As we slide closer and closer to the end of a busy year (seriously, how in the world are the holidays just around the corner?), let’s take a look at where the Charlotte housing market has been and where we are headed…
What’s Happened So Far
We started the year off with a bang as Zillow named Charlotte the hottest real estate market in the country. Multiple factors weighed into Zillow’s criteria, but Charlotte took the crown largely due to the continued migration of buyers relocating from the Northeast and West Coast seeking a better lifestyle and more affordable home prices. While the rise of housing prices has been mind-blowing to Charlotteans, we are constantly reminded that our beloved city is just that – a city. We have seen rapid growth across the board and our home prices are often being compared to more expensive markets.
The beginning of the year also saw interest rates hovering around the 6% mark as early as January. Virtually every news outlet predicted that the housing market was coming to a screaming halt with higher rates, but that didn’t happen in Charlotte. In fact, our clients gave us zero indication that things were going to slow down. Even though low inventory persisted, we still experienced a spring housing frenzy. Just as we have seen in the previous few springs, 2023 was filled with multiple offers and bidding wars, continued price growth, and not enough housing inventory to meet demand. We negotiated rent backs, tackled appraisal issues, and spent a lot of time (and we mean A LOT of time!) on the hunt for housing for our clients.
What’s Going On Now?
After navigating the spring frenzy, we settled into the slightly slower and seasonal stability that the summer and the “back to school” market often see, which brings us to now. We are firmly in fall and experiencing the uptick in activity that comes in September and October. Fall market is not a time where we generally see significant price growth, but we expect the market to remain fairly stable and hold the price values from spring.
Currently, the challenges are much the same. We’ve had clients in multiple offer situations over the last few weeks and our buyers are struggling with the lack of inventory coupled with the higher interest rates.
There are three major market factors at play:
- Homeowners’ unwillingness to sell. Let’s be honest, who wants to give up their 3% interest rate? Not many! A big part of the housing market involves trading homes – upsizing for more space, downsizing for less space, etc. That has dramatically slowed. Around 50% of the mortgage market right now is comprised of first-time homebuyers. A figure like that shows just how many existing homeowners are not exploring moving unless they truly need to sell. And, with inventory already an issue, this holdback from sellers makes the market even tougher for buyers.
- Lending programs. While affordability is a big topic in housing, owning a home is still the American dream. Buyers want to find a way to obtain a home in spite of the interest rates. To make that happen, there is a shift in lending happening now. Buyers are exploring five, seven, and even ten-year ARMs (Adjustable Rate Mortgages) and assessing what down payment amount works best.
- Slowing price growth. We hate to burst your bubble, but don’t expect more double-digit price growth in Charlotte this fall. In the last couple of years, some of the in-town neighborhoods where we work saw 16% price growth in a single year! That price has subsided to around 5% this fall and could shrink to about 2% next year. But, hey, growth is still growth!
What’s Ahead?
2024 has a lot of variables – from inflation to elections – that could swing the U.S real estate market in multiple directions. While we don’t have a crystal ball, we do feel confident that Charlotte’s housing market will remain strong compared to most of the country. Strong, in this case, means that our prices will hold. Sellers will continue to see the market lean in their favor and buyers will continue to be challenged by low inventory and higher interest rates.
Charlotte remains one of the fastest growing cities with over 100 people moving here daily. We haven’t had the supply of housing inventory to meet the demand of the last few years and won’t for the foreseeable future… especially with more and more homeowners delaying a move because they don’t want to give up their interest rate. It’s this basic principle of supply and demand that will push Charlotte’s price growth again in the new year even though the rate of growth is being slowed by higher interest rates. Our hope is that the Fed stops raising the rates to allow for a soft 2024 landing. It’s so important to have an active and healthy spring season next year, especially given that elections are known to cause uncertainty in the housing market during the latter part of the year.
While 2024 may seem like a bit of a replay of 2023 in Charlotte, our team is ready for what’s coming. We have the experience and knowledge to help advise you on all your housing decisions now and in the future.
Let us know how we can help. We’d love to hear from you.
— Genevieve
Cover Photo: Alexander South NC
