The continuing rise of homes in the countryâ€s top metropolitan areas are forcing homebuyers to look at cheaper options. Midsize cities in the South and Midwest offer the biggest bang for your buck. 

Cities like Chattanooga, Tennessee; Columbia, South Carolina; El Paso, Texas and Louisville, Kentucky could soon be some of the hottest housing markets as home prices there are expected to climb. This according to Realtor.comâ€s 2023 housing forecast and economic overview. 

The real estate listing firm also expects to see prices rise in places like Toledo, Ohio and Buffalo, New York, as buyers continue to be priced out of the larger cities. Those who can work remotely are looking to leave those larger cities for more affordable places to live. 

In an interview with CBS†Money Watch, Realtor.com Chief Economist Danielle Hale said, “If you have a remote work job that you can take with you, then it can make sense to move there because you’re going to see your real estate dollar stretch a lot further.” 

According to Realtor.com, Augusta, Georgia is expected to be the hottest housing market in the country. The median home price as of November 2022 is $319,000 and is expected to grow by 5.7% in 2023. Rounding out the top 10 are Buffalo, New York ($240,000, 6%); Chattanooga, Tennessee ($397,000, 8.2%); Columbia, South Carolina ($300,000, 3.6%); El Paso, Texas ($291,000, 5.4%); Grand Rapids, Michigan ($358,000, 10%); Hartford, Connecticut ($372,000, 8.5%); Louisville, Kentucky ($290,000, 8.4%); Toledo, Ohio ($161,000, 6.7%) and Worcester, Massachusetts ($447,000, 10.6%).

According to Zillow, the Midwest in particular is expected to attract more first-time home buyers.

“Having available houses to choose from is another key component of a healthy market, and the Midwest stands out,” Zillow noted in their 2023 predictions released last month. “Inventory isn’t in a massive hole compared to pre-pandemic times and declines in new listings are smaller than the national average– encouraged by the more consistent demand from buyers.”

2022, a year that saw increasing prices in homes and skyrocketing mortgage rates, is over. Cities that were the hottest like Austin, Texas; Boise, Idaho and Phoenix, Arizona have started to cool. 

Itâ€s not unusual for home prices to fall near the end of the year, but prices in the top 100 markets will climb again in 2023, according to Hale.

Charlotte metro area ranked 50th in Realtor.comâ€s 2023 Housing Forecast with a 5.5% year-over-year price change. Homes in the Queen City have a median listing price of $403,852 and spend an average of 55 days on the market, according to Realtor.com.

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For the tenth consecutive month, existing-home sales have dropped according to the National Association of Realtors. The data for Existing-Home Sales for November was released at the end of December. Decemberâ€s report will be released at the end of January.

All four regions in the U.S. saw month-over-month decreases.  The four regions also recorded year-over-year declines in transactions. Single family homes, townhomes, condominiums and co-ops saw a 7.7% sip in completed homes sales from October to a seasonally adjusted annual rate of 4.09 million in November. Year-over-year sales dropped by 35.4%. Compared to November of 2021, that is a decrease of 6.33 million.

“In essence, the residential real estate market was frozen in November, resembling the sales activity seen during the COVID-19 economic lockdowns in 2020,” said NAR Chief Economist Lawrence Yun. “The principal factor was the rapid increase in mortgage rates, which hurt housing affordability and reduced incentives for homeowners to list their homes. Plus, available housing inventory remains near historic lows.”

The total inventory of houses registered at the end of November was 1.14 million units. This is down 6.6% from the month prior but up 2.7% from a year ago (1.11 million). There is a 3.3-month supply of unsold inventory at the current pace of sales. October saw an identical inventory however itâ€s up from the 2.1 months of inventory from November 2021.

Yun says affordability in 2023 will continue to be a challenge, but there will be less competition for homebuyers as more properties come onto the market. 

“What happened in 2020, 2021, multiple offers, situations like that will not repeat,” Yun said.

In the Charlotte area, there is still a high demand for housing but not enough of it.

“Housing stock is low, basically no matter what, weâ€re not going to change the housing stock shortage for several years,” John Connaughton, professor of financial economics at UNC Charlotte, said. “So, that will keep pressure on prices of single-family homes.”

