If you have been hunting for a home within the past two years, you’re no stranger to the red-hot market conditions around the country and Charlotte has been no exception.
Closing on a home these days is tough, but how tough is it?
The combination of lower interest rates, shrinking inventory and the continued increase in construction costs has squeezed the housing supply. This has resulted in homes being bought up faster and for much more money.
There has also been a pent-up demand for many buyers after spending more than a year inside due to the pandemic while many millennials have entered the market to explore first-time home ownership.
“It’s truly a seller’s market, but the market right now has never been higher,” said James McDuffie, community lending manager for U.S. Bank’s Mid-Atlantic region. “I’ve been in the business for quite a number of years now. I’ve seen ups and downs, but right now is definitely a plateau that the market has hit that I don’t think we’ve ever seen before.”
The biggest hurdle for most buyers in the market is price. It’s hard to pay attention to any other factors when the price of homes in many areas have skyrocketed. The median home sale price in the Charlotte metro area hovered around $260,000 throughout 2019. Those prices rose steadily throughout 2020 and continued to rise into 2021. The median sales price has now surpassed $300,000. Most sellers are getting well above their asking price.
Another obstacle for potential homebuyers is the inventory. With fewer house on the market, there is bigger competition among those buyers to snatch what’s out there. Throughout the pandemic, supply has dwindled steadily. In the Charlotte metro area, there were less than 3,000 homes available for sale in June, a decrease of 45% from just a year ago and an almost 70% decrease from June 2019. It is possible that inventory will bounce back however when considering the recent low of 2,141 available homes in March of this year.
With fewer houses available, the time spent on the market has also shrunk. In June, the average time it took a home to sell was just 12 days. That is three times as fast compared to June of last year.
A good way to measure an area’s housing market is to consider an area’s month’s supply of inventory. It’s to measure how fast available homes would sell on the market at the current pace. In the Charlotte area, the number of available homes dipped below one month’s supply for the first time in November of last year. In June, the supply was just 18 days.
A market is considered balanced when there is around six months’ worth of supply.