Real Estate Broker Eric Andrews discusses his 2022 real estate predilections. Will he be correct, or wrong like last year? Why are analysts predicting a price increase in real estate in 2022?
Interviewer: What are your 2022 Chatham County real estate predictions?
Speaker 2: So when I look into my crystal ball, I have, I have no idea. I mean, I was so wrong about 2020. I really thought that 2020 was going to be a tough year, and I thought I was going to be working out on the farm and we’re going to be twiddling our thumbs. And 2020 was one of the busiest years we’ve ever had. And then 2021, I was like, “Okay, well, there’s no way that’s going to…” People were just crazy in 2020, with the pandemic and moving here and everything. There’s no way 2021 will be better than 2020. I thought it would be as good, there were a lot of indicators and everything, and 2021 was phenomenally better than 2020, for everybody. It was time on the market, appreciation, sellers, money; it was really good. So that was our busiest year ever.
I mean, it’s got to slow down a little bit in 2022, and part of the problem is that ratio to what people are making and the cost of real estate. So it made the Triangle Business Journal, and a bunch of the news stations went crazy with, the average price of a residence in Wake County is now over $400,000. Okay. Well, if the average family is making $60,000, we’ve discussed this before, that puts them at a $250 price point. So the $400,000 is just unattainable. You’ve got to be, as a family income, you’ve got to be bringing in between $125 and $150 to get to that $400,000 average. You’re talking about double the average income.
And honestly, the new construction that we see in Chatham County is above that $400,000. We don’t have municipal sewers, so we’re not going to have condos, apartments, town homes. A lot of what we’re doing, is in these private subdivisions that have private systems, or they have individual septic systems. The lots are so dang expensive, that if you have a $90 to $125,000 lot, that means we’re going to be in the $6 to $750 range for the new construction, and that’s 50% and above what Wake County is.
New construction in this area is averaging like $200 a foot right now, and that just seems… I mean, we’ve been tracking it. It was, for a long time, we were $75 to a $100 a foot. Then we thought it was crazy when it went to $125 and $130, and $165 and $178 seemed really high, but probably average $200. And there’s a lot, like Chatham Park, it’s not insane to be at $300 a foot. There’s a bunch of stuff, new construction, that’s at $300 a foot. It’s getting close to some California prices to me. 1,750 jobs, about 11 to 12 miles north of Siler City. Siler City used to be the good deal. Well, with the largest manufacturing site ever to have come to North Carolina, just 11 miles of Siler City, Siler City’s not going to be cheap anymore.
The local market is one issue, but the national market is another issue as well, because the NAR estimates that there is a 5.5 million housing shortage in the US right now. We still see a tremendous amount of migration from the West Coast and the Northeast, they’re all coming here. We had a client just last week. She sold a 1500 square-foot home in California, a little brick ranch on nothing of a lot, and she sold it for $1.5 million, okay? You can get double or triple the house, new construction. You can get a 3 to 4,500 square-foot home for like $750,000 here. So can you imagine selling your house, a 1500 square-foot home in California for $1.5 million, and then you compare that to what you can get in North Carolina.
The other elephant in the room is, okay, my house has gone up a bunch and I sell it. Where are you going to go? What are you going to do? It’s not like just your home went up, everybody’s home went up. The house you bought five years ago for $300,000, it’s now worth $600,000. If you sell it, where are you going to go? That’s one of the biggest logjams in the systems right now. Our only options are to go south and west of here. If you go north or east of here, the prices go up. Now you’re looking at Randolph or Moore County, or maybe Lee County, and actually Lee and Moore going up a bunch too.
So Chatham Park will continue to have more residential rooftops, and we’re going to have more commercial properties in the Mosaic commercial area of Chatham Park. Looks like the Thales School off of Thompson Street, that will be open as well.
McBane, the subdivision that I’ve been working on, they’re probably going to break ground next year. The parks just got bought by a Chicago development group, they’re probably going to be building houses. Briar Chapel and some of the other smaller subdivisions are still going to be building houses. Farrington, Farrington’s selling them as quickly as they can build them; as soon as it’s done it’s sold.
I’m on the Chatham County planning board, we have a full schedule. We’re often working real, real late, until the evening, because it’s such a full docket. We’re so far behind on these subdivisions, that if they get approved, if the subdivision gets approved right now, it takes so much time to engineer and grade and put in the infrastructure that we’re like 10 to 15 months from any homes going in there. If the subdivision gets approved.
The other thing with new construction, we used to tell buyers that they could build a house in four to six months. If it was a big house we told them eight to 10 months. We don’t have- All our builders right now are 12 to 15 months out right now, and if you want something big, they’re saying 24 months. So if you found the land, and you decided to build on it right now.
Speaker 2: You’re a year to two away from turning the light to switch on and parking your car there. So we got COVID, the economy, inflation, the stock market, all our possible factors that could change the market in an unpredictable way. But overall, I think that Chatham County looks really, really strong. We’re going to have some moderate appreciation. There’s certainly going to be some buyer frustration; the prices are going to be out of reach for some people. But I expect for much of ’22 it will be the same as 2021. The biggest thing, it’s going to be tough for agents to get listings. Any agent that gets a listing will be very popular in 2022.