Charlotte’s housing market tipped further in sellers’ favor last month, as the inventory of properties for sale continued to dwindle and prices continued to climb.
A report released Friday by the Charlotte Regional Realtor Association showed the average price of existing homes rose 15 percent in January from a year ago, to $217,109. The increase came as properties for sale sunk to a 4.7-month supply, the lowest level on record going back to 2005.
Despite higher mortgage interest rates and snowy weather during the month, January sales were higher than a year ago. Closings totaled 2,169, up less than 1 percent.
Real estate agents say buyers are flocking to the market before interest rates and home prices rise further.
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“People see that the bottom has already happened and was a year and a half-ish ago,” said Sarah Martin, a broker with Charlotte-based real estate company Savvy + Co. She said the low supply of homes is driving some people to buy.
Inventory slid from a 4.8-month supply in December. A balanced real estate market is said to be one with six months of inventory. A year ago, inventory was at 5.7 months. Real estate insiders say some would-be sellers are waiting to put their homes up for sale, because they bought at the peak of the housing market and still owe more than their properties are worth.
With supplies low, some homes are attracting multiple offers, which contributes to rising prices. In January, sellers on average received 93 percent of original listing prices, according to the Realtors association.
Tom Caravaglia said he immediately began receiving offers when he put his four-bedroom Ballantyne-area home on the market late last year for $259,900.
“It just shocked me how many people were calling,” he said.
He said he received an offer within the first week, but he didn’t accept it. Additional offers came in.
“The price just kept going up,” he said.
He accepted the fifth offer, for $257,000 – 99 percent of his asking price.
As buyers scramble to the market, rising mortgage rates are said to be cooling demand. According to mortgage giant Freddie Mac, interest rates are a full percentage point higher than a year ago, hitting 4.43 percent for a 30-year mortgage in January. Although higher, it’s still low by historical measures.
Mortgage rates are expected to top 5 percent in 2014 and rise to 5.5 percent by the end of 2015, the Mortgage Bankers Association said. As rates rise, buyers might not be able to afford the same size or quality home they could a year ago, and some buyers might be priced out of certain locations.
“They’re going to buy, but they’re going to buy less,” said Pat Riley, president of Charlotte-based real estate company Allen Tate Cos.
The competition for homes in the Charlotte region is resulting in some potential buyers moving fast to make offers. Real estate agents say properties in popular neighborhoods are sometimes going under contract in under 30 days.
Martin, of Savvy + Co., said she was the buyer’s agent for a home in NoDa, Charlotte’s arts district, that went under contract in about two days in January.
“The listing agent for the home ... put a ‘coming soon’ sign in the yard, and within two or three days there were multiple offers without it having gone on MLS (the multiple listing service).”
In good news for buyers, they are facing less competition from large investors than a year ago, said Joe Rempson, president of the Realtors association. Last year, the Observer found that such investors were swallowing up hundreds of homes in Mecklenburg County to use them as rental property. Rempson said some of the investors have backed off as the amount of distressed properties in the area has decreased, leaving fewer deals to be had.
In Charlotte and elsewhere, a lack of land ready for construction, coupled with labor shortages, is holding back new-home construction, which is also keeping supplies low.
“Builders are jogging instead of sprinting,” said Allen Tate’s Riley.
Riley said the Charlotte area has an 18- to 24-month supply of such lots. He said some builders are being careful not to burn through them too quickly before more lots are developed – meaning ready to be built on.
“It’s going to take a long time to get the land that’s being bought now through the development stage,” he said.
The Realtors association report is based on sales in an 18-county area.