Living Here Guide

Sellers’ market but still affordable for buyers

jsiner@charlotteobserver.com

Newcomers moving to the area for jobs, retirees seeking to be closer to grandkids and families outgrowing their old homes all helped push Mecklenburg County home sales up 14 percent during the first half of 2015. That’s vastly better than the same midyear snapshot last year, when sales were down a bit.

Prices weren’t up nearly as much as sales, which was good news for all those buyers.

The average price for single-family homes sold through Carolina Multiple Listing Services was up 6 percent during the first six months of the year, to $286,539.

Inventory problems persist. Homes are coming onto the market – just not in enough numbers to keep pace with eager buyers. As market problems go, though, that’s a good one, according to CMLS President Maren Brisson-Kuester, a Realtor with with CottinghamChalkHayes.

It’s a healthy market for sellers, she said, and one that offers affordable choices for buyers.

What does the rest of the year hold for families hoping to buy? More recovery, she and other pros say.

Terrence Llewellyn, president of the Home Builders Association of Charlotte, said business is booming for new-home builders, and promises to get better. “I think we’re at the beginning of what will become the best time – in a long, long time – for people to buy a new home.”

Builders are offering new, exciting home designs, he said, and mortgage rates remain near record lows.

New subdivisions are opening after a long lull. Builders are beginning to offer speculative homes again, after cutting way back on speculative building during the worst of the downturn. You can buy a new house, and move right in.

Not all new homes pass through the MLS, but lots of them do and are reflected in those midyear sales figures.

For existing homes, the lack of inventory has been the dominant topic of conversation among real estate pros, here and across the country.

So, why does the issue linger? “The seller is confused, plain and simple,” Brisson-Kuester said. “It’s a seller confidence issue.”

Hard to blame prospective sellers, but it’s easy to see how their collective decisions impact the market.

Sellers aren’t sure they can find homes, because inventory is low, so they don’t sell. Then, of course, they don’t buy.

Builders face a shortage of lots in the best locations, Llewellyn said, even though that’s changing slowly.

At midyear, there was a 3.9-month supply of homes for sale through the regional MLS, which consists of Mecklenburg and surrounding counties. Compare that to the six-month supply widely considered to be balanced between buyers and sellers.

Quite a gap – and it grew wider closer to Charlotte, the economic engine that drives the region. The supply in Mecklenburg County was 2.7 months; in the city of Charlotte, just 2.5 months.

Brisson-Kuester predicts slow and steady growth in the months ahead as sellers regain their confidence and other conditions improve.

One issue that real estate professionals have been worried about no longer looms quite so large.

Millennials, those young people born between about 1980 and the mid-2000s, finally are entering the housing market, Brisson Kuester and Llewellyn said.

“I think when you’re ready to own a home, you’re ready to own a home,” Brisson-Kuester said. “We all held our breath, to see what the millennials were going to do. We’re seeing them back. Because homeownership is fundamental.”

It’s a huge potential market – more than 78 million people, Llewellyn said – who will get married and will have children. “And will not stay in the apartments they’ve been living in.”

Another question still looms.

When will those low interest rates go up, and how much?

Mortgage rates have been at or near record lows since the Federal Reserve slashed interest rates to boost the struggling economy, including housing. But the Fed has hinted that rates will go up soon, perhaps in the fall, as the recovery continues.

A slight uptick in mortgage rates can send buyers racing to lock in before rates rise even more. That can be good for home sales in the short run. As rates continue to rise, of course, that can stall home sales.

Brisson-Kuester said Charlotte buyers haven’t been overreacting to speculation about when and how much rates might go up. “There has been no sort of panic. They’re not afraid they’ll be priced out of the market.”

Llewellyn, who leads Llewellyn Development, said mortgages are becoming easier to obtain than many prospective buyers appreciate. They need good credit but, as lending restrictions continue to ease, they don’t need perfect scores and 20 percent down.

He calls that “social inertia.” Potential buyers are convinced they can’t buy, so they don’t try, much as potential sellers remain on the sidelines. As confidence returns and reduces that “social inertia,” the home market will gain momentum in the months ahead.

Allen is a freelance writer and retired Homes editor for the Observer.

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