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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4.78 million existing homes will be sold, prices will remain stable and Atlanta will be the top market to watch in 2023 and beyond. All this according to forecasts by the National Association of Realtors. NARâ€s Lawrence Yun, the National Association of Realtors chief economist and senior vice president of research, unveiled the predictions at NARâ€s annual year-end Real Estate Forecast Summit last month.

Among the predictions were that home sales will decline by 6.8% compared to last year (5.13 million) and the median home price will reach $385,800 compared to 2022â€s $384,500. That is just an increase of 0.3%. 

“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said. “However, markets in California may be the exception, with San Francisco, for example, likely to register price drops of 10–15%.

After rising to 7% late last year, Yun expects the 30-year fixed mortgage rate to come down a bit to 5.7% as the Federal Reserve tries to get a control on inflation. Foreclosure rates will remain historically low in 2023, according to Yun. Yun predicts less than 1% of mortgages will default. 

Along with pricing predictions, NAR also identified the 10 markets to expect to outperform in 2023. Topping the list is the Atlanta, Georgia metro area. While Charlotte didnâ€t make the top 10, Raleigh, North Carolina comes in at number two. Rounding out the list is Dallas-Fort Worth-Arlington, Texas; Fayetteville-Springdale-Rogers, Arkansas-Missouri; Greenville-Anderson-Mauldin, South Carolina; Charleston-North Charleston, South Carolina; Huntsville, Alabama; Jacksonville, Florida; San Antonio-New Braunfels, Texas and Knoxville, Tennessee

“The demand for housing continues to outpace supply,” Yun said. “The economic conditions in place in the top 10 U.S. markets, all of which are located in the South, provide the support for home prices to climb by at least 5% in 2023.”

The Top 10 real estate markets to watch in 2023 was selected by NAR based on how they compared to the national average by using some of these economic indicators: housing affordability, number of renters who can afford to buy homes at the median price, job growth, population growth, active housing inventory and housing shortages.

How does Charlotteâ€s numbers compare?

Comparing the Charlotte-Concord-Gastonia region to number one Atlanta and number 10 Knoxville, based on the Housing Affordability Index, Charlotte received 89.6 points compared to 100.7 and 97.2 for Atlanta and Knoxville, respectively. 

23.3% of renters in the Charlotte region can afford to buy a median-priced home (at 7% mortgage rates), while 21.3% renters can afford to buy in Atlanta and 24.1% in Knoxville. And when taking a look at the numbers from NARâ€s Housing Shortage Tracker (Oct. 2022) meaning areas where the housing supply meets better housing demand for buyers to have more options,

 Atlanta ranks at 5.6; Knoxville at 4.3 and Charlotte 3.7. This measure computes how many new permits are issued for every new job.

The post NAR Predicts Stable Prices in 2023 appeared first on Charlotte Real Estate.

The Assessorâ€s office has spent two years determining the market value of all properties and county assessors will visit all properties to verify the accuracy of record for the property, compare similar property sales and consider improvements or changes that have been made to the property. 

Fowler said the assessorâ€s office has seen so far a 50% increase in property values countywide: 57% average increase in residential and 39% average increase in commercial. In Matthews, theyâ€ve noticed so far a 56% average increase for residential and 30% increase for commercial. 

The increase in values partially due to homes being built or flipped across the county which changes the neighborhood landscape each year. Ashley Park in West Charlotte for example has eight houses listed on Zillow.com. A newly built home is going for $700,000 while homes next door are worth less than half.

CEO of The Buildery, Hunter Moll told WCNC News that a hot market means good business for people in his industry. 

Higher property values, however lead to higher property taxes.

“Higher interest rates, higher values, thatâ€s higher payments and now you throw higher property taxes in there, itâ€s definitely going to squeeze affordability,” said Moll.

In a city council meeting last month, Charlotte Mayor Pro tempore Braxton Winston said that lower income families that bought their homes decades ago will be some of those most affected by the property revaluations.