Realtor.com anticipates a slight decline in homes sales this year by 0.3% however home prices are forecast to increase 5.5%

Meanwhile, the median existing-home price for all housing types across the nation in November was $370,700. This is an increase of 3.5% from November of last year and marks 129 straight months of year-over-year increases. Itâ€s a record for the longest-running streak.

The 30-year fixed-rate mortgage, according to Freddie Mac, averaged 6.31% as of mid-December. That’s down from 6.33% the week prior, however it is up from 3.12% one year ago.

“The market may be thawing since mortgage rates have fallen for five straight weeks,” Yun added. “The average monthly mortgage payment is now almost $200 less than it was several weeks ago when interest rates reached their peak for this year.”

Yun believes this year won’t be a buyer’s or seller’s market as it will be more balanced. 

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For the first time since July 2020, the index showed the housing market entered neutral territory. All but the Fayetteville, North Carolina market have moved towards favoring buyers over the last year. Last month, 51 markets were a sellers†market while 39 were neutral and 10 favorted buyers.

The shift is most notably due to declining home sales. Only 127,000 homes were sold in 100 of the largest markets in October. This is down from 262,000 a year earlier, a 51.4% decline. The median home price was $388,000 compared to $360,000 last year.

“The housing market has borne the brunt of the Fedâ€s attempt to control inflation,” said Knock co-founder and CEO Sean Black. “At the same time, it has continued to demonstrate its resiliency. Despite moving into neutral territory, sellers still hold the advantage in a majority of the nationâ€s largest metros, and many will continue to favor sellers well into 2023. With interest rates stabilizing in recent weeks and less competition, buyers may begin to re-enter the market over the next few months, which could result in a return to a more normal spring home-buying market.”

In all of the top 10 buyers†markets, the monthâ€s supply surpassed two months except for in Nashville. Las Vegas had a supply of 4.2 months. This is the largest of the 100 housing markets considered in the index. 

Phoenix, the nationâ€s top buyers†market, saw 34 days for a typical listing to sell in October. It was normal for a home to stay on the market for three weeks or more in the top 10 buyers†markets. Columbus, Ohio led the nation with 44 days on the market. 

Over the next 12 months, experts are expecting the housing market to balance. By October 2023, 26 markets are forecast to be buyers†markets compared to 10 in October 2022. 38 markets are expected to remain a sellers†market while 36 will be neutral. 

The national median sales price is predicted to peak at $416,000 in June 2023 before falling to $410,000 in October 2023. This would amount to a 5.6% increase over the past 12 months and follows a typical home-selling season. 

Inventory is expected to grow in all but a few markets. Last month, the supply was 1.9 months and is expected to increase to 3.4 months at this time next year. A balanced market is considered somewhere between four to six months of supply. This will mark the first time the market has approached a supply balance since April of 2019 when the supply crested at 3.7 months. 

You can view the full report here.

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The index analyzes key housing market metrics to measure whether the countryâ€s 100 largest markets favor buyers or sellers. Last month, the index found that home prices in 98 of 100 were below their peak price from last spring. The markets in Providence, Rhode Island and Salisbury, Maryland were the only markets where home prices have remained at their highest since being set earlier this year. 

In 42 of the major housing markets, home prices are expected to fall further than their 2022 highs by this time next year. Of those 42 markets, 15 are in the South, 15 are in the West which is home to some of the most expensive markets in the country. The remaining 12 are in the Midwest and the Northeast. 

Of the 25 markets with the largest projected median sale price decline, 15 peaked well above the national high of $410,000. In San Francisco and San Jose California, the median sale price peaked at $1.3 million and $1.6 million in April 2022, respectively. 

Through the first nine months of 2022, just over 1.8 million homes have traded hands across the largest 100 markets in the nation. This was less than during the same time frame in each of the past four years. While still low, the supply of homes for sale has grown at a steady pace throughout this year as median days on the market increased to 20 in September. This is up by one full week from a year ago.

The average sale-to-list ratio fell to 99% in September. This measures how close homes are selling for their asking price and itâ€s the lowest level since February 2021 and also down from 100.3% in May when the prices for homes peaked nationwide. 

The co-founder and CEO of Knock, Sean Black, said that based on the findings the shift to a more balanced market is still in its early stages. “We expect that this much-needed reset will persist through much of 2023, and although prices will again begin to rebound they likely wonâ€t return to their peaks for the foreseeable future,” he said.

