What salary do you need in Charlotte to afford a home?
Affording a home is slipping further and further out of reach for many prospective buyers in the Charlotte area.
In fact, you’d need to earn nearly $80,000 to afford a home sold in 2020 at the median price in the Charlotte region.
That may be no surprise to anyone who has tried to buy a house or rent a new apartment since the pandemic began: Strong demand combined with low inventory have contributed to significant increases in rent and home sale prices.
These findings were presented Wednesday in the 2021 State of Housing report from UNC Charlotte’s Childress Klein Center for Real Estate.
“All the crazy stories you heard about house prices are probably true,” said Yongqiang Chu, the center’s director.
The Charlotte area’s “starter home” has become significantly more expensive in the last decade, data show.
In the first nine months of 2021, only 4.4% of the single-family houses in the eight-county Charlotte region sold for less than $150,000.
Only about 35% of the houses sold were under $300,000. Just a year ago, it was nearly half of homes sold.
“Before 2011, it was reasonable for a household transitioning into first-time homeownership to assume they would be able to find a home priced under $150,000 — the typical “starter home” price,” according to the report.
“By 2020, however, that same household would realistically need to assume that starter homes are those with prices of $300,000 or less.”
More than half of the homes sold in Mecklenburg in 2019 were unaffordable to households with incomes below $60,000, according to the report. For someone earning in the mid-$50,000 range, they could afford fewer than 1 in 5 homes sold.
For those in the mid-$40,000 range, it drops to around 5% of homes sold within their budget.
Price increases in the last decade had been most dramatic for the lowest priced homes, he said.
In June 2021, 60% of homes sold for above listing price.
Before 2020, that number was never above 30%, Chu said.
Affordability will become an even larger concern, Chu said, when interest rates begin to rise again after months of low rates during the pandemic.
But Charlotte will continue to be a destination for people looking to relocate from even more expensive cities and the rise of remote work prompted by the pandemic, he said.
“I do not believe this is a bubble,” he said of current trends. “This is driven by a strong demand and extremely limited supply.”
Rental price increases
Charlotte area residents who rent are also feeling a squeeze.
The average increase in rent was 16.6% in 2021, or $198 per unit, from the previous year.
The rental market for single family homes “is as hot” as the single family for-sale market, he said, spurred on by the pandemic.
In January 2020, the median monthly rent for a single family home in the region was just below $1,500, according to the report.
By September 2021 it had jumped to almost $1,900, a 26.7% increase.
This story was originally published November 17, 2021 at 3:44 PM.
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