An article in the Jan. 8 issue of Charlotte Stories suggested that Charlotte home values are “almost certainly approaching a peak…(and) after that happens…owners will rush to sell, precipitating a steep decline in a short span.”
Ouch!
The problem with the argument in the Charlotte Stories article is that it almost completely ignores the demand side of the equation. An estimated 44,000+ new residents came to Charlotte in 2019 and more are on the way with recent decisions by SunTrust, Honeywell, Krispy Kreme, and Lowe’s to move thousands of employees to Charlotte.
Also, the chief statistic used by the article to support its conclusion was that home prices in Charlotte increased exponentially since 2012. However, the area’s average home sales price is just 27.5% more than it was in 2008 or an average annual increase of 2.5%. That’s not much more than the annual rate of inflation in that time.
In fact, when coupled with lower interest rates than the mid-2000s, a case could be made that home prices in Charlotte are LESS expensive than they were then (when adjusted for inflation).
Still, we agree that sufficient housing inventory is a problem for Charlotte with all of the new demand. The average months’ supply of inventory stood at four months at the end of last year. The National Association of Realtors considers a market with a six months’ supply of inventory to be in balance.
Part of the problem is that new construction started to decline from 2018. Almost all of the decline was due to fewer single family detached home starts. Banks and developers continue to build apartments unabated.
How can Charlotte’s housing inventory grow to meet current and future growth in demand? In addition to more single family home starts, a greater number of investor flips in up-and-coming neighborhoods would help (7% of Mecklenburg County homes are unoccupied according to the county). Few first time home buyers are comfortable with taking on renovations so investors and/or mortgage lending programs that favor fixer uppers are needed.
Charlotte Stories did get one thing right; 2020 is a terrific time to sell your home given the lack of housing inventory. If you want to know what your home is worth, email us at sales@carverpressly.com for a free, no-pressure opinion.
