The Charlotte region’s home values have rebounded to within 0.6 percent of their August 2007 peak, according to the Standard & Poor’s/Case-Shiller home price index.
Only four of the 20 metros in the index have matched or surpassed their all-time highs: Dallas, Denver, San Francisco and Portland, Oregon.
The Charlotte index, which measures prices compared with those in January 2000 and creates a three-month moving average, is now at 135.07. The local index peaked at 135.88 in August 2007, during the housing bubble. It sank to a low of 108.39 in January 2012 in the following market crash.
Ali Patterson, a broker with Coldwell Banker United, said he isn’t surprised by Charlotte’s return to pre-recession home values. The area has been a seller’s market for quite some time, he said, because so many people are moving here.
The population in the Charlotte-Concord-Gastonia region grew more than 32 percent between 2000 and 2010, according to the U.S. Census Bureau. That made the metro the fourth-fastest growing in the country after Las Vegas, Raleigh and Austin, Texas.
And the growth shows no signs of abating. Charlotte’s population, for example, is projected to grow 71 percent between 2010 and 2030, according to a United Nations report released in 2014.
“I’m looking to see an explosion in the market,” Patterson said. “This is just the beginning because of the growth that’s headed this way.”
Mathew Bessette, broker in charge of Traver Realty & Associates, agreed. He said he’s seen a flood of individuals moving here from the Northeast, Florida and California. He said other dynamics also are pushing demand and, subsequently, prices. They include strong job growth, first-time home buyers entering the market before interest rates go up again, and the passing of time that permits individuals who lost their homes during the recession to once again be eligible for a mortgage.
According to the home price index, Charlotte’s prices in November rose 0.33 percent from October, when it was 134.62. Year over year, home prices rose 5.3 percent in November. That was up from an annual increase of 4.7 percent in October.
On a national level, home prices have also been rising.
In the 20 large cities tracked by the S&P/Case-Shiller 20-City Composite Home Price Index, prices in November increased 5.8 percent year over year and were up 0.1 percent from October. Nationally, they increased 5.3 percent at an annual rate, and rose 0.1 percent from October.
“Home prices extended their gains, supported by continued low mortgage rates, tight supplies, and an improving labor market, said David Blitzer, managing director at S&P Dow Jones Indices. Nationally, sales of existing homes rose at a 6.5 percent annual rate last year to 5.26 million, according to the National Association of Realtors.
Blitzer said the number of homes on the market averaged a 4.8 month’s supply last year, suggesting a seller’s market.
That’s certainly been true for the Charlotte metro, where inventory dropped to a mere three-month’s supply in December. That was a 24.2 percent decline from December 2014, when there was a 4.5-months’ supply.
A six month supply is considered to be a market in equilibrium, where neither buyer nor seller has the upper hand in negotiations.
Patterson, who has been in the real estate business for eight years, said he doesn’t see much room for improvement.
“We’re having a real problem. People are searching for months,” he said. “If people keep moving here, I don’t see how (the situation) could get better.”
Bessette said he thought the local price increases were also contributing to a shortage of inventory.
“If you weathered the storm, there’s no compelling reason to sell as prices go up,” he said. In addition, those mulling a sale have few choices in move-up properties other than new construction, he said. Such individuals would have to rent for several months while their new home was being built.
“The big problem is that the seller has to find somewhere to move into,” Bessette said.
Calling Charlotte an emerging market, Bessette said he expects prices to continue to rise this year unless a major market correction occurs.
“It’s a good time to be in the real estate market,” Bessette said, “but also frustrating because of the multiple offers” that occur on a property for sale.
He said one of his clients was interested in a home, but it was on the market for only three hours. It was already under contract before Bessette could make an offer.
Nationally, rising home values and limited selection could ultimately deter sales growth in 2016, said Nela Richardson, chief economist at brokerage Redfin.
“The dearth of inventory has really taken its toll on the market,” Richardson said. “Home buyers this year are motivated but not desperate, and they refuse to overpay. Without more listings what we’ll see are higher prices and lower sales volumes, a lousy way to start a new year for homebuyers.”
The rising prices have created some affordability pressures — such that down payments have fallen as a share of the purchase price even as they have increased in absolute terms.
For a conventional 30-year mortgage, the average down payment was 17.46 percent of the purchase price in the October-December quarter. That is down from 17.63 percent in the prior quarter, according to a Monday report by LendingTree, the online loan marketplace.
But buyers had to devote $51,721 for their average down payment at the end of 2015, a 5.72 percent increase from the third quarter.
The challenges caused by rising home values have been offset by falling mortgage rates in recent weeks.
Mortgage buyer Freddie Mac says the average rate on a 30-year fixed-rate mortgage declined to 3.81 percent last week from 3.92 percent a week earlier. Rates have historically averaged 6 percent, meaning that interest expenses are relatively low for homebuyers.
‒ Josh Boak, AP Economics Writer, and Managing Editor Sharon Roberts contributed to this report.