CHARLOTTE – The region’s homes experienced the nation’s fifth-biggest increase in median sales price — 17.7 percent — in the first quarter compared with the first quarter of 2014, according to the National Association of Realtors.
Mark Vitner, managing director and senior economist at Wells Fargo, said home prices in Charlotte would likely keep rising through the end of 2016, but at a more moderate rate. He estimated home prices would rise between 5 percent and 6 percent in both 2015 and 2016.
Vitner said increased prices are the result of high demand and low inventory.
“So there’s a lot of competition for the homes that are on the market right now, and that’s pulled prices higher,” he said.
The median sales price in Charlotte in first quarter 2015 was $197,200 compared with $167,500 in the first quarter a year ago.
Low inventory has been a problem in Charlotte’s housing market for several months. In April, home inventory remained at a 3.9-month supply for the third consecutive month, according to the Charlotte Regional Realtor Association. Six months is considered to be a market in equilibrium.
But Vitner said he did not expect prices to reach a point that would discourage buyers, especially if Charlotte continues to attract people and create jobs.
“I don’t think that home prices are going to rise enough this year to cause demand to be adversely impacted,” he said, noting that housing in Charlotte is “relatively affordable.”
The Charlotte area’s median sales price during the first quarter of this year was ranked 64th among the 174 metro areas the NAR included. The most expensive housing market was San Jose-Sunnyvale-Santa Clara, California, where the median sales price was $900,000. The lowest median sales price was $64,300, in the Youngstown-Warren-Boardman area of Ohio, which includes part of western Pennsylvania.
Vitner also said there are a couple of “structural issues” keeping inventory down, such as the high number of homes owned by institutional investors that are being rented rather than sold, and the fact that people are still dealing with the financial impact of the recession and are unable to afford new homes.
Maren Brisson-Kuester, president of the CRRA and the Carolina Multiple Listing Services Inc., said she expects Charlotte’s inventory to increase by the end of the year.
“I can’t see how we could last through this entire summer marketplace and not see our inventory levels increase,” she said.
Nationally, the inventory is about five months. The national median sales price increased 7.4 percent to $205,200 in the first quarter this year compared with first quarter 2014.
“Sales activity to start the year was notably higher than a year ago, as steady hiring and low interest rates encouraged more buyers to enter the market,” said Lawrence Yun, chief economist at the NAR, in a statement. “However, stronger demand without increasing supply led to faster price growth in many markets.”
Median sales prices in most regions were higher in the first quarter than in last year’s first quarter. Sales prices increased in 148 areas, and increased by at least 10 percent in 51 areas compared with 37 areas in the first quarter of last year.
The only areas that had greater annual price increases than Charlotte in the first quarter were Sherman-Denison, Texas, at 33.4 percent; Port St. Lucie, Florida, at 22.9 percent; South Bend-Mishawaka, Indiana, at 19.1 percent, and Decatur, Illinois, at 18.1 percent.