Since the beginning of the year, the median real estate sale price has gone up every month in Wake County, according to a report from the county Register of Deeds.
June’s median sale price, the latest available, was $383,000, an increase of $9,000 from May.
It’s an increase from the $328,750 reported in January. In January 2020, before the COVID-19 pandemic started, the median price was $302,000.
Changes in median prices tend to be caused by sales valued at $1 million or less, which the Wake County Register of Deeds calls the core market. Larger transactions, outside of that core market, have little effect on median prices.
In June, over 95% of sales were $1 million or less.
Why are home prices increasing?
The increases in home prices are due to multiple factors, said Roberto Quercia, a professor who studies low-income homeownership at the University of North Carolina at Chapel Hill’s Department of City and Regional Planning.
He said the region’s limited housing supply, low interest rates increasing demand for mortgages, and the high cost of lumber have contributed to increasing home prices over the last several months.
“This is kind of the perfect storm,” Quercia said.
And while he thinks the pace of growth will slow as interest rates eventually increase, companies like Apple and Google coming to the area will keep home prices higher than they were before the pandemic, he said.
“I don’t see this as a bubble,” Quercia said.
Effect on low-income families
Quercia said many low-income families will continue to be forced to move farther outside of Raleigh.
“Unfortunately, for families, especially ones you would consider blue collar, our essential workers, the future is longer commutes,” he said.
Quercia said that these families are also increasingly cut off from one of the most important aspects of wealth building — buying a home and building equity as the mortgage is paid down and the value of the property increases.
“The more you delay that, the less wealth building is likely to happen,” he said.
Quercia said as more people with higher incomes come to work at Google or Apple, where the average position is expected to pay $187,000 annually, it will drive up housing costs.
“The reason why that creates challenges for affordable housing is that [low-income families] now are competing with the others for housing,” he said. “Higher purchasing power is capitalized into higher prices.”
What’s the solution?
Quercia said local governments play a crucial role in offsetting increasing housing costs.
Over the last year, Wake County and the City of Raleigh have introduced many measures to promote affordable housing.
In April, Wake County approved $10.3 million for future affordable housing developments, The News & Observer reported.
The city committed funding in May to two affordable housing developments along future bus rapid-transit lines.
Last month, the City Council approved residential rezoning measures that allow duplexes and townhomes to be built in traditionally single-family neighborhoods, something Quercia said would in theory increase affordability because it allows for more supply on the market.
Raleigh voters passed an $80 million housing bond last November that helps build and repair homes and offers first-time homebuyers financial help.
“There continue to be a menu of solutions,” Quercia said, “but there is no silver bullet. I do believe there is more that should be done.”
Quercia said Wake County and the surrounding region will continue to attract people due to its universities, relatively lower housing costs for retirees moving from other areas and its general economic growth.
But that growth doesn’t benefit everyone equally, he said.
“Unless we do something, I think our area is going to become an expensive area like we typically associate with Silicon Valley,” Quercia said. “As we should celebrate economic development successes, we need to look at the distributional impact of those successes on those that are below the end of the income distribution.”