Emotions and Home Prices
At Carter Group Realtors, we acknowledge the mixed feelings that changing home prices stir for potential buyers and sellers. The fluctuations often encompass financial aspirations, uncertainties, and a certain level of anxiety, impacting decisions regarding real estate transactions.
If concerns about a potential drop in home prices have held you back from making a move, it's essential to recognize the current trend—home prices are not heading south. In fact, they continue to climb, and the scenario is no different in our dynamic city of Charlotte, NC.
Understanding National Market Dynamics
National data from various sources consistently reveals the upward trajectory of home prices throughout this year. Yet, it's crucial to note the local picture, especially in Charlotte, where specific trends illuminate why prices are likely to keep rising.
In the first half of 2022, there was a substantial surge in home prices (illustrated by the green bars on the left side of the graphs). However, these drastic increases were deemed unsustainable, leading to a corrective phase in the latter half of the year, where prices slightly dipped (shown in red). Despite the media's focus on these declines, they were brief and shallow.
Now, in 2023, prices are once again ascending, but this time at a more stable pace (depicted by the green bars on the right side of the graphs). This normalization after the high price surges and subsequent corrections in 2022 signifies a positive outlook for the housing market.
Orphe Divounguy, Senior Economist at Zillow, aptly summarizes the recent shifts in home prices: “The U.S. housing market has surged over the past year after a temporary hiccup from July 2022-January 2023. . . . That downturn has proven to be short-lived as housing has rebounded impressively so far in 2023. . .”
2024 House Price Predictions
All the major predictors are indicating home price growth in 2024.
Insights into Charlotte's Market Dynamics
One of the biggest indicators of a looming housing crash is a significant stockpiling of housing inventory. That definitely has not occurred in the Charlotte housing market. Charlotte, North Carolina, is one of the hottest spots in the United States. All predictions including inventory, days-on-market and sales-to-list ratios indicate 2024 will see positive home price growth.
Examining the numbers for the greater Charlotte area, only a handful of housing markets witnessed an increase in available inventory year-over-year. In the Charlotte metro area as a whole, available inventory dropped by 16.2%. Charlotte proper saw a steeper decline of 22.1%. In September 2023, the number of available homes decreased to 7,305 from 8,720 in September 2022 in the metro area. In Charlotte proper, it dropped to 1,929 from 2,476 during the same period. We currently have 1.8 months (54 days 🤯) supply of homes in inventory. This is the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. This means the inventory of homes is still VERY LOW and we have a lot of catching up to do. The demand for homes with a great go-to-market strategy is still high and as rates go down, the demand is expected to go up further.
In Charlotte, although homes for sale are lingering longer in the broader metro area compared to last year, within the city limits, houses are spending fewer days on the market—a positive indicator of the localized market's strength. Overall the average days on market until sale: 36 days, up 89.5% from 19 days last year. Buyers are being pickier (rightfully so) with higher interest rates to make sure the home is the right fit for them.
Another important thing to look at when trying to anticipate home price growth is the sales-to-list ratios of housing markets in a certain area. For example, when you have a sale-to-list price ratio of 99%, that means a home was sold for 1% under its list price. In the Charlotte housing market, sales-to-list ratios have been very stable over the last three and even five years. Currently on average, 97.7% of the original list price is being received. Sellers, this means now more than ever, a solid pricing and marketing strategy is KEY. Buyers, good news for you: you don’t have to go wild over-asking to get the house (in most cases).
Implications and Opportunities for Buyers and Sellers
These local trends signify a persistent imbalance between supply and demand, reinforcing the continued rise in home prices. As we navigate these shifts, it's crucial for both buyers and sellers in Charlotte to understand these market dynamics:
For buyers, recognizing that home prices are on the rise should provide assurance that real estate generally appreciates over time, making it an investment worth considering.
For sellers, the data indicates a favorable turn in home prices, suggesting that now might be an opportune moment to collaborate with a real estate agent and list your property.
In summary, if concerns about a potential decline in home prices have hindered your decision to make a move, the data reveals a consistent upward trend. Collaborating with a local real estate agent to comprehend the changing home prices in Charlotte is crucial for informed decision-making.