Twenty percent. That’s the magic number for a house down payment, or at least according to popular wisdom. Earlier in the 20th century, that might have been both true and achievable. But now,
Are We Heading For A Bubble
Now that I got you to click on the link, I can tell you: No.
Well, rather, I don't think so. I can't predict the future. What I can do is look at the historical trends and come to that conclusion. It's a story told in two charts.
You might look at this chart and get spooked because today's prices are just as high nationwide as they were the bubble burst in 2007-2008. Fear not and look at the chart below:
A bubble is when prices are higher than where they should be, like in 2002-2008. The housing recovery was when prices were lower than they should have been, like in 2009 until about 2014 when average prices caught back up to that historic appreciation.
But, all real estate is local and while national numbers and charts are great to look at, they aren't too relevant to a house in Cary, Durham, or Chapel Hill. For our story I'd like you to look at two more charts:
This is the average sales price for a home in the 16 counties in the Triangle Multiple Listing Service going all the way back to 2004. That's a large enough sample to see see the same trend that we saw on the national level (but we had another hump in 2011). You can see a steep dive early in 2008 and then a constant recovery starting in 2012. Let's compare that regional trend with some other local markets:
In this chart, the regional trend still shows up as orange, but I've added Wake (teal), Durham (purple) and Orange (blue). I wish I could change the colors, but alas, I can not. For those thinking we're in a bubble, Wake and Durham look to be following the regional trend, while Orange County is actually lagging behind.
So, are we in a bubble simply because prices are going up - no. Prices are simply reaching the point they would have hit by this point if we didn't have the recession in the first place. Don't be shocked if these neighborhoods with 10% changes in sales prices start to level off to a more normal 5% in the coming years.
Want more detailed stats for your neighborhood, just ask!
Real Estate Broker
Michael Cunningham is a Real Estate Broker as well as the go-to tech and marketing wiz at Domicile Realty. A native of Tennessee, Michael arrived in Chapel Hill by way of Washington, DC where he help....