Black went on to say, “While many drivers of the housing market like demographics and record low unemployment have not changed, the combination of higher rates and home prices have put affordability at the worst levels in 30 years with entry-level monthly payments set to be 34% higher in 2022 versus 2021. The good news is that as prices soften and rates stabilize once the Fed is done with its aggressive rate hike campaign—hopefully, after its meeting in November—buyers will be ready to re-enter the market and sellers will retain the majority of the equity gains theyâ€ve seen in the last two years.”

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Some homebuyers are backing out of deals as the housing market slows, allowing them more room to negotiate while others are being forced to back out of contracts due to higher mortgage rates that are making the homes no longer affordable. 

“The slowdown in housing-market competition is giving homebuyers room to negotiate, which is one reason more of them are backing out of deals,” said Redfin Deputy Chief Economist Taylor Marr. “Buyers are increasingly keeping rather than waiving inspection and appraisal contingencies. That gives them the flexibility to call the deal off if issues arise during the homebuying process.”

Marr went on to say: “Rising mortgage rates are also forcing some buyers to cancel home purchases. If rates were at 5% when you made an offer, but reached 5.8% by the time the deal was set to close, you may no longer be able to afford that home or you may no longer qualify for a loan.”

The housing market has cooled recently as the Federal Reserve boosted interest rates in an effort to thwart inflation. This has allowed potential homebuyers more freedom to seek concessions from sellers. At the same time, the higher rates also make the home less affordable. Buyers did catch a small break last month when the average 30-year fixed mortgage rate fell to 5.3%. It was the largest one-week drop since 2008.

“When mortgage rates shot up to almost 6% in June, we saw a number of buyers back out of deals,” said Lindsay Garcia, a Redfin agent in Miami. “Some had to bow out because they could no longer get a loan due to the jump in rates. Buyers are also more skittish than usual due to economic uncertainty.”

The metro area with the most pending sales to fall out of contract was Las Vegas, NV at 27.2%. Newark, NJ saw the lowest pending sales to fall out of contract– 2.6%.. In order to be included, the metro area must have had at least 1,000 pending home sales in June 2022. 102 metro areas made the list. Charlotte came in at number 76 on the list with 11.6% of pending sales falling through.

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While several studies have been done with varying results due to different contributing factors of income and cost of living data, The study by Rocket Mortgage analyzed data measuring the 2021 movement of single-family house prices, the change in home prices in Q4 of last year from Q3;  the cost of living index which is the amount of money needed for a comfortable lifestyle, with “100” marked as the U.S. national average; the house price index per state which is single-family home transactions with conventional and conforming mortgages in Q4 of 2021; and lastly, the median household income in all 50 states.

Topping the list as the cheapest state to buy a home in 2022 is Tennessee. The cost of living index is at 89 with a median household income of $68,600. Lack of income tax and low property taxes also make it a favorable state to live.

The second cheapest state to buy a home is Illinois. The cost of living is lower than the national average with an index of 94.3 and median household income of $85,000. Rounding out the rest of the top five is Oklahoma, Ohio and Texas.

While most would consider states like New York, California or Hawaii to be the most expensive states to buy a house, only Hawaii even made it in the top 5 of most expensive. Topping the list as the most expensive state to buy a home is Oregon. The rest of the top five are New Mexico, Alaska, Utah and then Hawaii in fifth.

When it comes to buying in this hot market, there are some money-saving moves besides moving to a cheaper state. Mortgage companies suggest favoring a better neighborhood over the house itself when possible. The property will hold more value over time when things slow down. A smaller house in a choice neighborhood could mean long term savings because it will usually come with less taxes, utility costs and upkeep. Buying a cheap house that you can fix up over time could also raise the value of the home.

North Carolina just missed the top 10 of cheapest states to buy a home coming in at number 11.

To see the full list of the report click here

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“Itâ€s been incredibly frustrating,” said Erin Damato, in an interview with Bloomberg. “House prices have gone up about $100,000 since weâ€ve been looking.”

Damato and her husband have been seriously hunting for a home in New Jersey since last fall to house their growing family. They are finding that even $1 million isnâ€t enough to meet their needs.