“Itâ€s a time period a lot of our folks have certain fears over, you know, when they see the tax value of their home can change 60%,” Winston said.

Many residents are happy to see value added to their homes, but others fear theyâ€re being priced out. 

“Gentrification doesnâ€t occur because the assessor is raising values,” County Assessor Ken Joyner said. “All it does is bring it to the forefront where everybody sees what is happening in those neighborhoods.”  

Property owners will be notified of their new property values in March. If there is an error or if the property owner disagrees with the value, they can file a review by mail, in person or online. The form to request the review will be live once property values are sent out. It may take the county up to four weeks to respond. If owners disagree with the informal review, they can file a formal appeal to the Board of Equalization and Review. The deadline is May 25.

Once the new values are mailed out, the property tax bills based on the new numbers will be sent out in July. 

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The U.S. is seeing itâ€s second biggest home price correction of the post-WWII era with 55% of Americans saying they cannot afford to buy their home in todayâ€s market, according to the CATO Institute 2022 Housing Affordability National Survey.

Mitch Roschelle, Macro Trends Advisors founding partner, told Fox News he attributes the huge correction to Americanâ€s uneasiness regarding the markets and the economy. He said that the “shoe to drop” would be seeing a rise in unemployment that may cause a “leg down” in the real estate market.

“A couple of things are going to cause it to turn in the opposite direction, meaning home prices are going up. One is certainty. And when you don’t know if interest rates are going to go up or not. I think that is what is driving a lot of people away from buying because they just don’t know if rates are going to be cheaper in two months, and they’re just going to wait,” said Roschelle.

He went on to say, “And the other thing is uneasiness regarding the economy. And I think the shoe to drop there would be if we start seeing layoffs, and we start seeing unemployment starting to rise, I think that could be something that causes a leg down in the housing market in a big way.”

Roschelleâ€s comments follow a power shift currently happening in the U.S. housing market away from sellers. 

“Right now, I would say it’s a buyer’s market. I think the power has completely shifted from seller to buyer. Doesn’t mean you don’t see some bidding wars because again, I think statistically across the country, we’re at 3.3 months supply. So that’s still relatively low. So, if there’s a house that hits the market that’s perfect, and it ticks all the boxes for buyers and there are buyers out in the market, I think you could see sporadically bidding wars, but mostly, you know, it’s one or two people chasing that house. And we’re not seeing that. We’re not,” Roschelle said.

The average home price is expected to plummet from its peak at the height of the pandemic. According to Fortune.com the price of homes in the country in October 2022 were 38.1% above March 2020 levels. Roschelle believes that the average price will drop by at least 10% from its peak in 2022.

“My 10% to 15% [prediction] is from the peak in 2022, that is where we land in terms of average home prices being down 10 to 15%. Which if we’re talking about the stock market, it would certainly be seen as a correction, but not a bear market. The thing to remember is that from February 2020, home prices went up as much as 40% to where we are today,” Roschelle explained.

You can view the CATO Institute 2022 Housing Affordability National Survey here.

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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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A new report released this month by UNC Charlotteâ€s Childress Klein Center for Real Estate (CKCRE), the Charlotte housing market is showing signs of softening but itâ€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 donâ€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.

The post New Report: Affordable Homes in Charlotte “Increasingly Difficult to Find” appeared first on Charlotte Real Estate.

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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According to the latest RE/MAX National Housing Report, home sellers accepted offers below their listing prices on average based on data from August. This is further indication of the housing market rebalancing which is a source of relief for prospective homebuyers who have faced an incredibly competitive market. Out of the reportâ€s 51 metro areas, the average close-to-list price ratio was 99% in August. This means that homes sold for 1% less than the asking price. This is down from 101% in July and 104% in April. 

“Patient buyers were rewarded in August, as prices softened from July. Sales increased as buyers ‘bought the dip’ – which was not the trend many people were expecting. The activity modestly depleted inventory, although the number of homes for sale remains significantly higher than this time a year ago,” said Nick Bailey, RE/MAX President and CEO. “The late-summer burst of activity underscores the housing market’s resiliency. Despite the uptick in interest rates and concerns about the economy, demand remains strong. We’ll see what happens from here, but the August bump in sales was great news for the industry.”

