Should Charlotte-area home hunters feel optimistic about finding the right house this year?
Yes, according to local real estate experts.
It’s true that, like last year, homebuyers will continue to face heated competition for available homes, rising mortgage rates, and an uptick in home prices.
But experts say rates will still be at historic lows. And, despite the tight market, home sellers must still update their properties and price them right in order to get buyers’ attention.
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Here’s what to expect if you are looking to buy or sell a home in the Charlotte area in 2017:
1. Buyers shouldn’t wait around expecting a steal.
Those days are long gone, experts say.
Charlotte’s tight market shows no signs of letting up, with December ending with 2.3 months worth of inventory, according to Roger Parham, president of the Charlotte Regional Realtor Association. That “is very low, and very distinctly a sellers’ market,” Parham says. Properties in good condition priced below $250,000 aren’t lasting long.
Other factors that keep things competitive: The strength of Charlotte’s job market means more first-time homebuyers are looking. Boomers – with homes that are paid off or with low mortgages – are staying put and delaying downsizing, according to Pat Riley, president of Allen Tate.
Builders developed 12,500 new homes last year, compared to an average of 26,000 new homes in previous years, Riley says.
Banks are no longer slashing prices on foreclosures and are now selling them at market rate, Parham says. “So what buyers have to realize is...there are no more steals in our market,” Parham says. “There are still a few deals...but steals are all gone.”
2. Sellers can’t cut corners just because the market is in their favor.
You want your home to be memorable – but in a good way, according to Riley. Buyers won’t bite on homes that feel outdated, such as sinks and countertops down low, “where you have to bend over and brush your teeth.”
“People don’t understand why my neighbor’s house had three offers in a day, and mine is just sitting here,” Riley says. “Chances are, it’s dated.
And while it’s worth investing even several thousand dollars to make your home memorable, don’t make the mistake of over-improving your house, according to Hadi Atri, president and CEO of Re/Max Executive, the largest franchise in the Carolinas.
“You don’t want the most expensive house in the neighborhood,” Atri says. “Don’t overbuild, don’t over-remodel.”
3. Buyers and sellers should start early, even if they are a while away from making a move.
Instead of getting a prequalification letter, which says what a bank may loan you, future buyers should get a loan commitment letter instead, says Atri.
Atri says by having a document specifying how much money they’ll be able to get – such as a $200,000, 30-year-loan, on a 10 percent downpayment – a buyer can stand out if they get in a multiple-offer situation.
Future sellers – especially boomers in their homes for a long time – should contact a Realtor early to figure out ways to get their homes market-ready, Riley says.
“Boomers, because they’ve lived with it so long, they don’t see” what updates are needed, Riley says. Even “if you’re not going to sell for another 5 or 6 years,” call an agent now.
4. We’ll see more ‘coming soon’ properties.
This began about two or three years ago, Atri says: listing homes that aren’t yet available as “coming soon” if they are undergoing fixes before hitting the market.
“You’ve got 30 days to get the carrot dangling,” Atri says. Realtors can show pictures, but not the house.
It’s added to the selling frenzy once these homes hit the market he says, with potential buyers who haven’t even seen the house already poised to write an offer
5. About those mortgage rates and home values...
Economists forecast 30-year mortgage rates will average 4.5 percent to 4.675 by the end of the year, which “is still an excellent mortgage rate.” Parham says, compared to 7-7.25 percent, the average rate historically.
That is still higher than the 30-year rate that averaged 3.65 percent for all of 2016, the lowest level recorded from records going back to 1971, according to the Associated Press.
Parham expects home prices to rise 4-6 percent this year, compared to 6 percent for 2016.