Charlotte-area house hunters searching for bargains might have to look elsewhere.
A recent report by residential real estate data provider Trulia says for-sale homes here that are marketed as “bargains” sell, on average, for just 4.2 percent less than fair market properties.
That comes to $10,782 off the median listing price of $254,900 over the last two years.
Trulia looked at 100 of the largest metros in the U.S. and found that residences listed with words such as “fixer-upper” and “underpriced” sold for less than comparable properties in just 55 cities. Discounts ranged from around 2 percent to 20 percent in those areas that truly offered markdowns.
The Queen City ranked 44th out of those 55 metros for offering the largest percentage reduction from the median list price.
Trulia found the lowest discounts in the markets that were most expensive or appreciating the most — where low inventory means sellers don’t have to offer as many concessions.
That’s certainly true for Charlotte, where inventory hit a historically low 3.3-month supply in November. That was the lowest level since the Carolina Multiple Listing Service began tracking such data in 2005. A six-month inventory is considered to be a market in equilibrium.
John Kindbom, regional vice president for Allen Tate Realtors, said the days of discounts are gone.
“We’re short of inventory,” he said. “The laws of supply and demand say your prices aren’t going to go down.”
Several factors can cause a low supply of for-sale residences, including prospective sellers waiting for prices to rise sufficiently to recoup equity lost during the housing crisis; low interest rates that make refinancing existing mortgages attractive; and the difficulty of saving for a down payment during a time when real wages are stagnant and student debt has mounted.
Julie Berryhill, a broker and Realtor with Wilkinson ERA Real Estate, agrees that it’s a seller’s market.
“Finding bargains is a lot harder than it once was,” she said. “Sellers don’t have to negotiate as much.”
Berryhill said reduced prices are exceedingly slim in “hot” areas such as Wilmore, NoDa, Wesley Heights and Belmont. Those neighborhoods attract many prospective buyers, causing homes to sell very quickly.
But, she added, bargains are still out there. She said she searches for properties using key words such as “below tax value,” and compares them with similar nearby homes. The cost of updating a property is a big factor in deciding if a deal is worth it.
For those willing to put in sweat equity, Berryhill said, older neighborhoods with homes built in the 1960s through the 1980s are a good starting point. She cited southeast Charlotte near Sardis Road North and Independence Boulevard as a well-established neighborhood that offers affordable homes in need of renovations, along with spots in northwest and southwest Charlotte.
Local Realtor and broker Yuriy Vaynshteyn cited another reason it’s exceedingly difficult to find a discounted home in Charlotte: Investors, he said, have sparked keen competition for those properties. Banks selling foreclosed properties know they will have multiple offers from both institutional and smaller investors and have been adjusting their list prices accordingly.
The local market is highly attractive to investors looking to flip or buy a rental because of its affordability relative to other areas, along with strong employment and population growth.
“It’s hard to find bargains in Mecklenburg County,” Vaynshteyn, owner of Engel & Volkers South Charlotte and Carolinas Metro Realty, said. “You have to go out to Statesville or Gastonia where there’s not so much competition.”
Kindbom said reasonably priced homes are available across the city, but prospective homebuyers won’t find a “steal.”
“Charlotte still doesn’t have those crazy spikes in prices,” he said. “People who want a steal go to Los Angeles or Las Vegas where they jump high and low really fast.”
Trulia reported that the deepest price cuts in the 55 U.S. markets that offer discounts on properties marketed as a bargain can be found in the Midwest and South.
Ohio led the pack, where properties advertised as bargains in Dayton and Toledo offered markdowns of 19.6 percent and 18.1 percent, respectively. Those in Knoxville, Tennessee, came in third, offering 12.8 percent off the median listing price. Other cities offering larger discounts include Buffalo, New York; Omaha, Nebraska; and Raleigh, where bargain-priced homes sold for 10.2 percent less than the median list price of $267,900.
Riverside-San Bernadino, California, came in last, where “bargain” homes sold for a 2.1 percent discount, or $6,480 less than the median list price of $310,000.