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Wake County News > Posts > Wake County Property Market in June is Up Significantly
July 02
Wake County Property Market in June is Up Significantly

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Thursday, July 2, 2020
For Immediate Release

Contact: Luther Snyder, Deputy Director
O. 919-856-5462 M. 919-369-7045
luther.snyder@wakegov.com

Wake County Property Market in June is Up Significantly

June is back to 2019 levels after a two-month decline
Real estate lending remains strong

In Wake County, June 2020 real estate activity in dollar terms was up 35% compared to May 2020 and was nearly even with the pre-recession month June 2019. The number of deeds recorded in June was greater than in both May of this year and June 2019.

Charles P. Gilliam, Register of Deeds said, “June actual results denote a quick turnaround. It is too soon to predict definitively that we are clear of a real estate recession, but June results are promising. For one thing, we need to see if an eventual pick-up in commercial activity confirms the strength in the core market.”

June real estate activity rebounds

The dollar value of Wake County real estate transactions in June was almost $1.2 billion, recovering $304 million from May, and was only $32 million less than the pre-recession month of June 2019.

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June core market transactions were up 28%, or $198 million, compared to May 2020, and were up 3%, or $58 million, compared to June 2019. The core market is defined as property transactions valued at $1 million or less.

Commercial real estate closings continued to be slow in June but were up from April and May. In June there were 58 transactions at a price of more than $1 million. The two largest June closings were Hawthorne at the Trace Apartments on Glenwood Avenue, Raleigh for $42 million and land at Highway 55 and McCrimmon Parkway, Cary, for $35 million. The Cary land is the site of a new UNC medical facility.

A breakdown of the dollar value of transactions by price range for the years 2014 – 2019 is available at http://www.wakegov.com/news/Lists/Posts/Post.aspx?ID=1140

June deed volume increased to pre-COVID-19 restrictions levels

There were 3,685 deeds recorded in June, up 25% from May and 4.9% higher than June 2019.

From the initiation of economic restrictions in March through May 2020 there had been a widening gap between the actual and expected number of real estate transactions. The strong June activity reversed that trend.

The following chart shows the daily number of deeds recorded in May and June 2020 compared to the corresponding days in 2019. During this period, deed growth was higher in 2020 as compared to 2019. By the end of June, the 2020 exponential growth trend line erased the gap between it and the 2019 trend line.

 

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Monthly median sales price

June 2020’s median sales price was $312,500.

The median Wake County real estate sales price for the full second quarter of 2020 was $322,500. For both the first quarter of 2020 and the fourth quarter of 2019 the median was $310,000.

A breakdown of the dollar value of transactions by price range for the years 2014 – 2019 is available at http://www.wakegov.com/news/Lists/Posts/Post.aspx?ID=1140

 

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Changes in median sales prices tend to be caused by activity in the core market. The occurrence or non-occurrence of large transactions has virtually no impact on the calculation of median values because there are so few of those transactions.

Lending activity continues to be strong

Real estate lending activity continued to be quite strong in June. The number of loans secured by real estate was up 82% compared to June 2019 and was up 20% from May 2020. This continues a trend that started in the autumn of 2019.

Real estate lending activity has two primary components.

  1. The first is lending that coincides with a transfer of ownership of real estate. This is seen in the typical residential home sale where simultaneously a seller’s loan is paid off and a buyer takes out a new loan as ownership is transferred by deed.
  2. The second is where a new loan secured by real estate is taken out, but there is not a change in ownership of the underlying property. This is the situation in the typical mortgage refinancing or second mortgage transaction.
    The relative strength of the second type of lending activity can be quantified by comparing the ratio of deeds of trust to deeds in a period. Relatively more deeds of trust signify increasing refinance of mortgage loans.

The relative strength of the second type of lending activity can be quantified by comparing the ratio of deeds of trust to deeds in a period. Relatively more deeds of trust signify increasing refinance of mortgage loans.

Since the autumn of 2019, there has been a significant increase in the second type of lending activity. The following chart shows the continuing widening gap between deeds of trust and deeds. This gap, compared to a baseline period from 2017 through mid-2019, quantifies increasing strength in the mortgage refinance market.

 

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Long-Term Trends in Real Estate Activity

Aggregate value of real estate transactions

The following chart shows the aggregate dollar value of real estate transactions in Wake County for each month during 2017 through 2019 as well as year to date 2020. Because real estate transactions tend to be seasonal, it is useful to compare monthly results to the corresponding month of prior years.

 

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Aggregate value of real estate transactions - linear

The following chart shows the aggregate dollar value of real estate transfers in Wake County linearly (month by month) from January 2017 through year to date 2020. Because real estate transactions tend to be seasonal, this information should be evaluated in conjunction with the year over year comparison shown in the preceding chart.

 

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Deed volume

The following chart shows the number of deeds recorded in Wake County for each month during 2017 through 2019 as well as year to date 2020. Numbers of deeds recorded reflect the velocity of real estate activity without regard to the dollar value of a transaction. The number of deeds includes transfers where monetary consideration did not change hands, such as transfers within a family.

 

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Real estate lending

This chart shows the number of deeds of trust recorded in Wake County for each month during 2017 through 2019 as well as year to date 2020. A deed of trust is the legal instrument used in North Carolina to secure a loan with real estate used as collateral. Numbers of deeds of trust recorded reflect the velocity of lending transactions involving real estate without regard to the dollar amount of the loan.

 

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Methodology and Additional Information

The statistic in this report are derived from instruments recorded in the office of the Wake County Register of Deeds. Under North Carolina law, changes in property rights in real estate, including security interests in real estate, are recorded with the Register of Deeds of the county where the real estate is located.

The value of real estate transferred is measured by excise tax assessed on the consideration in a real estate transaction. Excise taxes are calculated as $1 in tax for every five hundred dollars of consideration. About 99% of these transactions were property transfers by deed and the balance were miscellaneous transactions such as acquisitions of a right of way. Calculation of the aggregate value of real estate includes all transactions. The calculation of median price includes all transactions where property was transferred by deed.

The core market is defined as property transactions valued at $1 million and less. In June 2020 98% of transactions were in the core market.

The number of deeds and deeds of trust recorded with the Register of Deeds reflects the total volume of property and loan transactions regardless of the dollar value of the real estate or amount of the loan. The number of deeds includes transfers where monetary consideration did not change hands, such as transfers within a family. In June 2020, 23% of deeds attracted no excise tax and in the first quarter that percentage was 21%.

On March 14, 2020 public schools were closed and mass gatherings were prohibited by an executive order of the governor. On March 17 and 23, 2020 additional executive orders were issued which closed certain businesses and introduced additional restrictions. Based on these events, a starting date of March 17, 2020 is used to demark the advent of Covid-19 related legal restrictions on economic activity.

For a complete picture of Wake County real estate activity, the information in this report should be considered in conjunction with data available from other sources, such as rezoning applications and new building permits.

This report was initially released July 2, 2020.

 

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