A low inventory of homes for sale in the Charlotte market is driving existing home prices up, according to data for November released by the Charlotte Regional Realtor Association.
Charlotte’s median sales price increased 9.4 percent to $175,000 in November from last year, while the average sales prices rose 9.2 percent since November 2012, to $204,820, marking two consecutive years of price increases, according to data from Carolina Multiple Listing Service Inc., which is owned by the CRRA.
Likewise, list prices for the Charlotte area in November averaged $261,466, compared to $218,335 from the same time last year, an increase of 19.8 percent. Sellers received 93.8 percent of the asking price in November as opposed to 92.2 percent last year. The company that calculates the information for CRRA, 10K Research and Marketing, determines the percent of the list price received for each property, then averages those numbers.
Even more dramatic were the average sales prices for south Charlotte, which rose 28.8 percent to $419,966 from $326,066 in November 2012, and the median sales price rose to $309,900 from $251,250 last year. List prices also increased, by 23.3 percent. The inventory for south Charlotte was very tight, at 2.9 months, with a 1.5 percent decrease in new listings, resulting in closed sales slipping 9.5 percent compared to last year.
Scott Sadler, a Realtor at RE/MAX Executive Realty, said the south Charlotte market is red hot. He has seen prices there reaching the pre-crash levels of 2007, rising every quarter since late 2012. Calling the situation “kind of crazy,” Sadler said multiple offers are not uncommon. He’s been involved in about a dozen bidding wars this year. Even though the south Charlotte market is not overheated like D.C. or San Francisco, buyers can expect to pay $5,000 to $10,000 over listing price, he said.
A variety of forces are driving prices in the south Charlotte market, including relocations for MetLife and Chiquita, as well as Charlotteans who are either upgrading or downsizing, according to Sadler. People who had stayed in their homes waiting for the market to improve are now on the move again, taking advantage of low interest rates. Institutional investors are also buying up properties in the $150,000 to $275,000 range for what Sadler said is a very tight rental market. “We’re fortunate to be in one of most resilient markets in the country,” he said.
Charlotte Regional Realtor Association President Eric Locher said another reason for the explosive rise in average prices is that million-dollar homes are selling again after a few years of retraction in the market.
Realtor Cindy Barnes with Allen Tate Real Estate said bidding wars are frustrating prospective buyers. “A few years ago, sellers were happy to get any kind of offer.” Barnes believes that in today’s market, buyers looking for a new home recognize, after seeing a few opportunities slip away, that they need to move right away.
Barnes was surprised, though, by the 20-percent-plus growth in median sales and average prices, saying that what she’s seen on the street is more in line with the figures for entire Charlotte area – around 9 percent increases year-over-year.
Inventory in Charlotte is stubbornly tight because many homeowners still have mortgages worth more than their homes, and others are just beginning to feel confident about their ability to buy a home, according to Barnes. Houses will sell if they’re priced well and presented well, Barnes said, but even homes in okay condition will move when there’s a lack of inventory.
More than relocations to the area, she’s seeing Charlotteans who are already here feeling more confident about assuming the responsibility of home ownership as local companies resume hiring and promoting employees.
“Stability is creating a market (in Charlotte),” she said.
In her opinion, Charlotte will remain affordable, though an anticipated increase in interest rates this spring might dampen the market a bit. “People will still buy a home, but it’ll be a smaller home.”
Residential listings for the entire Carolina MLS area in November increased year-over-year, with 3,341 new listings, a 6.9 percent increase since last year. However, the inventory of homes for sale decreased to a 5-month supply in November, compared to a 6.5-month supply last year. The number of homes sold increased by 15.2 percent for the area in November from the same time last year, with both median and average sales prices showing significant growth. The number of closed sales in November was 2,619, compared to 2,274 for the same time in 2012.
The data shows homes for sale are turning over more quickly, with the average list-to-close at 136 days in November, down 10 days from November 2012’s average rate of 146 days. The number of days a house was on the market until it sold for active and under contract properties decreased 6.5 percent from 106 days to 99 days for the same period.
Foreclosure inventory including short sales also improved. with 8.1 percent of newly listed properties and 8.8 percent of all closed properties in foreclosure this November. Last November, distressed sales accounted for 14.3 percent of new listings and 13.3 percent of closed sales.
Locher said that for the first 7 months of the year, there was tremendous activity in the housing market as people anticipated a rise in interest rates. Then, “August 1st, the faucet turned off.” The slowing market is also attributable to the holiday season, according to Locher. He anticipates things heating up again as spring nears.