Wilmington’s Housing Market Is Still Digesting the COVID Boom

The best description I have heard of today’s real estate market came from Brian Buffini: the housing market is like an anaconda that swallowed an enormous meal during COVID. The meal went down, but it will take years to digest.

That analogy fits what I am seeing in the Wilmington NC housing market. This is not the traditional slow market many experienced agents have seen before.

In a normal slowdown, inventory climbs because homeowners continue making ordinary moves. Growing households buy larger homes, empty nesters downsize, and owners move among different Wilmington Neighborhoods. Today, many of those discretionary sellers are staying put.

The market has not stopped. People still buy and sell homes every day, but much of the activity I see is being driven by life events rather than simple preference.

Recommended listening: Brian Buffini’s market perspective

Brian Buffini offers a helpful perspective on the demographic and economic forces shaping housing. I have followed Brian for more than 25 years, and I consider him one of the industry’s most practical, common-sense voices.

His episode, “The Biggest Real Estate Opportunities Right Now,” explains why waiting for the old market to return is the wrong strategy. His central point is that buyers, sellers and real estate professionals must work with the market that exists.

Episode attribution: Brian Buffini, The Brian Buffini Show. If the player does not load, listen to the official episode on Apple Podcasts.

The anaconda analogy is useful because digestion is not a crash or an instant reset. It is a long adjustment involving inventory, affordability, household decisions and expectations.

Life events are creating much of the resale inventory

Many current resale listings are connected to a necessary move rather than an optional one. Death, divorce, job loss, relocation, health changes and other major events continue to create real estate decisions in every market.

One meaningful group I am working with consists of baby boomers who moved to the coast years ago, often from the Northeast or another part of the country. Some are now ready to move again to be closer to children, grandchildren or other family members, making careful relocation planning more important than trying to identify a perfect market moment.

What we are not seeing in the same volume is the owner saying, “Our household is growing, and we would simply like a bigger house.” Those owners may want to move, but replacing a low-rate mortgage with a larger balance and a higher financing cost can make the payment difficult to justify.

Freddie Mac reported that nearly six out of 10 borrowers had a mortgage rate at or below 4% in its analysis of the mortgage rate lock-in effect. Freddie Mac estimated an average lock-in value of $55,000 for the fixed-rate loans it studied, illustrating why many owners remain in place.

The hardest seller conversation is about price

I have already had three difficult seller conversations this week, and it is only Tuesday. In each case, the owner believed the home should be worth more than current buyers were likely to pay.

That expectation is understandable. During the COVID market, sellers watched homes receive multiple offers, sell quickly and sometimes close above what almost anyone predicted. Those memories now compete with the evidence in a current local home-pricing analysis.

A house is priced by today’s alternatives, not its highest historical estimate. Buyers compare active listings, expected payments, property condition, location and competing new homes before deciding what they will pay.

The market does not know what an owner needs for the next move, what an automated valuation once displayed or what the property might have commanded during the peak. Owners considering a sale should compare their home with the listings a buyer can purchase now, including relevant homes currently offered across the local market.

A lower expectation can still leave substantial equity

Equity and market value are related, but they are not the same thing. Market value reflects what a qualified buyer is likely to pay, while equity generally reflects value minus debt secured by the property.

Some owners are disappointed because they will not receive the “triple grand slam” result they imagined. Yet an owner who bought in 2018 or 2019 may still have a gain of $100,000, $200,000 or more, depending on the property, mortgage balance and transaction costs.

That can still be a strong financial position even when the home does not command its pandemic-era peak expectation. A realistic analysis should estimate value, subtract the loan payoff and expected selling expenses, and show the owner an estimated net range rather than one emotionally attractive number.

Profit and equity are not automatically tax-free. Under federal rules, certain qualifying sellers may exclude up to $250,000 of gain, or up to $500,000 for some married couples filing jointly, but ownership, occupancy, filing status and prior exclusions matter. Review IRS Publication 523, Selling Your Home, and confirm the consequences with a qualified tax professional or accountant.

Owners with larger gains can also review my educational discussion of the home-sale capital gains exclusion. That article is general information, not individualized tax advice.

New construction is changing competition below $500,000

New construction is one of the strongest competitors for area sellers, especially around the $500,000-and-under range. Larger builders may use rate buydowns, upgrades, price reductions or other incentives that an individual owner usually cannot reproduce dollar for dollar.

The challenge becomes serious when a nearly new resale home competes with the same or a similar floor plan nearby. If the new home is priced $20,000, $30,000, $40,000 or even $50,000 below what an owner recently paid—and includes a financing incentive—the resale property must offer another compelling advantage.

That advantage might be a more desirable lot, completed outdoor improvements, window treatments, mature landscaping, immediate availability or a location within an established section. Sellers should study active builder inventory as carefully as comparable closed resales and understand the choices displayed on the area’s new-construction home search.

