Whether you’re buying a home for the first time or looking for a Wilmington upgrade, you’re probably wondering if the housing market will ever be in your favor again.
I mean…the prices are bound to drop eventually…right?
But there are a lot of factors keeping housing costs high for the foreseeable future.
How did we get here?
To understand today’s housing market, we’ve got to look all the way back to the 2008 Housing Crisis. Causing a dramatic drop in prices (33% to be exact), the housing market crash created an economic recession that’s taken more than a decade to recover from.
The country’s housing prices began growing steadily in 2012 and should have completely rebounded by the end of 2018.
But, then…Hurricane Florence hit the North Carolina coast, destroying much of the newly developed housing inventory and setting the state’s housing market back a bit.
Less than two years later, we found ourselves in a global pandemic, which has had all sorts of impacts on the housing market. From a massive shipping problem and building material shortage to significant shifts in buyer and seller attitudes, the COVID-19 virus only exacerbated the already existing supply issues.
Between Hurricane Florence and the pandemic, it’s no surprise that housing prices have spiked in recent years.
“There was a slight pause during COVID — maybe a 6-month pause or so — but after mid-year of 2020, prices just took off,” said Kevin McKoy, Carolina Beach Network Real Estate Agent. “Prices might have nearly doubled since 5 years ago. Five years ago, you could have maybe got a starter house in Wilmington for $100-and-something, and now, it’s $300.”
And the scary increase in prices has sent buyers and sellers reeling in different ways.
While homebuyers are unable to secure homes within their budget range, sellers are reluctant to put their homes on the market because it's become more and more difficult to find a new home.
“For 4 years now, I’ve been saying when these condos sell for these prices, it’s going to create an influx of sellers,” McKoy said. “You’d have thought that the increase in prices would have created some sellers, but it hasn’t.”
Hence, the sort of housing stalemate we’re finding ourselves in.
How does Wilmington’s Growth Contribute?
If you’ve ever spoken with someone who’s lived in Wilmington for a while, you probably know that the town has experienced booming growth over the last few decades.
And that growth is continuing to this day.
Every year, United Van Lines conducts a study of Americans’ moving patterns. In 2021, North Carolina ranked as the 13th most moved-to state. And Wilmington was the third most popular moving destination among all U.S. cities (after earning the #1 spot in 2020).
With the already-sparse inventory of homes, the housing market is struggling to keep up with the growing Wilmington population. So, although it’s not the sole driving force behind the hike in prices, the growth of the Cape Fear Region is definitely a big contributor to the strain.
When will Wilmington Area Housing Prices Drop?
Home prices will drop when (or if) one of two things happens. Either the demand has to decrease or the supply needs a big boost.
Even amid the pandemic, Wilmington’s population (and thus, the demand for housing) continued to grow. But after peaking at 2.37% in 2016, the area’s rate of growth has hit a plateau of just over 1% in recent years.
Even if the population and demand decrease gradually, you’ll hardly notice a change in price. The descent will just be too slow.
Several factors could boost the housing supply, though:
- More new home construction — if and when construction companies can get the materials they need
- Expansion into surrounding areas with lower demand — such as Leland and Hampstead
- Changes in buyer and seller attitudes — sellers need to feel comfortable with the risk of putting their homes homes on the market & buyers need to be willing to take on the risk larger mortgages (although, this is the kind of riskiness that contributed to the 2008 Housing Crisis)
- Responses to affordability challenges — if the country’s housing prices become too unaffordable, the government may provide some sort of assistance
Hoping to buy a home in 2022?
Whether you’re looking for a home in Wilmington, Wrightsville Beach, Carolina Beach, or Kure Beach, our realtors will help you determine what you can afford and find you a home that you’ll fall in love with! Give us a call at 910-395-4100.