A new report released this month by UNC Charlotte’s Childress Klein Center for Real Estate (CKCRE), the Charlotte housing market is showing signs of softening but it’s becoming difficult to find homes that are priced affordably.
The “2022 State of Housing in Charlotte” report, says home buyers and renters in the eight-county region are entering a second year of high prices and a lack of affordable housing. According to the report, only 25% of the houses are sold for under $300,000 while 3.8% of the houses sold for half that price.
“In particular, the prices at the lower end of the distribution have increased much faster than at the higher end, causing significant concerns for housing affordability in the region,” said Yongqiang Chu, CKCRE director and the primary author of the housing report.
The dramatic rise in interest rates in recent months has made housing affordability much worse. The 30-year fixed mortgage interest rates rose from 2.96% in January 2021 to almost 7% in September 2022.
Middle-income housing affordability is becoming a challenge for the region. For a median-priced home, the required income has increased from $89,816 in 2020 to $136,750 in 2022. This is an increase of 73%. The median home price in Charlotte increased from $237,500 in January 2020 to $420,000 in September 2022. That is a 54% increase in 32 months.
The combination of rising interest rates and house prices have made housing unaffordable in the Charlotte region.
“At some point this will become a serious concern for people who want to do business here,” Chu said. He went on to say that there needs to be an increase in supply and offered two solutions to the problem. First, make development easier by regulations and restrictions and then build on green space.
“We should be willing to make those compromises, before Charlotte becomes really unaffordable and people don’t want to live here anymore,” Chu said.
While the market does continue to be tight, there are some signs of softening since this past summer. The median number of days a house is on the market has increased from three days to nine days in the months of May 2022 to September 2022. Prior to the pandemic, the median days on the market was about 20 days.
The report also found that over the last few years, the average rent has increased by 27% per unit or $320, a swift acceleration in rental prices.
You can click here to see the full report from CKCRE.
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