Hold on to your seats, Mecklenburg County’s next big challenge is its recently announced property revaluation. Mandated by NC state law, Mecklenburg County is required to revalue property every 8 years. In 2011 the county’s revaluation collapsed under the weight of lawsuits and property appeals. It’s hoping this one goes more smoothly. Expect to see your new value by early in January 2019. The early word is that Countywide, median residential values will increase 40%, while median commercial values are expected to increase 76%. Ouch! If these are median values, look for bigger increases in intercity neighborhoods and traditional hot spots like Myers Park, Eastover, Foxcroft, and Cotswold. These are values not taxes. Tax rates will not be available until September 2019. County Commissioners could vote to keep values revenue neutral, but I wouldn’t bet on it. My guess is that as a result those owners can expect higher taxes and sub sequentially renter’s higher rents.
Look for notes on activity in Charlotte’s Regional Market in the next couple of weeks. We have a sense that the market has cooled, but will have November’s numbers by mid- month to evaluate.
According to a recent report in Zillow, Charlotte residential real estate prices in September were among the fastest growing metro markets in the US, behind only Seattle, San Jose, and Vegas, at 9%. Zillow argues that these increases are not related to a bubble but due to shrinking inventory, down 12.3%, and that these increases will continue in 2018 but at a more modest 4%. The CoreLogic Case Shiller index also showed big increases in September up 6.2% year to year. Throw in a business friendly Fed Chair who is expected to follow Janet Yellen’s script, Consumer Confidence at a 17 year high, and new tax policy; 2018 is setting up to be another good year in real estate!
January will also mean exciting changes at Scot Williams Realty as we re-market the company to more accurately reflect my partnership with Ann Wood Holladay. Stay tuned!
Look for exciting news at Scot Williams Realty, LLC. Scot Williams and Ann Holladay have partnered, together bringing 50 years of experience to Charlotte’s continuously growing market!
Ann has long been one of Charlotte’s most productive and trusted home resale Brokers. Adding her experience to Scot Williams’ resale, condo, and development experience- WOW what a duo. Together, they expect great things in what looks to be a fantastic 2018 market. This quarter as we finalize name change plans that more accurately reflect our new partnership; expect some re-branding, work on an updated, more mobile friendly website, and quite possibly some new faces!
August/ September 2017 brought a slight cooling to our local real estate markets, typical activity for this time of year, as family focus changed from vacationing to back to school. From key metrics reporting provided by Charlotte Regional Realtor* Association:
Closings were down 3.8% in August and down 3.9% in September year over year, but they are still up 6.1% year over year in 2017. Median sales prices were up 9.2% and inventory was down -17.5%. With inventory down, interest rates and tax policy unchanged, Buyers and Sellers can expect more price acceleration in 2018.
From the Charlotte Regional Realtor* Association:
August 17′ vs August 16′ Sept. 2017 YTD change
New Listings +6.0% +3.3% +4.9%
Pending Sales +15.5% +16.4% +6.8%
Closed Sales -3.8% -3.9% +6.1%
Average Sales Price +1% +6.1% +6.0%
Median sales Price +5% +9.2% +10%
Inventory of Homes -18.6% -17.5%
The Case-Shiller Home Price Index showed similar results nationwide in August. The National Price Index increased 5.8% nationwide, and 6.4% over the previous 12 month period in the Charlotte Census Division.
Let’s take a minute and examine Charlotte, the 7th largest real estate market in the country. Employment and wages are improving, creating wealth and with it opportunities in residential real estate. North Carolina’s jobless rate was down to 4.7% in April, slightly higher than the national average but improving. From the looks of things unless something unpredictable is generated out of Washington, that trend should continue:
Based on information provided by Carolinas Multiple Listing Service and Barclays Home Survey for April 2017, as we get well into the spring market, Charlotte continues to show the effects of escalating prices and shrinking inventory.
New Listings are up 5.1% for the year, but are down 20% year over year for April. Couple that with an 8% increase in closed sales year to date and you have the makings of an expensive Seller’s market. Median prices were up 11.9% in April and 12% for 2017. In Mecklenburg County in April, average list prices increased to $363,236 from $346,331 in 2016; average sales price increased 11% to $308,109, and days on market dropped to 31 days from 43 days.
Our read here is the move up buyer continues to be strong and a leading market force, but even with high rents, the first time buyer is still mostly missing in action. But it is all good news for sellers!
So for you homeowners thinking about selling and looking at a lifestyle change, call us (Scot 704/953-8256 and Ann 704/617-7678). It is a great time to sell!
