Charlotte’s new starter home? Some buyers shift to condo, townhouse market
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Housing in Charlotte
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Stephany Bird found herself, like many potential home buyers on the hunt in 2021, in fierce competition.
“I was originally looking for a single-family house,” Bird said, but a townhouse started to make more sense “the more I got to looking at stuff in this obviously crazy market.”
She closed in May on her three-bedroom townhouse in Charlotte’s Stonehaven neighborhood, and is now renting out the other bedrooms to supplement her mortgage with a goal of someday turning it entirely into a rental house.
Bird, 24, lost out on several offers on single-family homes, and at least one other townhouse before buying. One key to securing her new home, she believes, is it had been on the market almost three weeks and the seller was willing to negotiate.
Once Bird changed her focus to the townhouse market, she found other positives, including the lower price point and fewer maintenance costs she’d be solely responsible for.
In Charlotte’s strong sellers’ market, the largest demand is for single family homes, data show. For first-time buyers and those with a smaller budget, that can be a challenge. For some, townhouses and condominiums, which are often more affordable than their single-family counterparts, is the best way into home ownership.
‘First rung of the ladder’
Data for days homes spend on the market, which is one way to quantify demand, show single-family homes sold almost a week faster on average than a townhouse or condominium in the 10-county Charlotte metro area.
They spent an average 18 days on the market in June, compared with 12 for single-family homes, according to data from Canopy Realtor Association.
That 18 days is still remarkably fast, considering townhouses and condos spent an average of 34 days on the market in July 2020 and 32 days in July 2019.
That increased demand for single-family homes is a reversal from 2019 into 2020, when townhouses and condos routinely sold faster on average than single-family homes.
David Kennedy, president of Canopy, said the biggest demand and “buying frenzy” in the Charlotte region now is for single-family homes, driven in part by a pandemic-era desire for more space and separation from neighbors.
But Kennedy said for people feeling shut out of the single-family home market, townhouses and condos can be a way to “get their foot on the first rung of the ladder of homeownership.”
For some people the smaller, more communal living style is ideal, particularly for more affordable options. For those still holding out for something else, Kennedy has an analogy.
“I tell (people), the first job out of college won’t be your dream job. The first person you date probably won’t be your spouse,” he said.
Less affordable homes on market
Lack of overall inventory in the market is a key factor to the current boom. There’s a particular lack of more affordable “starter home” options in part because of large real estate investment companies that buy homes in Charlotte to add to rental portfolios.
A recent review by UNCC’s Urban Institute found that of the roughly 11,500 Mecklenburg single-family homes owned by six Wall Street-backed rental companies, the average appraised was about $206,000, “well below the average appraised value of all single-family homes in Mecklenburg County, which is about $325,000.”
That analysis found those companies concentrated their purchases in middle-income neighborhoods, with homes that might have otherwise been bought by first-time buyers and those with more modest means.
A Charlotte Observer investigation in 2018 found many of those same companies rapidly purchased residential property in Charlotte and steadily raised the average rent in many low-income neighborhoods.
Experts then described how higher rent costs — not just the limited availability of modestly-priced starter homes — would contribute to less opportunity for home ownership, as Charlotte renters would find it harder to save for a down payment and other costs.
Realtor Teresa Becker said townhouses have always been more popular among younger clients, even more so with the competitive single-family market.
“I have had buyer clients who started out looking for single families and (switched) because the competition is just so high,” she said. “If they are first time homebuyers there are some limitations ... to competing with buyers who have more cash.”
She said she doesn’t dissuade people who want to stick it out searching for a single family home, but tries to prepare them that it might take longer.
“My whole goal is to help my clients reach their goal, and for them to be happy,” she said.
This story was originally published August 10, 2021 at 12:48 PM.
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