Writer: Max Crampton-Thomas
2 min read July 2021 — Raleigh-Duram’s insatiable real estate demand is close to depleting inventory, stretching out to real estate pockets that had yet to recover from the 2008 downturn but are now waking up. Jim Allen, president of the Jim Allen Group, shares his expertise on transitioning from a negotiator to a mediator in a predominantly seller’s market.
How would you characterize the Triangle’s real estate market?
There is almost no inventory in the market at all. I never believed that I would see a market this prolific in my time and I’ve been a top agent in Raleigh since 1993. In 2020, we closed $462 million and in 1Q21 alone we closed nearly $710 million. We went from a pre-pandemic market that had about 93 days on the market for the average listing to three days. In all of the Triangle — encompassing seven other major counties around us, sprinkling a bit down into Fayetteville and a bit at the coast — there are only 2,100 total active listings.
To be a healthy market, there needs to be somewhere between 12,000 and 14,000 active listings. In Wake County, which is the best county in the Triangle in terms of annual sales, there are only 1,040 total active listings, while it would require about 11,000 to be healthy, considering we sell on average 54,000 homes a year through MLS (Multiple Listing Service).
What can the average buyer do to make their offer stand out in such a competitive landscape?
It’s tough. There’s a wide variety of things you can do from escalation clauses to compelling letters. If you grew up in a family home, you want that next person to enjoy it the same way you do. Sometimes that helps a bit but the biggest part when presenting an offer is due diligence money, which is nonrefundable from day one as a means to set yourself apart. We’re advising our clients to put down between 5 and 20% . If that’s the house for you to move forward with, show your interest the best way you can. It’s not always the highest offer that’s going to win. The truth is most homes are selling right now for more than they’re going to appraise for anyway. One of the things the seller wants to know is if the person has enough money to make up the difference between the offer and the appraisal price. If they have enough space or bandwidth to do it.
What is Jim Allen Group’s outlook for the near term?
We’re on the pace to pass $1 billion in sales for 2021. Our 2020 numbers were a historic high for anybody in the state of North Carolina and in 2019, we did $400 million, the top sales in the state. We’re averaging $4 million in sales a day at present. If we stay on that pace, if the market continues that way, our $1 billion landmark will be easily attainable. The problem is getting those deals closed because we’re selling so many homes. Before I can tear the house down, we have already sold it to the end user and we just have to wait to collect the commission. We do not know if closings will get there because it’s taking between nine and 11 months to build a home of substance. We can still build a house in five or six months that is a starter-type home but the big houses take a while to build because of getting materials. The biggest problem with the interruption is appliances. When you go to build a house, the day you start the house, you need to order the appliances and pray they get there before closing because they may not. There is such a shortage of them. Windows and doors are the other two components. It is taking six to 10 weeks now to get windows and doors in. When you get a plan, you get ready to build it, normally you would be ordering it way back. You order them on day one, when you start the house, just to make sure you’re going to get them. A lot of our builders are getting storage buildings because if they don’t store the supply, they will not have it. For those who can afford to do it financially, you will see a lot more of that. We wager that this market is going to continue. In 2020, we were right at 11.2% appreciation for the year. Housing wise, we will supersede that in 2021 in pockets. The shortage is going to continue.
We have a 0.07-month supply of houses in the Triangle. That’s frightening, and we believe it will continue. It will get tougher and tougher. Prices are going to continue to rise. People are going to go further and further out. We’re considering developing property in Smithfield and Wilson, and these are really outlying markets, some of which never recovered from the last downturn. They’re getting ready because they’re waking up. One of our builders in Wilson cannot get homes finished before they are sold.
For more information, visit: https://www.jimallen.com/