At midyear, the Charlotte region’s housing market is “solid” and “steady,” say those who watch it closely. And that’s far better than spectacular for buyers and sellers.
“It’s not skyrockets,” said Joe Rempson, president of the Charlotte Regional Realtor Association. He then added quickly: “But everybody knows what happens to skyrockets.” Indeed, they scream upward, explode with a bright burst – then fade.
Slow and steady improvement is more likely to be sustainable, and more likely to build confidence.
The inventory of existing homes remains a concern. “We’d like it to be higher,” Rempson said. Too few homes on the market, especially in the most popular areas, boosts prices but hampers sales. Several years into recovery, potential sellers still sit on the sidelines watching prices rise.
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Among new home builders the big news – really big news – is that work on new subdivisions is (finally) underway. Just as foreclosures dominated talk among Realtors before that issue faded, the lack of new lots has been a talking point among builders.
Rempson said area agents are seeing another trend that ought to boost confidence and stability. Corporate investors, who snapped up moderately priced homes, have been replaced by families who want to sink roots in Charlotte neighborhoods.
In 2012, and until the summer of 2013, cash investors dominated the market, he said. Wall Street-backed companies accounted for 25 percent of sales in Mecklenburg County during one period, according to a study.
“It was a good thing to happen, to get us to this point,” said Rempson, who’s with T.R Lawing Realty. “Now, we’re seeing more of a primary-residence-type purchaser.”
Pending sales, which precede closings, were up at midyear. “The huge jump in pending contracts should signal strong sales in the coming months,” Rempson said in a release as the association announced sales figures at the end of June.
Here’s a snapshot of activity at midyear:
The average sales price through the MLS in June was $257,854, up 7.5 percent compared to the same month last year. That’s for all homes – condos and townhouses as well as single-family – across the regional MLS. Year to date, the average price was up 2.1 percent to $228,929.
The market includes Mecklenburg and seven adjacent counties, but extends far beyond that.
Preliminary pending sales for June totaled 3,871, an increase of 24.4 percent over the previous month.
New residential listings were up 5.9 percent in June, compared to the same month in 2013. But that elusive inventory fell 3.2 percent, compared to the same month last year. That left Carolina Multiple Listing Services with 5.4-months’ supply, below the 6-month supply that’s widely considered balanced.
In both Charlotte and Mecklenburg County – the heart of the regional market – the supply was even lower, at 3.8 months.
Low inventory is good news for values, not so good if you’re trying to find that perfect home for your family.
New home builders might be even more upbeat.
“Overall, new home sales are strong,” said Bill Saint, president of the Home Builders Association of Charlotte. Sales figures weren’t available as this was written, he said, but builders were able to get to work on homes that stalled during the cold, wet months at the first of the year, and buyers were responding.
Sales were strong across all price ranges, he said. Prices were up a bit, but not enough to slow sales.
Saint, president of Classica Homes, cited three reasons that new home sales are improving. Again, one is huge.
• Interest rates remain low and, as confidence returns, home buyers are taking advantage.
Saint said that the interest rate – not the granite countertops or those hardwood floors – is the biggest driver of the cost of a home. Loans at midyear were available below 4 percent – and every uptick can equal hundreds of dollars per month more in higher payments (tens of thousands or more over the life of the loan).
• As they ramp up activity after the downturn, builders are introducing new models and floor plans. Popular styles and features have boosted sales, Saint said. He cited award-winning new plans by Toll Brothers and Epcon Communities. During the recent Parade of Homes, Mattamy Homes won multiple golds for its designs.
• Work is underway on new subdivisions.
Since the housing collapse, builders have said lenders have been reluctant to lend money for new development. Builders working to stay afloat have gobbled up existing lots, and fretted about what would happen when those lots ran out.
Money for development isn’t flowing freely, Saint said, but at least has increased to a “trickle.” That lowers a major hurdle for builders, and for buyers who choose new homes.
His own company has three land deals complete or almost complete, and two more in the works, Saint said. M/I and Standard Pacific, among others, are opening new neighborhoods.
Eighteen months ago, Saint said, builders wouldn’t have been able to proceed with projects. “This time last year, I would have said you probably can’t.”
It’s not as speculative as it was at the peak. Lenders aren’t investing in neighborhoods by developers who hope that some builder will come along. But a builder with a successful track record that plans to build the homes can find the money, Saint said.
“It has been so long since Charlotte has seen those big yellow bulldozers moving dirt... They’re moving now.”