In January, the Damato family big $828,000 for a house that was listed at $750,000 in West Orange which is about 20 miles west of New York City. After placing that big, they learned from their real estate agent that of the more than 20 offers received, theirs wasnâ€t even in the top five.

Itâ€s par for the course to lose out in a bidding war in the red-hot U.S. housing market. Millennials who are starting families, remote workers with location flexibilities and the concerns over rising mortgage rates are only adding fuel to the fire. About 70% of offers were in bidding wards up about 60% from the year before according to Redfin. It made January the most competitive month ever.

The average 30-year fixed mortgage rate was 3.92% in mid February. This is up from a record low 2.65% in early 2021. A $500,000 loan with a 30-year mortgage has a monthly payment of about $2,364. Last yearâ€s low saw those payments at $2,014. Investors expect the Federal Reserve to hike interest rates several times this year to respond to soaring inflation though it doesnâ€t seem to be deterring buyers.

“Rising mortgage rates are intensifying an already-severe shortage of homes for sale because buyers are feeling more urgency to buy while homeowners are feeling less urgency to sell — an imbalance thatâ€s fueling an increase in competition,” said Redfin Chief Economist Daryl Fairweather.

A combination of luck and resourcefulness are allowing some buyers to snatch up a house that was subject to bidding wars. In an interview with Bloomberg, Gianna Gordon said she big $235,000 for a home listed at $215,000 in Atlanta. According to Gordon, the offer was initially rejected in favor of an offer from an investor however when the offer fell through, Gordon was asked if she was still interested.

“You have to do a little bit extra to get the attention of the owner,” she said. Gordon offered to pay $800 in relocation expenses for the seller. She credits that creativity for sealing the deal. According to Redfin, many successful bidders are seeing similar results. Several homebuyers are shortening or waiving the inspection contingency and offering to increase their down payment if the appraisal comes in low.

Spokane, Washington; Sacramento, California; and Seattle have the highest bidding war rates of the 40 metro areas surveyed by Redfin. 83.3% of offers in Spokane saw a bidding war in January while Sacramento and Seattle saw 80.4% and 79.7% respectively.

Raleigh, North Carolina ranked ninth with 75% of offers receiving competition. Charlotte came in at number 17 with 72.5% of competing bids up from 66.7% in January 2021.

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Unfortunately for potential homebuyers, those agreements have shifted. The spring market is predicted to be red-hot but whatâ€s more is that there is a chance it could be the hottest spring homebuying season on record as bidding wars are picking up again.

U.S. home prices soared to an unsustainable 18.8% in 2021. How could the market get any hotter?

In 2020 when the covid-19 pandemic began, many real estate groups predicted the housing market would enter a slump, but the opposite happened. By the summer, the market was booming as first-time millennial buyers rushed in to buy, encouraged by record low mortgage rates and the shift to working from home. The rise in demand from these potential buyers saw inventory shrink. By the following year, inventory dropped 32% from the pre-pandemic levels. Buyers exceeded the number of homes for sale causing bidding wars to begin.

Many industry experts were looking forward to inventory leveling out. It was expected that elderly homeowners who were cautious during the pandemic along with those who were facing financial struggles would list their homes.

The number of homes began to shrink again in November of last year after seeing a brief rise in the fall. Inventory levels in January 2021 were 42% below January 2020 levels. Zillow tracked 327 housing markets and saw 254 have inventory levels down by more than 30%.

Zillow forecasted the yearly rate of home price growth would decrease by 11% by the end of this year. However, in January Zillow revised its prediction and expects the year-over-year rate to peak at 21.6% in May and end the year at 17.3%.

Zillowâ€s prediction is the highest by several points. Other industry leaders like Fannie Mae and Freedie Mac predicted a 7.9% and 7% jump respectively. Meanwhile Realtor.com predicts 2.9%. The Mortgage Bankers Associationâ€s forecast model projects a 2.5% decline by the end of 2022 in the median price of existing homes. Many of the predictions can be taken for what it is, just a prediction as none of these organizations predicted the historic rise in home prices over the past couple of years.

The biggest reason for the less conservative outlook is due to the lower-than-expected inventory levels and a rise in mortgage rates. At the end of 2021, the average 30-year fixed-rate mortgage was 3.11%. Last week saw the 30-year rate up nearly 1% at 3.92%.