The numbers however still show that it is more expensive to buy a home in Charlotte and has been for over a year. 

The median home sale price in Charlotte went up slightly from July to August per the report. This is up 1.3% from $395,000 to $400,000. The opposite happened with the median listing price. The price dropped 1.3% from July to August– $400,000 to $395,000.

Year over year, both prices have seen significant increases.

According to RE/MAX, the median listing price for the Charlotte metro area has jumped 12.9% in the past twelve months. In August 2021, The price was $349,000 compared to $395,000 in August 2022. The median sales price meanwhile has jumped 16.1% from $344,500 to $400,000 in the same time frame. 

Charlotte had 5,723 active listings in August which is up 77.4% from a year ago. According to the report, there were 3,226 active listings a year ago in August. 

Compared to the national average, Charlotteâ€s median home sale is less expensive. According to RE/MAX, the national average is $410,000. The report notes however that Charlotte is in the top five markets in the country for median sale price increases year-over-year.

The national trends for housing inventory in the report showed Charlotte isnâ€t an outlier, with an active inventory increase of 20% in the last 12 months but down from July by 1.8%.

Rising mortgage rates are expected to help cool the housing market country-wide. “The cumulative effect of this sharp rise in rates has cooled the housing market and caused the economy to start slowing, but hasnâ€t done much to lower inflation,” says Greg McBride, CFA, Bankrate chief financial analyst.

The last time the 30-year rate rose to over 6% was during the 2008 housing crash. The interest rate for a 30-year fixed mortgage is at 7.20% a .16 increase from just a week ago (7.04%).

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At a Federal Open Market Committee press conference in September, Federal Reserve chair Jerome Powell was asked to clarify what he meant when he said the U.S. housing market would “reset.” He answered: “Weâ€ve entered into a ‘difficult correction†that will see the U.S. housing market transition to a more “balanced” market for buyers and sellers alike.”

With that said, he still hasnâ€t addressed if home prices will fall. However at the University of Kentucky this week, Fed Governor Christopher Waller told the audience itâ€s possible we could see a drop in prices. 

“While this [housing] market correction could be fairly mild, I cannot dismiss the possibility of a much larger drop in demand and house prices before the market normalizes,” Waller said. 

This was the first time a Federal Reserve official has acknowledged that the housing correction could see housing prices fall at the national level. Waller also said the home price correction might end up being more of a small trickle down. 

“Despite the risk of a material correction in house prices, several factors help reduce my concern that such a correction would trigger a wave of mortgage defaults and potentially destabilize the financial system,” Waller said. “One is that because of relatively tight mortgage underwriting in the 2010s, the credit scores of mortgage borrowers today are generally higher than they were prior to that last housing correction. Also, the experience of the last correction taught us that most borrowers only default when they experience a negative shock to their incomes in addition to being underwater on their mortgage.”

The Fed acknowledging that home prices could fall comes after many markets are already starting to see the home prices fall. Among the 148 major regional housing markets tracked by the Burns Home Value Index, 98 of those markets have seen home values fall from their peaks this year. In 11 markets, they have dropped by more than 5%

“Prices have even fallen in some areas of the country, especially those that saw the largest increases over the previous two years. And many builders are reportedly cutting their list prices and offering larger incentives,” Waller told the audience.

Two markets are getting hit the hardest by the housing correction. High-cost tech hubs like the San Francisco market is down 7.8% from its 2022 peak while San Jose is down 9% and Seattle is down 6.2%. The other market group are bubbly markets where home prices have reached levels well beyond what local incomes can support historically like Austin which is down 6.2% along with Boise (down 5.3%) and Phoenix (down 4.4%). According to Moodyâ€s Analytics, The Austin and Phoenix market are overvalued by 61% and 57% respectively. Typically markets that are significantly overvalued are the most vulnerable to home price cuts during a housing correction. 

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