This year we saw a definite slowdown in the real estate market. Homes that had been selling in just days started to sit on the market for weeks and even months before going under contract. We stopped seeing buyers offering way over list price and offering concessions to win bidding wars. We also stopped seeing buyers waive important parts of contracts such as appraisal clauses and inspections to make their offers more attractive. We stopped seeing homes sell in one day with multiple offers. This is welcome news for buyers, though it has made some sellers feel like they missed out.
Prices however, have yet to come down which is what we typically expect with the “laws of supply and demand”. The monthly report from the Canopy Realtor Association shows that the average sales price of a home in the Charlotte area rose from $386,817 in 2021 to $444,600 in 2022. This 14.9% increase represents $57,783 more on average for the same home as one year previous.
The average home is now listed for sale for 41 days before going under contract. Last December it took 20 days on average. This increase of 105% is part of a trend that looks like it may continue for a while. This will help us recover inventory which rose 54% from 4,206 homes for sale last December to 6,479 this year.
The Charlotte region is now at 1.6 months of inventory up from 0.8 months last December. A balanced market between buyers and sellers is generally considered to be a 4-6 month supply. This means that if no additional homes were offered for sale it would take just 1.6 months for there to be no homes left for sale. When you have such a small supply, sellers generally have the upper hand in contract negotiations. With the supply increasing, buyers are starting to be more balanced in negotiating power.
Interest rates are part of the slowdown in the system. With rates climbing in response to a key indicator set by the Federal Reserve, interest rates rise in accordance to help combat inflation. The rate for a 30-year fixed interest has climbed up to almost 6.5%. In contrast the rate in January of 2022 was 3.22%. This means that a $500,000 mortgage at 6.5% would have a payment of $3,160 per month before taxes and fees. That same $500,000 mortgage at 3.22% last year would have cost $2,168 per month. That is an extra $992 per month or $11,904 per year or a staggering $375,120 over the 30 year life of the loan. This rise has kept some buyers away from owning, but we are starting to see the shock wear off and buyers are coming back.
The rise in interest rates could keep inventory low because people who bought when rates were historically low may be reluctant to list their homes unless they have to. This could keep sales volume lower in 2023, but Charlotte is still a popular place for people to relocate. This means that though our market may slow, it is still one of the most robust in the country.