For those that are interested in buying a home, the new year brings news of a robust market where demand still outstrips supply in many neighborhoods. In fact, inventory is down 25.0 percent since last January, according to the Charlotte Regional Realtor Association. That’s almost 3,000 fewer Charlotte homes for sale. Still, January listings are up 4.7 percent year-over-year, which may suggest a long-awaited improvement in overall inventory.
Strong demand often exerts upward pressure on selling prices. For the three-month period ending February 1, Trulia calculates a median sales price of $193,500 for Charlotte real estate, a solid increase of 8.7 percent compared to the same period one year earlier.
Prices Rise for Both Smaller and Larger Homes
It is interesting to note that the prices of mid-sized (two and three-bedroom) homes rose marginally, while the median sales prices of one-bedroom and four-bedroom residences saw strong double-digit growth. The price of the larger four-bedroom homes rose to $300,000, a sizable 14.1 percent year-over-year increase.
At the same time, the median selling prices of one-bedroom Charlotte homes for sale soared 25.6 percent to $157,000, a full $17,000 higher than the median price of two-bedroom homes. The strong showing by one-bedroom residences may be attributed in a part to several factors. First, this category was hard-hit during the rise in foreclosures following the recession of 2008. Second, it is possible to attribute some of the price increases to new condominium construction. Third, another year of very low interest rates coupled with high demand created ideal conditions for sellers.
“Hot Market” Says Zillow
Meanwhile, Zillow continues to rate Charlotte real estate as “hot,” and appropriately so. Its “Home Value Index” stood at $178,200 on December 31, 2016, 8.0 percent higher than one year earlier. Zillow projects another 4.2 percent increase in home values in 2017. Zillow says the market health of Charlotte real estate continues to improve, to a 5.7 rating on a 10-point scale. Only about one in 1,000 homes have negative equity, consistent with nationwide statistics.
Mortgage Rates Trending Upward
After rising from about 4.2 percent late in 2016 to above 4.3 percent in January, the benchmark 30-year mortgage rate reported by bankrate.com fell to near 4.25 percent at the end of January 2017. Prospective buyers may have been lulled into a sense of complacency from 2015-2016, as rates remained steady in the high threes most of the time. This fairly quick jump in rates may bring even more buyers into the market, especially if they conclude that those historically low rates are gone for good. Additional buyers could squeeze the ongoing inventory shortage even more, increasing the occasional bidding wars that erupt over very desirable properties.
Given the confluence of increasing home prices and rising mortgage rates, prospective buyers may want to laser-focus on Charlotte homes for sale as soon as they hit the market. Strong competition among buyers is often evident. At the same time, prospective sellers may want to enter the market now in case higher mortgage rates eventually reduce demand going forward.