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Charlotte housing market expected to outperform national average

Expectations that Charlotte will experience better-than-average job growth this year have caused the chief economist for the National Association of Realtors to predict the Queen City will be a top performer for rising home prices and sales.
According to Lawrence Yun’s latest column at Forbes.com, the metros that will fare best this year also boast relatively affordable home prices.
Charlotte is one of eight markets he thinks will outperform the averages, with the city boasting a 12-month job growth rate of 3.3 percent in November, compared with 1.9 percent nationwide. The other metros are Grand Rapids, Michigan; Riverside, California; Salt Lake City; Atlanta; Portland, Oregon; Tampa-St. Petersburg-Clearwater, Florida; and Providence, Rhode Island.
“As common sense would have it, when jobs tank, home prices buckle,” Yun said in his column. As an example, he cited Massachusetts’ situation in the early 1990s, when the state suffered nearly half a million job losses. Home prices in Boston subsequently fell for six consecutive years.
Texas, he said, also suffered during the mid-1980s oil bust, followed by a decade-long wait until homeowners fully recovered lost equity.
The Charlotte-Concord-Gastonia region had a 5.1 percent unemployment rate in November, according to the latest available figures from the U.S. Bureau of Labor Statistics. That was lower than North Carolina’s rate of 5.7 percent, and slightly higher than the 5 percent national unemployment rate.
The metros Yun identified as those likely to have the best home-price and sales growth saw annual job gains of between 2.1 percent and 3.7 percent through November.
“There are other markets with similar or even faster job growth rates, but the very high home prices in these areas could deter buyers and thereby dampen demand,” Yun says in his column. “San Jose, with a 5.1 percent (job) growth rate, and Austin, (Texas), with a 3.9 percent growth rate, are prime examples where job gains may not necessarily translate into more home-buying activity because of affordability issues.”
The average sales price on Charlotte-area homes rose 4.5 percent in 2015 to $242,168 from a year earlier. The median sales price for the year grew 6.3 percent to $192,500 compared with 2014, according to the Charlotte Regional Realtor Association.
Yun expects national median existing-home prices in 2015 to have increased 6 percent from 2014 to $221,200. In 2016, he expects prices to rise between 5 percent and 6 percent.
But slower economic expansion and rising mortgage rates will cause sales to slow this year, to between 1 percent and 3 percent, down from 6.5 percent in 2015, he said.
Yun said that weak-performing markets will be those that suffer employment losses. He said the collapse in oil and coal prices have caused job cuts in Louisiana, North Dakota, Oklahoma, West Virginia and Wyoming. In addition, some small manufacturing towns have been hit by the stronger dollar’s effect on the price of exports. He said towns such as Allentown-Bethlehem, Pennsylvania; Dubuque, Iowa; Peoria, Illinois; and Roanoke, Virginia have very affordable homes, but prices could buckle as people leave in search of jobs.

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