Benjamin Franklin wouldn’t lie – the Federal Reserve does have a nice present for Charlotte home buyers.
The Fed’s board of directors announced lower rates last month, the first reduction in more than ten years. This should not only stoke the economy and prevent a recession, but also free up more capital for home buyers.
Will that rate decrease by itself turn the real estate market around? The answer is – complicated.
As of July 31, 2019, the median sales price of Charlotte homes spiked once again, this time by $25,000, or 10.4%, to $265,000. The Charlotte region’s long-standing problem with inventory has only gotten worse. We saw a 15.3% drop in the number of homes for sale compared to July, 2018, a net loss of 1,707 units. The number of months’ supply of homes stands unchanged from last month at 2.3, far below the standard of six months for a balanced market. The closest thing to good news for home buyers is the continuing cooling off of the percentage of original list price received, which dropped by .2% from July 2018.
Despite a strong national and local economy, and low interest rates, the number of closed sales dropped 1.3% from last year. That, of course, arises from our inadequate inventory. The Charlotte area’s quality of life and robust economy continue to attract more businesses. As more businesses relocate here, they recruit more residents. Our population growth in turn puts even more strain on the housing market.
While the national economy remains strong, middle-class home buyers are facing additional pressures that make long-term purchases (such as a home!) a daunting challenge. Concerns about corporate downsizing, globalization, outsourcing, health care, retirement planning, and student debt aren’t helping.