In a recent report by Zillow, Charlotte, North Carolina ranked fifth in its list of the hottest housing markets in 2022. Charlotte was recognized for its impressive economic growth, a strong job market, and a promising quality of life.
Demand for Charlotte housing has far surpassed supply, resulting in soaring home values and overwhelming investor interest. Migration to Queen City continues to rise, but housing inventory stays low, with roughly only 4600 available homes.
Charlotte’s housing inventory was first impacted by the housing market crash in 2008. Then, thanks to the fallout from the COVID-19 pandemic, Charlotte’s housing inventory reached record lows. Charlotte real estate will continue to be a seller’s market in the foreseeable future.
Median listing home values in Charlotte are approximately $370,000, trending 5.7% year-over-year. With the Charlotte housing competition fiercer than ever, more home buyers consider short sale homes in Charlotte, NC. While the short sale process is longer and more complicated, short sales provide an excellent opportunity to score property at a reduced price.
Read on to learn more about the hot Charlotte housing market, inventory trends, and how you can successfully find a property in Charlotte, NC.
Is the Housing Market in Charlotte Slowing Down?
The housing market in Charlotte is not slowing down as Charlotte is currently the most populated city in North Carolina. It’s also recognized as one of the fastest-growing metros in the US regarding job growth and the economy. Charlotte is home to the second-largest financial sector in the country, a climate that’s desirable year-round, and bustling retail and cultural centers.
Zillow named Charlotte, NC one of the hottest housing markets in 2022.
The recovering labor market and the availability of diverse work opportunities have increased local job growth, leading to higher housing demand.
The Queen City continues to be one of the top migration hubs for people and businesses. It’s expected that more than 600,000 people will migrate to the city in the next three decades.
Record-low Housing Inventory
As mentioned, the 2008 housing market crash and then the COVID-19 pandemic caused the housing inventory in Charlotte, NC to reach a record-low in decades.
Homes in Charlotte, NC sell on average for $387,000. This high price is mainly a result of low supply and high demand, compounded by the rising population in the city. Average home prices increased by $100,000 in the past two years, and real estate experts expect home values to increase by 20% in 2022.
According to the Canopy Realtors Association, an average of 50 people move to Charlotte, NC every day. The current housing inventory is already scarce for the current population. There is a need to introduce new housing and properties while considering the rising number of people coming into the market.
Before the Great Recession in 2008, there were approximately 28,000 homes available annually in the Charlotte market. In 2021, available homes sank to less than 5,000. Nationwide foreclosures in the past years have caused small and medium builders to exit the market, exacerbating the low housing supply even further.
This makes the competition even more difficult for home buyers and real estate investors.
Is Charlotte a Buyer’s or Seller’s market?
With the housing inventory at an all-time low, Charlotte housing continues to be a seller’s market. According to Realtor.com, Charlotte homes sell for their asking price and stay on the market for about 41 days.
Despite the skyrocketing housing prices, interest rates continue to stay low, between 2% to 3%. According to mortgage associations, it’s unlikely that interest rates will be this low in the near future.
Buyers who get low-interest rates for the entirety of their loan can potentially gain more favorable returns on their investments despite the high housing prices.
Some people consider renting instead of buying a home in Charlotte, NC, but according to realtors, waiting for the market to cool off is a bad idea. The Charlotte real estate market is only expected to grow, and the only way to get the upper hand in an inflationary market in real estate is to own assets.
Is Charlotte a Good Investment?
Charlotte is actually a good investment. Its current inventory crisis has even encouraged more investors to buy property in the area. As one of the strongest housing markets in the US, many people consider Charlotte to be one of the most lucrative real estate investments today.
Here are a few reasons why investing in properties in Charlotte is a good idea.
- It Is a Fast-Growing City
Charlotte, North Carolina is the third fastest-growing city in the US. If the migration rate continues at this pace, the World Population Review predicts that its population will grow by almost 50% between 2010 and 2030.
With the increasing availability of work opportunities, even more people choose to migrate to Charlotte in the wake of the COVID-19 pandemic. Millennials are moving into the area due to its booming financial sector. This opens up more opportunities for investors, as millennials are likely to drive up the renter’s market.
Meanwhile, baby boomers and older generations are also moving to Charlotte. This is because of its low cost of living and promise of a better quality of life, thanks to the city’s recreational and cultural hubs.
- It Has a Strong Job Market and Low Unemployment Rates
Investors should seriously consider Charlotte, NC as it has an impressively stable and growing job market,
The unemployment rate in Charlotte, NC currently stands at 3.4%, almost half of the national unemployment rate of 6.7%. This is extremely attractive to real estate investors who want to avoid lost cash flow, evictions, and high carrying costs due to vacancies.
Investors are attracted to Charlotte because it hosts multiple Fortune 500 companies, such as Bank of America, Wells Fargo, Duke Energy, and Honeywell. It is also home to major employers, including American Airlines, Lowes, and Charlotte Motor Speedway.
- Mortgage Rates Are Lower
Lower mortgage rates are also fueling the housing demand in Charlotte, NC. More people can now afford homes at lower rates, including investors and first-time homeowners.
The stock market crash is also a significant factor that caused housing demand to soar in 2020. During the pandemic, the volatility of other investments encouraged investors to diversify their assets with real estate.
- It Is a Renter’s Market
A growing population, scarce inventory, rising housing prices, and a stable job market contribute to the booming Charlotte, NC renter’s market.
Millions of millennials are migrating to Charlotte to expand their career prospects. Again, most millennials are looking to rent properties instead of buying homes. This significantly increases the demand for rental properties in the area, which is excellent news for investors.