This does not mean every newer home or subdivision is losing value. Real estate remains local, and condition, lot, design, remaining inventory and buyer demand vary from one community to another. Sellers can use the community and neighborhood guide to understand how nearby choices differ.

Buyers considering a brand-new property should also use a detailed new-construction walkthrough checklist. “New” does not remove the need for careful review, documentation and professional inspections.

Some owners may need lender-approved solutions

A short sale becomes relevant only when an approved sale is expected to produce less than the amount needed to satisfy secured debt and associated obligations. It is a specific financial and legal situation, not a synonym for a price reduction or a disappointing online estimate.

In a limited number of cases, likely proceeds may not cover the mortgage balance and selling expenses. Possible paths can include a short sale, loan modification or another lender-approved workout, but each requires an individual review and may depend on documented hardship and lender requirements.

My concern is that real estate professionals may recognize some of these cases before lender systems are prepared to process them efficiently. We saw a version of this during the 2006–2009 downturn, when institutions needed time to develop workable short-sale procedures.

I am not predicting another 2008. Owners facing a possible shortfall should start early by obtaining a realistic market analysis and estimated net sheet, contacting the mortgage servicer, and consulting an experienced broker, a North Carolina real estate attorney and appropriate tax or financial professionals.

Luxury homes are not immune to financing pressure

The upper end of the market can feel rate and affordability pressure even when buyers have substantial resources. Some luxury buyers used short-term or adjustable financing, which can react differently from a long-term fixed-rate mortgage.

Mortgage rates do not move in lockstep with the Federal Reserve’s policy rate. Longer-term pricing is influenced by the bond market, inflation expectations, economic risk and other forces, which is why a Fed decision does not guarantee an immediate or equal change in a 30-year mortgage rate.

I explain that relationship in more detail in my guide to why local mortgage rates move. Buyers can also use a mortgage payment calculator to test how different rates, prices and down payments affect the monthly obligation.

For luxury sellers, the central lesson remains the same: yesterday’s purchase price or estimated value does not set today’s market value. Current alternatives available to qualified buyers do.

Most long-term owners still have good news

Homes can still sell, and many owners who purchased before 2021 are likely to hold meaningful equity. The difficult part is accepting that a strong gain may still be less than the number an owner once expected.

If you need to sell, the goal is not to chase an old market. The goal is to understand today’s competition, protect the equity you have and make the next decision with clear eyes.

You cannot price a home according to what you need for the next chapter. The market does not know what you owe, what you spent on improvements or what another home will cost. It only knows what buyers can purchase today and how your property compares.

Owners who are still gathering information can review current property marketing examples and the broader local real estate blog. The most useful next step, however, is a property-specific comparison rather than a general headline.

Experience matters more in a complicated market

A complicated market rewards current evidence, direct communication and experience with plans that need to change. That matters more than it did when nearly every properly presented house attracted immediate attention.

This may not be the best time to choose an agent because of a social media video or personal relationship alone. A friend, neighbor or fellow church member may be a capable professional, but a difficult transaction can require blunt pricing advice and uncomfortable financial conversations.

Ask whether the agent has worked through changing markets, difficult appraisals, builder competition, lender negotiations and transactions where the first plan did not work. Buyers should apply the same standard when selecting guidance for buying a home in the area.

I have helped area sellers through good markets and hard markets since 1998. This cycle is unique because resale inventory remains constrained by mortgage lock-in while builders hold meaningful inventory and can compete through financing incentives.

That combination calls for honesty, patience and a plan grounded in current evidence—not yesterday’s headlines or tomorrow’s promises. If you want to discuss a property-specific situation, you can contact the Buddy Blake team for a direct conversation.

Frequently asked questions

Why are fewer homeowners selling voluntarily?

Many homeowners have low fixed mortgage rates they would have to surrender when they sell. Buying another home at today’s price and financing cost can make an optional move difficult to justify.

Can a resale seller compete with a new-home builder?

Yes, but the strategy must account for the builder’s complete offer, including rate buydowns, warranties, upgrades and price incentives. Property condition, lot, location, timing and realistic pricing become especially important.

Does having equity guarantee the price a seller wants?

No. Equity is the difference between a property’s market value and the debt secured by it. Market value is determined by current buyer demand and competition, not by the owner’s desired proceeds.

What if the likely proceeds may not cover the mortgage and expenses?

Start early. Obtain a realistic market analysis and estimated net sheet, contact the mortgage servicer, and consult qualified legal, tax and financial professionals. A short sale or loan modification is not automatic and normally requires lender approval.

Are profits from selling a primary residence always tax-free?

No. Federal law may allow qualifying homeowners to exclude part of the gain, but eligibility, ownership, occupancy and filing-status rules apply. Sellers should consult a qualified tax professional about their circumstances.

The COVID housing boom was an enormous meal, and the market is still digesting it. People who truly need to move still have options, but the first step is an honest conversation about value, competition, equity and what buyers will actually pay.