This year’s market is off to a strong start, but inventory woes still plague the region and that is driving prices up. While this is great news for sellers, buyers are feeling the pinch of the price hike and it is keeping many first time buyers in the rental market for now.
Analysts are predicting a strong spring as people who held off listing their homes last year, put them on the market this year. This would ease some of the lack of inventory driving the most intense seller’s markets we have seen. Currently in the Charlotte region, there is just a 0.7 month supply of homes on the market or 3,370 homes. A balanced market between buyers and sellers is typically considered to be 4-6 months of supply. Lack of inventory drives prices higher and we are seeing multiple offers on many listings as well.
Mortgage rates remain low, below 3% for some well-qualified buyers, and mortgage applications are up year over year. Those rates are tied to the 10-year Treasury Bond yields which are beginning to rise. If mortgage rates follow, it can discourage buyers even if more listings do become available.
Lumber prices have risen as well as demand has grown. This includes for DIY projects, new construction, and home improvements driving costs higher. These higher costs are passed along to buyers in the form of higher purchase prices. This can edge first time buyers out of the market, especially if builders can’t make enough profit on entry level homes.
Carrying costs for homes are becoming more expensive as well. Real estate taxes have been reassessed for many people and with rising prices they are seeing an increase in their tax bills as well. This rise in costs can mean the difference in being able to afford a home and not in some cases.
So far, buyers don’t seem daunted. It is a trend for people to look at home listings and search for their dream homes. Searching for homes online has become so much of a national pastime that Saturday Night Live parodied it. It means that buyers are ready when the home they want gets listed, but that doesn’t guarantee they will get it. With so few listings and so many buyers, multiple offer situations are becoming more common. Some homes even sell above list price causing buyers to bring cash to the closing table to cover the gap between sale price and appraisal price depending on the structure of their loan.
Homes are selling more quickly right now as well. In 2020, it would take on average 46 days from list to contract on a new listing. Currently, it is taking only 26 days. This includes new construction homes selling quicker than ever and some builders have long waitlists for homes. Many homes are selling before they even hit the MLS system through word of mouth or well timed open houses.
The median home price in the Charlotte region was up 12.9% to $285,000 from last year’s $252,500. The average home price rose 13.6% from $299,303 to $339,984. These rises in price can make it hard to resist listing your home, but many sellers are waiting until there is more inventory to choose from before they list their own home.