The Charlotte area will continue to have a shortage of homes for sale this year and into next, a trend thats also expected nationwide, the chief economist for the National Association of Realtors said Wednesday.
Lawrence Yun, in a presentation to Charlotte-area real estate industry officials, also said too few new homes are being built nationwide to keep up with demand from buyers. The result is a 13-year low in the supply of existing U.S. homes for sale and a 50-year low for newly built homes, he said.
Those shortages are driving up home prices, another trend Yun said he expects to run into next year. The low inventories have been leading to bidding wars among some homebuyers in parts of Charlotte.
Yun also predicted that mortgage rates, which have been rising this year, could climb to 5.5 percent by this time next year and keep rising in 2015.
Its not going to return to 3.5 percent, he said.
Strains have been placed on inventory nationwide since homebuyers re-entered the housing market in larger numbers about two years ago, Yun said. Mortgage rates were hitting historic lows at the time.
Yun said Charlottes inventory shortage is not as large as in other parts of the U.S., such as the two- to three-month supply in Miami and Phoenix. At five to six months worth, Charlottes inventory is a more manageable level, he said.
But its possible that Charlottes inventory could tighten, Yun said. He cited large investors buying up properties in the region to rent them out. If the investors increase their buying pace in Charlotte, the housing supply will shrink further, Yun said.
Its just inevitable, he said.
Adding to the inventory problem, Yun said, is that some homebuilders nationwide arent able to get construction loans. Uncertainty about federal regulation, such as those under the Dodd-Frank financial overhaul, has community and midsize banks reluctant to lend for home construction, he said. Thats hurting smaller builders more than larger ones, who can obtain financing from Wall Street, he said.
Yun said the U.S. is in a slight sellers market. But pending sales have declined in recent months as mortgage rates and home prices have increased, he said.
Charlotte did not see the wild run-up in home prices that some other markets did during the housing boom. Charlotte prices peaked in 2007 and bottomed out in 2011.
August marked Charlottes 18th month in a row of year-over-year price gains, Irvine, Calif.-based CoreLogic said in a report released this month.
Median home prices in Charlotte are up 9 percent from a year ago, Yun said. He said the current pace of price gains in Charlotte and elsewhere is outpacing income growth. The increases are making homes less affordable for some people, such as renters, who are already having trouble meeting tougher financial requirements to obtain a mortgage, he said.
But the Charlotte market, even with the high single-digit price appreciation, is still relatively affordable compared to other parts of the country on all measures, like house prices to income, he said.
Roberts: 704-358-5248; Twitter: @DeonERoberts
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