According to the US Census Bureau, Charlotte, NC has a homeownership rate of about 53%, lower than the national average of 64%. With soaring housing demand and rising home values, investors can increase their cash flow by charging higher rent.
The median rent in Charlotte, NC today is around $1,730, up 20% compared to 2020. To give you an idea, the median rent in the US is around $1,300, or 29% lower than that of Charlotte.
While it’s hard to predict how much rent in Charlotte will increase, we can assume that as inventory stays low, landlords will have more leeway to set higher rental prices.
Charlotte Housing Market Inventory Trends 2022
For the most part, Charlotte, NC has followed the national housing market trends. Two years into the pandemic, market trends and forecasts for the Charlotte housing market are more apparent than ever:
- Rising interest rates: According to real estate experts, mortgage rates will likely increase in 2022. Interest rates are expected to quadruple throughout the year to make up for inflation. Today the average interest rate for a 30-year fixed mortgage is about 3.10%. The year prior, interest rates were well below 2.7%. This means that the cost of financing a home will increase in the next few months. Because of the anticipated interest rate hike, the Charlotte housing market is busier than ever as home buyers scramble to secure a property before interest rates soar.
- Increasing rental rates: It can’t be stressed enough: Charlotte, NC is a booming renter’s market. In the previous year, active buyers, interest rate surges, and dwindling inventory in the city caused home prices to climb by 25% and rent by 15.5%. In 2022, expect rent to increase at a much faster pace as more home buyers will be driven out of the market. Landlords and investors will have the upper hand in the current housing market in Charlotte, NC in the foreseeable future.
- Appreciation continues to grow: Charlotte, NC will keep its title as one of the hottest housing markets in 2022. In Charlotte, median home prices are only expected to grow as competition becomes fiercer with pent-up buyer demand. However, as prices continue to skyrocket, they will inevitably reach a ceiling that excludes most home buyers. This means that while home prices will increase in 2022, expect a slightly smaller rise (about 21%) than the previous year.
- Negative net migration: Though migration in Charlotte continues to rise due to diverse job prospects, adopting flexible working opportunities may cause a slightly negative net migration in Charlotte. More professionals will leave their homes in the metro area for more affordable living spaces in nearby suburbs or secondary cities.
- Long-term investor strategies: As home values increase and the renter’s market becomes more attractive, more investors will look to become landlords in Charlotte, NC in 2022. Even though acquisition costs remain high, investors will want to buy a property before interest rates increase. Thanks to high demand and low supply, investors are guaranteed to get significant returns on investments.
Buying a Short Sale in Charlotte, NC
As we’ve discussed in the previous sections, the Charlotte housing market will continue to be a hot seller’s market due to dwindling inventory and soaring demand. As interest rates and home prices are expected to rise in 2022, more residents choose to rent after being driven out of the competition.
However, real estate professionals suggest that buyers capitalize on an inflationary market by growing their assets. If buyers don’t have the budget to afford most of the Charlotte homes on the market, they should consider buying a short sale home in Charlotte, NC. A knowledgeable real estate agent can help with the short sale transaction.
Is It a Good Idea to Buy a Short Sale Home?
Charlotte, NC homebuyers can consider buying a short sale home as an alternative to renting or buying a home at full price.
Short sales are a good idea for buyers who have the time and patience to negotiate a property at a reduced price.
If this sounds like you, and you work with an experienced local real estate agent in Charlotte, NC, like myself, Nancy Braun, there’s a big chance that you’ll score a great deal below the average market value.
While it’s possible for you to look up short sales on your own, a good real estate agent can give special attention to the technicalities of the offer. More importantly, an experienced real estate agent will help you navigate any roadblocks to end up with the best deal.
What Is the Downside of a Short Sale on a Home?
However, short sale buyers need to understand that the transaction is a double-edged sword.
While you may be able to purchase a home at a reduced price, take note that most short sale homes are fixer-uppers that need extensive repairs.
Can You Negotiate on a Short Sale Home?
As long as lenders are convinced that they’re better off selling a property, short sale negotiations work in the buyer’s favor.
The short sale process is longer and more complex than a standard home sale. This is because negotiations aren’t limited to the buyer and seller. The seller’s lender must also approve all short sale negotiations.
If you’re interested in buying a short sale home in a competitive housing market like Charlotte, NC, expect negotiations to be complicated as you’ll have to work with several parties. There is a huge possibility that the initial offer will be declined, and there will be multiple back-and-forth negotiations. A misstep in negotiation can mean losing thousands of dollars.
The key to winning a short sale negotiation is to figure out how much the seller’s lender needs to give up the home. Data is critical to countering the offers made by the seller and lender. Expert negotiation skills from an experienced and assertive real estate agent like myself, Nancy Braun, will remind the bank how much money they’re still owed on the home.
What Is the Buyer Responsible for in a Short Sale?
There are a lot of risks involved in short sales for buyers, because they may have to cover the cost of repairs. Sellers will only be required by law to make repairs for water heaters, smoke detectors, and carbon monoxide detectors.
If the contract doesn’t explicitly state that the seller or lender will pay for repairs, the buyer will have to face a time-consuming and costly fixer-upper.
Get in Touch With a Charlotte Real Estate Agent
Securing a home or an investment property in Charlotte, NC will be difficult due to the low housing inventory and skyrocketing demand. With the help of Showcase Realty (Nancy Braun, 704-997-3794), we can help you secure a spot in the hot housing market, whether it’s your first home, a short sale, or investment property.