Twenty twenty-one is over, and the Charlotte Region is once again experiencing low inventory, high demand, and rising prices. This trend has been in place for a few years now, and doesn’t show any sign of easing in the near future.
These end of year numbers have been published by the Canopy Realtor Association based on data from the Canopy Multiple Listing Service. The data includes Alexander, Anson, Cabarrus, Catawba, Cleveland, Gaston, Iredell, Lincoln, Mecklenburg, Rowan, Stanly and Union counties in North Carolina. South Carolina counties of Chester, Chesterfield, Lancaster and York counties are also included.
When you look at yearly trends for the Charlotte Region, you see that inventory has been declining since the first online published reporting in 2014. In December of 2014, there were 12,582 homes listed for sale or a 4.1 month supply. In December of 2021, there were only 3,041 or a 0.6 month supply. This decline in inventory has many causes, from the pandemic, to slowdowns in the supply chain, to slow building starts. The result is a persistent seller’s market where sellers have more power than buyers in real estate transactions. A balanced market between buyers and sellers is typically considered to be a 4-6 month supply so 2014 is the last time we saw a balanced market.
Demand for homes is high right now as well. Charlotte is one of the fastest growing cities in America with the population growing around 1.47% annually, representing over 13,000 new residents each year. The population growth means more people competing for every home listed.
We are seeing this competition in the form of homes selling above list price and multiple offers on many listings. In 2014, the average home sold for 94.1% of list price. In 2021, homes on average sold for 100.8% of list price. This means that some sold for less than list price, but in high demand areas, homes sold far above list price with bidding wars pushing prices higher.
List prices have soared over the years as well. In 2014 the median home price was $180,000. In 2021, that median home now costs $325,180. A staggering increase of $145,180 in just 7 years. Wages have not increased at the same pace, so younger buyers are having a hard time entering the market.
When you look at the December numbers for Charlotte, you see that new listings are almost on par with last year, but we are expecting a strong spring market with many people who have held off from selling during the pandemic to enter the market this year. While we don’t expect a flood of homes to depress home prices, we expect to see fewer bidding wars and fewer properties selling above list price as a result.
Many buyers will be keen to get locked into a home early in the year due to rumors of rate hikes from the Federal Reserve. When those key rates are raised, typically mortgage interest rates go up as well making borrowing more expensive. This can be a tool used by the government to help stop inflation, but the end result is making loans more expensive and refinancing less attractive.