The rise in mortgage rates could slow the housing market a bit since it would like price many buyers out of the market. But itâ€s likely the impact will have the opposite effect. Many buyers will rush into the market worried they will miss out on lower rates.

The post What to expect in 2022’s spring market appeared first on Charlotte Real Estate.

“The 2022 housing market is skewed heavily in favor of sellers — and itâ€s likely to stay that way for most of the year,” said Nik Shah, CEO at Home.LLC. “There just arenâ€t enough homes for sale in the housing market, and this number is getting lower with every passing day. Inventory of existing homes for sale dropped almost 20% in December. As long as this trend continues, home prices will keep going up, while affordability will continue to worsen.”

The December numbers cited by Shah represents the lowest inventory on record according to the National Association of Realtors. Prices skyrocketed nearly 19% last year and while they may not continue to rise at that pace in 2022, prices continue to rise.

As prices soar to record highs, the largest living adult generation is reaching peak home-buying age. No matter the economy, millennial buyers will impact the housing market for the entire decade to come.

“Millennials are entering their early thirties — the prime first-time homebuyer age — in large numbers,” Shah said. “They will continue to exert upward pressure on home prices well into the mid-2020s.”

Millennial buyer demand along with low inventory are keeping prices high but so is a decade of slow new construction. However it seems those tides can partially turn.

“There are close to a million housing units that are currently authorized for construction or under construction,” Shah said. “They have been delayed due to persistent supply-chain issues. When these homes are completed in the second half of 2022, thereâ€s an expectation that they will add to inventory and skew the market in favor of buyers.”

He cautions that itâ€s an optimistic view of the data. “Thatâ€s because many of these homes have already been sold,” he said. “For example, just 25% of new homes sold in December 2021 were completed homes. 46% were still under construction, while work had yet to start on 29% of homes.”

While it may not be the perfect time to buy, itâ€s still as good a time as any. Prices are rising and they will continue to rise but so does inflation while home values appreciate. Even if the market cools soon, itâ€s unlikely that prices are going to drop. Itâ€s more likely that they will just rise by less. Right now is cheaper than later. Itâ€s a sellerâ€s market and that only results in increased prices, thus reducing a potential home-buyers ability to purchase in the future. If you can afford to purchase now, then now is the right time to buy.

The post Is now the right time to be a buyer? appeared first on Charlotte Real Estate.

Here are some things to know if youâ€re looking to buy a home in Charlotte and where to go if youâ€re looking for a deal.

According to realtor.com, Charlotteâ€s real estate market is a sellerâ€s market. This means there are more people looking to buy than there are homes available and the prices of those available homes continue to trend up. The median price of a sold home is $355,000 while the median listing price for those homes are $367,000 according to Realtorâ€s data. That amount breaks down to about $206 per square foot. On average, the homes in the Charlotte area sell after 43 days on the market.

Another real estate site, Zillow, has a slightly lower figure. According to their site, the typical home value of homes in Charlotte are $349,176. This marks a 25.5% increase over the past year on Zillowâ€s “Home Value Index.” By comparison, homes in Raleigh are selling for $402,000, $215,000 in Greensboro while homes in Wilington are selling for $326,000.

For your average potential buyer, these prices may make it difficult to find a home within budget. According to UNC Charlotteâ€s Childress Klein Center for Real Estateâ€s State of Housing report, only 4.4% of houses in the metro area that were sold went for $150,000 or less while 35% of the houses sold for less than $300,000.

Where are buyers to look for more affordable housing? There tends to be more deals available if youâ€re willing to get further away from the heart of the city. Belmont, Gastonia, Mint Hill or even Hickory could be more affordable options.

The most recent data available from December of last year has the average sale price in Uptown Charlotte at $421,433. That is up 33.4% from December the year prior according to the Charlotte Observer. In this same time period, the average price in Gastonia was under $300,000 at $284,351 while Kannapolis was at $268, 193.

Of Charlottes 165 neighborhoods, about 1700 homes are currently for sale according to realtor.com. The most expensive neighborhood, Myers Park has a median listed home price of $1.1M. Elizabeth came in at second with a median list price of $665,000. The most affordable neighborhood, West Sugar Creek, has a median listed home price of $290,000.

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