Market Report (Charlotte Metro), Year-End 2023
Finally! The numbers are IN! The National Association of Realtors® and realtor.com predict a boost in home sales this year, thanks to falling mortgage rates. After peaking at 8%, rates are dropping, already stirring more buyer and seller activity in the Charlotte region since October. December saw an average rate of 6.61%, the lowest since May 2023. This trend is making homes like a $400K property more affordable, with a typical monthly payment of $2,046 at the end of December. Current rates as of mid-January 2024 are 7.51% for a 30-year fixed mortgage, 6.54% for 15 years, and 7.71% for a 10/6 ARM.
Mortgage rates, expected to drop further next year, are encouraging buyers back into the market. After hitting a high of 8%, rates have been decreasing, leading to an increase in contract activities in Charlotte since October, with a noticeable rise in November. This uptick reflects growing buyer demand, with November seeing a 3.9% year-over-year increase in contracts, a reliable indicator of future sales. Additionally, new listings, indicating seller activity, also rose for the first time in November. Despite initial reluctance due to rapid sales during the pandemic and rising rates in 2022-2023, both buyer and seller activities have increased with the recent rate decreases.
The National Association of Realtors® forecasts a 6.3% average for 30-year fixed rates in 2024, while realtor.com estimates around 6.5%, maintaining affordability for the average homebuyer. Realtor.com also expects rates to average 6.8% in 2024, ending the year around 6.5%. There's some positive news about mortgage rates, yet buyers and sellers will still face certain challenges. Both the National Association of Realtors® and realtor.com anticipate lower sales compared to previous years.
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In 2023, home prices in Charlotte softened, a trend expected to continue into 2024. November's median sales price dipped slightly to $379,000. Charlotte's market, having boomed during the pandemic, saw prices rise sharply, impacting inventory. With inventory low and buyer demand affected by affordability, 2024 will likely see further price adjustments. However, dramatic price drops are not anticipated due to consistent demand. Sellers, benefiting from high home equity recently, should price homes strategically, considering local market nuances. In November, median prices in Mecklenburg County and Charlotte city were $421,000 and $401,000 respectively, slightly up due to tight inventory. The List Price-to-Sales Price ratio remains high at 96.9%, indicating sellers still receive near asking prices, a trend expected to persist albeit with slight variations.
In the Charlotte region, inventory and supply will grow slowly but remain limited. The 16-country metro currently has about 6,500 homes with a 1.9-month supply, while Mecklenburg County is tighter with 2,100 homes and a 1.4-month supply. The market reacts to demand and inventory levels: prices rise with high demand and low inventory, but stabilize or decrease as more homes are listed. A balanced market, ideally with a 6-month supply, is the goal, but currently, the market is tilted in favor of sellers and is expected to remain so throughout 2024.
The 2024 housing market will be challenging, with potential advantages for buyers. Demand is rising but remains lower than previous years, suggesting less competition for homebuyers. Working with a Buyer's Agent is advisable for preparation. First-time buyers might struggle, especially without proceeds from a previous home sale. Inventory issues persist, partly due to homeowners holding onto low-rate mortgages and a long-term underproduction by homebuilders. Charlotte faces a shortfall of 10,000 units, though housing starts are expected to increase, particularly in outlying counties.
Current homeowners are in a strong position with continued home appreciation.
Over the past year, home values increased by 5%, with homeowners gaining over $100,000 in wealth in three years. This wealth growth starkly contrasts with that of renters, highlighting the long-term financial benefits of homeownership.
In summary, mortgage rates are likely to decrease, demand will grow but, not quite to pandemic levels, prices may soften, and inventory will slowly rise. No major shifts are expected next year, but the market is anticipated to continue its gradual improvement.
Real estate is hyperlocal - especially in our area. If you would like a detailed market analysis for your specific area, let's talk! Call or text me at (704) 491-3310.
© Debe Maxwell, CRS | The Maxwell House Group | Savvy + Company | SavvyBroker@me.com | Market Report (Charlotte Metro), Year-End 2023
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