Tony Harrington, owner of Wilmington-based firm The Property Shop International Realty, is this year’s president of NC Realtors. Below, Harrington shares his thoughts on the state of the residential real estate market in the Wilmington area and the state of North Carolina.
What do you think is the biggest challenge facing the residential real estate industry this year?
Harrington: “Forecasts from leading economists suggest a downward adjustment in interest rates by the middle of the year, a development that could notably impact both North Carolina Realtors as well as our buyers and sellers. We are already facing limited inventory, so this expected decrease in interest rates may prompt a surge of prospective buyers re-entering the market, potentially driving up property values as buyers vie for the limited housing stock available.”
How about the commercial real estate industry?
Harrington: “Since the onset of COVID-19 and the ensuing market that came out of 2020, we’ve witnessed a transformation in the use of office and retail spaces. The shift toward online and virtual work environments has resulted in a slower recovery for these types of real estate inventories as businesses have adapted to new modes of operation that were previously unfeasible.
“On the other hand, the industrial sector in North Carolina has grown by leaps and bounds. State-level initiatives aimed at educating international and national business communities about North Carolina’s benefits have significantly increased incoming industries, to the point where we’re experiencing modest growing pains. This commercial sector growth has, in turn, created a lag in the availability of housing for the workforce of these expanding industries.
“North Carolina’s accolade as the No. 1 Best State for Business comes with mixed effects on growth. As Realtors, we are monitoring these developments closely. Our members statewide are deeply involved with economic developers and are active participants in our commercial committees. Additionally, we maintain an ongoing dialogue with the State Economic Development Partnership of NC to ensure we are at the forefront of these evolving trends.”
How are Realtors coping with the ongoing lack of inventory in the Wilmington area? In the state?
Harrington: “In 2023, there was a noticeable downturn in real estate transactions, aligning with both state and national patterns. This was primarily due to the rise in interest rates from the historically low levels we had previously benefited from. Although current interest rates remain relatively low by historical standards – especially when compared to the 1980s – they have been enough to prompt a cautious approach within the real estate sector.
“New construction has emerged as the primary driver of sales activity across the state. With many homeowners locked into lower interest rates than those currently available, there’s been a reluctance to sell properties and assume higher rates. This hesitancy has allowed newly constructed homes to lead the market in terms of availability.”
Is the number of people becoming Realtors increasing or decreasing or staying flat?
Harrington: “Typically, both on local and state levels, we expect to see a certain amount of membership attrition at this time of year. Despite a slower market in 2023, which could have led to a predicted decrease in membership, our year-end figures actually showed a positive trend in our numbers. It’s important to note that the membership statistics I’m referring to are specific to Realtor membership, which is distinct from the licensing numbers reported by the N.C. Real Estate Commission. Although we have made allowances for some downturn due to market conditions, current indicators suggest that we will not experience a significant decline in our membership base in 2024.”
What would help tackle the lack of affordable housing in the Wilmington area? In other parts of the state?
Harrington: “Lack of affordable housing is a statewide issue and is not just a topic of conversation but a genuine crisis being addressed by Realtors at all levels of the organization. NC Realtors has been proactive in seeking legislative measures to drive substantive change. However, the effectiveness of such initiatives also depends on the engagement and cooperation of state elected officials and local governments.
“NC Realtors, along with other stakeholders, offered suggested legislation to the NCGA [state legislature] and representatives of the League of Municipalities and Association of County Commissioners to address our current housing crisis. Some ideas have included allowing more and different types of housing and allowing accessory dwelling units. Unfortunately, these suggestions have been met with fierce resistance. However, we continue to work with them and other stakeholders, and I feel confident that we are moving toward innovative and effective solutions.”
What do you think about reported trends of some generations preferring to rent versus own homes?
Harrington: “According to the latest data from the National Association of Realtors, the homeownership rate in the United States rose to 66.0% in the third quarter of 2023, up by 0.15% from the previous quarter. Out of 129.9 million households, approximately 84.6 million own their homes, while renters account for 45.2 million households. Additionally, 2.7% of occupied housing units are classified as second homes.
“There’s been a notable shift in the composition of homebuyers, with first-time buyers constituting 32% of the market, an increase from the previous year’s 26%. However, this figure remains below the long-term average of 38% since 1981. The demographic profile of buyers is also changing: the average age of first-time buyers has dropped to 35 from last year’s average of 36, and the average age of repeat buyers has decreased to 58 from a peak of 59.
“Ownership aspirations continue to drive the housing market, with 26% of overall home purchases motivated by the desire for personal residence ownership. Among first-time buyers, 60% cited this desire as their primary motivation for purchasing.”
What else would be important to tell the Business Journal’s audience about the market in the Cape Fear region of New Hanover, Brunswick and Pender counties? In the state?
Harrington: “The real estate market experiences fluctuations, ranging from buyer’s markets to seller’s markets. Realtors play a crucial role in guiding clients through these changes with market expertise and educational support. Real estate transactions involve one of the biggest financial investments most people experience in their lifetime.
“Thankfully, in our region, we’ve seen favorable growth and expansion as a result. Together, we’re committed to ensuring that our coastal area remains an attractive destination for prospective residents and continues to capitalize on the expanding commercial opportunities that make our region stand out.”
