Slowly but surely, our local economy is returning to where it was before the Great Recession of 2009. What does this mean for the local housing market?

It means you’re going to need a lot of money to buy a home – especially here in Orange County.

“This has been a really good year…we’re now reaching or surpassing historic highs,” said Mark Zimmerman of Chapel Hill’s RE/MAX Winning Edge while addressing the Chapel Hill-Carrboro Chamber of Commerce’s annual “Spaces and Places” briefing last week.

Much of the news he had to share was good – at least if you’re in the market to sell.

“All of our areas are sellers’ markets,” he said. In fact, in the last twelve months ending in July, more homes sold in Orange County than in any other twelve-month period in history – breaking a record set before the recession.

Data via SlideShare.net/CarolinaChamber.

Data via SlideShare.net/CarolinaChamber.

 

That’s coupled with a lack of inventory: not only are there relatively few existing homes going on the market, Orange County isn’t building many new homes either – only 177 new units in the last 12 months. That’s about a quarter of what’s being built in Chatham and Durham.

And the consequence, Zimmerman says, is that we’re hitting another milestone as well – one that’s somewhat less exciting.

“Not a surprise: we have limited supply, we continue to have high demand, and…that means increasing prices,” he said last week. “The average price of a single-family detached home, over the last 12 months in Orange County, popped above 400,000 dollars.”

Data via SlideShare.net/CarolinaChamber.

Data via SlideShare.net/CarolinaChamber.

 

The per-square-foot cost of housing is also higher in Orange County – in spite of the fact that Orange County’s housing stock is also significantly older. The average home on the market in Orange County is now more than 30 years old.)

Data via SlideShare.net/CarolinaChamber.

Data via SlideShare.net/CarolinaChamber.

 

Zimmerman says there’s an obvious danger: if prices continue to rise like this, Orange County will continue down the road of becoming a place where only the affluent can live.

“We lost the ability to house our lower-income people, especially in Orange County, a long, long, long time ago,” he said last week. “If this trend continues, we’re going to start losing the ability to house middle-class people too.”

How do we avoid this? Zimmerman says it’s all about the market, and the market is all about supply and demand: if you want a lower cost of housing, you have to either reduce the demand or increase the supply.

Demand will likely remain high as long as Orange County remains a desirable place to live, and that’s not something anyone wants to change – so Zimmerman says the key to controlling the housing market is to build new units. And that’s something he says we’re not doing enough.

“When you add a lot of new inventory, you have a lot of competition…and it forces the product that isn’t new to price itself accordingly,” he said. “In Orange, since we haven’t been adding that competition, it allows the resale property to be able to grow in price unfettered – and that’s making everything less affordable.”

Data via SlideShare.net/CarolinaChamber.

Data via SlideShare.net/CarolinaChamber.

 

Get more data from Zimmerman’s presentation at this link.