Housing Forecast: Hot, With Cooling Trend
The mixed signals of the market for Charlotte homes are finally aligning toward a definite cooling period. And we’re not alone. Low inventory and higher borrowing costs are putting the brakes on home sales nationwide. The National Association of Realtors reports that sales of existing homes in the US dropped by 20.4% compared to the same time last year. Lawrence Yun, the chief economist at NAR, adds that existing-home sales are “down sizably due to the current supply being roughly half the level of 2019.”
So what can buyers and sellers expect in the months to come? Still concerned with inflation, the Federal Reserve hiked the federal funds rate, that is, the rate that financial institutions charge each other, from 5.25% to 5.5%. Recent statements by the Fed hint at further increases. At the bottom of the food chain, consumers are seeing rates of 6.96%, the highest since November, 2022. With many existing homeowners sitting on mortgages of less than 6%, we can expect inventory to continue to be a problem. New home construction has yet to recover from the housing slump of 2008. The bottom line is that experts see little or no improvement in the market’s long-lasting inventory problems, and therefore, little change in pricing. Still, analysts expect a continued cooling off of the once red-hot housing market.
The latest monthly indicators for the greater Charlotte region confirm we’re in the same boat as the rest of the country. As of June 30, 2023, the inventory of homes on the market dropped from 5,996 in June, 2022 to 4,963 units, a decrease of 1,033 units, or 17.2%. The median sales price nosed downward from last June’s level of $400,000 to $389,900, a loss of 2.5%, or $10,100. The most telling statistic of the formerly hot market, the number of days until sale, increased by 15 days to 29 days, or 107.1%, compared to 14 days in June, 2022.
However, Charlotte remains a desirable home market, with its low cost of living and reputation as a solid banking hub. The American Growth Project tagged the Charlotte area as one of the top ten fastest growing cities. While we’re still in a market that favors sellers, buyers are seeing new opportunities for negotiating a new home. In a healthy but changing market, buyers can increase their negotiating leverage by getting pre-approved by a mortgage lender and by finding a buyer’s agent who will represent their best interests.