The Charlotte, NC Housing Market Continues to Rise
Although September’s gains in home prices in Charlotte, North Carolina weren’t as hot as they were in August (6.8%), they were still at pace with the national average at 6.2% according the S&P CoreLogic Case-Shiller index. The national trend has housing prices at its quickest pace since the summer of 2014.
This cooling off in Charlotte housing sales was to be expected as families settle in for the school year. But even though housing sales cooled off, they are still expected to be on the rise well into 2018.
Charlotte, NC Housing Sales Are on Trend Nationally
For the coming year, Charlotte has been ranked seventh by the National Association of Realtors, making it one of the top 10 housing markets in the country as well as the strongest housing market in the state of North Carolina. Charlotte is expected to continue its rise in housing sales with an increase of close to 6 percent and just over 3 percent in housing prices.
Current Median Housing Sales Prices
Currently, the median sales price for a home in the Charlotte-area is $230,000 or $141 per square foot. This is a 5 percent increase from last year, from $219,000, and a 11 percent increase in price per square foot from last year (up from $127).
But as housing prices rise, the housing inventory continues to fall.
At the end of August, the number of housing units significantly dropped close to 19 percent, by over 2000 units, to a new low of just above 10,000. This left the Charlotte area with just a 2.6 months supply of housing for sale, so this makes Charlotte a quite competitive housing market, even after the school year begins.
Factors Affecting the Charlotte Housing Market
For Charlotte, there seems to be no stopping this average to above-average growth in the housing market. It is tracking with both national and regional trends. Factors such as unemployment, wages growth, cheap oil, a strong consumer confidence, job growth, and mortgage loan rates—which remain at just under 4 percent for a 30-year loan—all suggest that there will be a long-term increase in housing prices.
Investors have begun a love affair with Charlotte, which not only has helped with the housing recovery, but it is also causing higher housing prices. But when houses put up for sale, they do not last on the market long.
Generationally, this has millennial homeowners putting off upgrades to their homes while Baby Boomers are delaying downsizing their homes.
Affordability Limitations Are a Looming Issue in Charlotte’s Housing Market
With the median house price at over $200,000, new houses that are priced under $200,000 are increasingly harder to find. There has been a 23 percent decrease in new home inventory from a year ago. Now, only 17 percent of the new homes have a price starting under $200,000, compared to just over 20 percent from last year.
The balanced market for new homes seems to in the price range of $300,000 to $500,000, but above $500,000 is where Charlotte’s new home inventory has a bit of a glut with almost 10 months of inventory available, and a lot inventory of almost 49 months.
Charlotte’s Housing Inventory Is Low—But Is There Relief Ahead?
This continues to be a sellers’ market in Charlotte, but there may be some relief ahead for 2018. Because the housing inventory in Charlotte remains low, there are indicators that new homes will be built soon, such as an increase in demand for housing construction supplies and materials.
Another good sign for an increase in Charlotte’s home inventory is the percentage of single-family home construction permits which have increased over 13 percent within the past year.
Overall, new construction is on the rise, up 2.6 percent from long-term averages. New construction of housing has not been able to keep up with the demand. And although it’s more typical for new home construction to drive supply in real estate, short sales and foreclosures have recently made stronger impacts on real estate inventory.
Charlotte is poised to have more than 12,000 annual new home starts for 2017. So the new home construction inventory is building and growing. But the lack of affordable inventory is of some concern, as housing prices continue to rise and the demand for new housing has not yet been able to keep pace with the growing supply of new homes.