Charlotte has turned decidedly more into a seller’s market than even a year ago.
Houses are on the market for less time. Home values are rising faster than inflation. And buyers, sellers and builders alike are becoming increasingly more confident.
The Charlotte-area housing market is poised for continued strengthening in 2015. Additionally, analysts say, while mortgage rates are still low by historic standards, they’re not the driving force of the market’s growth.
“This year will mark a bit of a breakout for single-family construction. The economy has been strong enough for a long enough period of time that more people feel comfortable committing to buying a home,” said Mark Vitner, managing director and senior economist at Wells Fargo in Charlotte.
For one, Charlotte added about 35,000 jobs last year, marking the biggest gain in about seven years, Vitner noted. What’s more, the Charlotte metro area has more than halved its jobless rate, which soared to almost 13 percent after the most recent financial crisis, which technically ended in June 2009.
And as the economy heals, confidence improves. One of the best barometers of confidence in housing is the length of time a house is for sale, said Alan Banks, owner of Evans Coghill Homes and former president of the Charlotte Home Builders Association.
“The sales cycle for someone from first contact to actually signing a contract is much shorter now than it was even a year ago,” Banks said, estimating that sales take about one-third the time now. “That would indicate that they’re confident.”
Homes in Mecklenburg County were on the market for 67 days on average this January, compared with 90 days in January 2014, according to a recent report from the Charlotte Regional Realtor Association, which generally does not include sales of new homes.
Further evidence of the housing strength locally is development of infill properties in established neighborhoods, Banks said, often involving tear-downs in high-density neighborhoods uch as Dilworth and Plaza Midwood.
The newer homes Evans Coghill builds, Banks said, are different from what they looked like in 2006. Now, for example, homes are generally 250 square feet smaller and tend to be more energy efficient.
Another trend that’s gaining momentum, Banks said, is homebuilding just outside Charlotte, particularly in the northern parts of York County, S.C., such as Rock Hill and Fort Mill, which are less expensive than Charlotte.
Irene Hunter and her husband, both retirees, moved to Rock Hill’s Riverwalk community in January to be closer to their grandchildren. Hunter said she’s appreciated her neighborhood’s proximity to retail and doctors in Rock Hill. Development, she said, seems to “meet the influx of what looks like will be a lot of houses.”
Both local trends in housing are symptoms of the lower supply of homes for sale in Charlotte, which is driving prices up. Year-over-year home prices in Charlotte rose 3.5 percent in December, up from 3.3 percent in November, according to the Standard & Poor’s/Case-Shiller Index, the leading measure of U.S. home prices.
The average sale price of Charlotte homes in January was $249,119, up from $230,505 in January 2014, the CRRA report showed. Sellers got 94.9 percent of their original list price back, up slightly from last year’s 94.7 percent, suggesting that sellers have more room for negotiation.
Home value appreciation is both beneficial for homeowners trying to build equity and a hindrance for would-be first-time homeowners, who already face tighter mortgage underwriting standards than before the crisis. That could be why Charlotte has experienced such a boom in apartment building recently.
And along with the property price, the cost of borrowing is another factor homebuyers consider.
Many are looking toward what the Federal Reserve will do in terms of raising short-term interest rates, which many economists say are likely to go up incrementally starting this summer. Though the U.S. central bank doesn’t determine them, mortgage rates are tied to long-term interest rates, which will move in anticipation of Fed action.
Greg McBride, chief financial analyst at Bankrate.com, said the impact of Fed action on mortgage rates in 2015 will be “pretty modest.”
For now, low mortgage rates are certainly welcomed by homeowners, but there seems to be “relatively little connection” between low mortgage rates and people going out and buying a home, according to Guy Cecala, CEO and publisher of Inside Mortgage Finance.
Traffic and sales almost always pick up for Saussy Burbank in the spring, said Jim Burbank, the Charlotte-based builder’s chairman. He estimates that roughly 55 to 60 percent of yearly sales come from the first half of the year, and this year already is off to “a very good start.”
And current mortgage rates, which are just under 4 percent for a 30-year fixed mortgage, aren’t the driving factor, he said.
“I would attribute the greatest part of our recent sales to an improving economy and seasonality,” Burbank said.
By the numbers: Charlotte’s a seller’s market
▪ Mecklenburg County homes were on the market for 67 days on average this January, compared with 90 days in January 2014.
▪ The average sale price of Mecklenburg County homes in January was $249,119, up from $230,505 in January 2014.
▪ Sellers got 94.9 percent of their original list price back, up slightly from last year’s 94.7 percent.