannie Mae, the government-sponsored mortgage loan company. It forecasts rates will stay at 2.8% in 2021.
Ramifications from the virus have also contributed to sales. Among her clients buying new houses, Allen Tate affiliate Betty Smith is working with families who have both parents working from home while their children are attending school remotely.
"They all need quiet spaces, and their homes aren't big enough (to accommodate that)," said Smith, president of Smith Marketing Inc. Several of those families are moving from Greensboro into northwestern and northern Guilford County, she said.
Smith and other Realtors said demand for housing has been so strong that sellers are often getting multiple bids for their houses, sometimes for more than list price.
Summerfield-based Smith Marketing has about 10 houses in its inventory for sale, down from a normal level of about 50.
"We've never been so low in inventory," Smith said. "Right now, people are able to get a little bit of an inflated price for their house."
The latest housing statistics for northwest Guilford illustrate the rising prices amid tightening supply.
The average sale price for houses in Oak Ridge and Summerfield climbed 14.6% to $479,148 in the third quarter compared to a year earlier, while advancing 7.2% to $335,627 in Stokesdale, according to the Greensboro Regional Realtors Association (GRRA). It cited statistics released by the Triad Multiple Listing Service.
The inventory of houses on the market in Oak Ridge and Summerfield dropped 37.8% to 2.8 months in the third quarter, GRRA said. In Stokesdale, it sank 48.6% to 1.9 months.
Higher prices for lumber, roofing shingles and other building materials are contributing to the costs of new homes. As an example, David Flanders, president of Builders MD, said he built a 4,000-square-foot house in Summerfield two years ago that was listed for $689,000. The same house on a comparable lot would cost about $75,000 more today, he said.
"Houses are more expensive, but people are getting more for (selling) their houses," Flanders said.
Trends are forecast to continue next year. Lawrence Yun, chief economist for the National Association of Realtors, projected that U.S. existing-home sales will rise by 10% to six million next year, fueled by the availability of a COVID-19 vaccine and mortgage rates projected to hover around 3%.
In recent months, surging sales have offset declines last spring when coronavirus-related shutdowns dampened real estate activity across the country, Yun said in an NAR news release Nov. 19. The association reported U.S. existing-home sales rose 4.3% in October from September, marking a fifth consecutive month-over-month increase.
"Considering that we remain in a period of stubbornly high unemployment relative to pre-pandemic levels, the housing sector has performed remarkably well this year," Yun said.
The healthy real estate market will mean a record 2020 for some northwest Guilford real estate agents and builders. Keller Williams' Cunningham said she expects to generate $30.5 million in sales by the end of December on the sale of 107 houses. She sold $30 million worth of houses in 2018, her previous record.
"Business is as strong as it has ever been for us," said Casey Johnson of Johnson & Lee, a custom home builder with about 20 houses completed or underway this year, an annual record for the company. "I don't think we have anything major to worry about over the next year."
The lingering virus "is bringing business to us," Johnson said. Not only are local buyers motivated by the desire to upgrade their houses amid low interest rates, but people living in northeastern or midwestern states such as New Jersey and Wisconsin are moving to northwestern Guilford County.
"They are trying to get away from the big cities and the shutdowns" caused by the virus, Johnson said.
Oak Ridge-based Builders MD is building six houses this year, with the number expected to at least double in 2021.
"We've got 12 new houses scheduled for next year, but the calls keep coming," Flanders said.
"Between COVID and the interest rates, our business has increased," he confirmed. "As long as rates stay low, our business is going to continue to grow. When the virus goes away, some people working from home may just stay at home.'