The 5 Top Trends Shaping Charlotte’s Market for Homes
Homes in the Charlotte area are selling rapidly. The demand is high and sellers are taking advantage of their power. 5 trends seem to be causing this shift in the home market.
1. Low inventory
A seller’s market is defined in general as anything less than a six-month supply of homes. The Charlotte Regional Realtor Association says the metro area has been below that point since November 2012 and in March the area had a 5.1-month supply of homes.
In Mecklenburg county is experiencing extreme shortages in areas like the south-southwest at 2.6 months. Northwest and Southwest Mecklenburg county are both at a 3.1 month supply of homes.
What does this mean for buyers? Buyers are struggling to find exactly what they want, which real estate officials say is causing many not to make a purchase.
Low supply is also causing some potential sellers are to choose not to list their home because they are unable to find their next home to purchase. What’s the best advice? List your home while the time is right and rent until you find the right home for purchase.
2. Few lots available for construction
Construction is being held back due to a short supply of lots available. Metrostudy’s Bill Miley who is the market director for Charlotte said supply of lots is at equilibrium when it is 24 to 30 months of inventory. He also said, Union County has a 18.6 month supply, while North Mecklenburg County has a 23.5 month supply.
Availability of financing has been a challenge for developers. Because of this developers are having trouble with getting lots ready for sale. Bill Miley said he expects Charlotte’s supply of lots available to be at equilibrium later this year. Shortages are expected to persist though in areas of high-demand. For example, by January he expects Union County to be at an all-time low of 15 months.
3. Prices are rising at a slower rate
Since the housing downturn, homes all over the U.S. have rebounded in gains. Charlotte is keeping up with this pattern of rising prices, but not at the same pace as before.
Standard & Poor’s Case Shiller index, shows a 6.7 percent home price increase in the Charlotte area when comparing February of this year to February of last year. U.S. home prices rose 12.9 percent over the same period.
Pat Riley, president of Allen Tate Cos. said, “Appreciation rates are going to come down, which they should, and that’s a good thing.” He expects appreciation to return to a more normal 3.5 percent annual rate.
4. Lower credit scores are being accepted
Lenders had to raise the minimum for acceptable credit scores after defaults on subprime mortgages helped spur the recession.
Cunningham & Co.’s senior loan officer, Skip O’Neal, said lenders have been lowering the minimum credit scores they will accept for loans that correspond to Fannie Mae and Freddie Mac guidelines and those backed by the Federal Housing Administration.
According to O’Neal, lenders are looking to offset declines in mortgages for refinancing. This is helping borrowers who have the ability to make their mortgage payments, but have flawed credit histories because of financial hindrances like a divorce.
“It used to be we could not do anything under 640 as a lender for FHA loans, but now we can go down to 620” if the borrower’s income, debt-to-income ratio and other financial qualifications are strong, O’Neal said.
Loose lending practices are not returning. Federal rules that took effect this year are still intact. These regulations require lenders to ensure a borrower can repay their mortgage, meaning loans with no or little documentation cannot be offered.
5. Upper-end housing market is rebounding
Charlotte’s upper-end housing market is rebounding. Areas like Ballantyne, Myers Park, South Charlotte, and Lake Norman are continuously doing well.
Properties in these high-end areas are not only selling for high prices, but also seeing multiple offers.
For assistance with all of your real estate needs, contact The Wilson Realty Group in Raleigh by phone: (919) 378-1974 or by email: Info@WilsonRealtyGroupNC.com