2017 ushers in both a new U.S. president from another political party and one with a lifetime of work in real estate, leaving few believing it will be business as usual. His plans for both deregulation and promised spending on infrastructure, should provide intrigue in 2017. Interest rates were expected to rise in 2016 and they did not, but with the recent bump from the Federal Reserve mortgage rates should increase, but in small jumps that should keep rates below 5%. ( Fannie Mae and Charlotte Regional Realtor Association)
So what does this mean for Charlotte in 2017? After a year where units of closed sales were up 8.4%, where the one year change in price for single family homes was up 7.9%, and for condos and townhomes 8.7% , where Sellers received 96.2 % of their original list price, and where months of supply in Mecklenburg County shrank to 1.5; if January’s activity locally is any indication we are looking at more of the same. Sales are boiling.
Broadly questions remain. How does development impact affordability? 2. Are the millennials going to skip their entry level buy and wait until they start a family or pay off student debt before buying their first home? 3. Will baby boomers continue to make up 1/3 of the market in 2017? Fasten your seat belts!
It has been a strong year for what I’m coining luxury plus condos in Charlotte’s Myers Park and Eastover neighborhoods. Fueled by strong existing home sales, prospects have found it an advantageous time to sell their single family properties and make the transition into condos and town homes. We are tracking 5o of these properties that were either sold and closed in the last 12 months or are under contract (mostly new construction with CO’s).
What do these 50 condos and town houses look like? The average luxury plus home is 3 bedrooms and 3 baths; is 2873 square feet, and sold for $391.77 per foot. With an average price of $1,125,500 it appears that the primary buyer motivation is a change in life style, instead of a financial downsize. Most of the buyers are coming from the neighborhood, buying new or newer properties that offer limited maintenance in an accessible location, with room for family and friends. There are nine more new properties listed for sale in MLS, so expect the trend to continue into 2017.
In other business, clients top design trends according to real estate professionals as listed in BUILDER (11/14/16) were:
- Open layouts
- Neutral color schemes
- Multigenerational floor plans
- First-floor master suites
- No dining rooms
- White kitchens
- Extra-large garages
- Big closets
- Finished basements with 9′ ceilings
- Barn sliding doors
Ps. Your comments are welcomed.
Looking at the Charlotte metropolitan residential real estate market using data provided from CarolinaMLS, we continue to find an entrenched seller’s market. Charlotte continues to see both inventory and months of supply of inventory shrinking (-22.7% and -30.2%). Additionally, Charlotte real estate has seen an overall increase in median sales price of 5.3%, with condos making the largest gains of 8.4%. Digging deeper into those numbers, the strongest percentage increases are coming from sales of properties $500,000 to $1,000,000.
These numbers are not unique to Charlotte, but reflect what is going on in the 100 major metropolitan markets in the U.S. since the end of the Great Recession. In 2005 at the peak of the housing bubble, new homes were selling at a rate of 1.283 million per year. Ten years later new homes are selling at less than half that rate. Interestingly a bigger share of new homes sold in 2015 vs before the Great Recession are 4000 sq. ft. or larger. With the median owner occupied home in the U.S. measuring 1800 sq. ft. (U.S. Census Bureau), intuition might suggest that larger homes would be the last to recover. Why would builders risk building more expensive, luxury properties that bankrupted some many of them in 2008? What is going on?
- Though the Washington bank regulators have done almost nothing to eliminate the systemic trading and derivative risks that collapsed the banking world in 2008, they have managed to tighten mortgage standards. It’s harder for everybody to get a loan. Wealthier buyers have more capital/cash to invest in properties, and they have tended to be the only buyers who can qualify for mortgages.
- Lot availability has declined. Lots are scarce and more expensive. Developers who buy them are forced to pay more, and to make a profit, build larger, more expensive homes.
- Demand for new apartment construction in Charlotte fueled by both category shortages and cheap money has increased construction labor and materials costs.
- Housing shortages fueled by Charlotte’s continued population growth is also adding pressure to the mix.
My view is that affordability, though not yet reflected in housing numbers, is slowly starting to return. Mortgage providers are offering a broader range of products with lower down payments, with more focus on the first time homeowner. First time buyers are the force pulling the chain that moves buyers from price category to price category. Almost ten years after the Great Recession, housing is heading back into balance. Hopefully Charlotte can find some answers to its political issues, encouraging business growth and employment, and with it buyer confidence. That confidence will allow the local market to develop in a sustainable fashion.
Your comments are welcomed.
- Data provided from Carolina Regional Realtor Association Housing Supply Overview for August 2016, and information pulled from a 9/21/2016 houzz article, Why So Many U.S. Homes Are Supersized.
Charlotte’s real estate market continues to improve. Year to date numbers and June 2016 vs 2015 results are showing dramatic improvement:
New listings are up 2.4% year to date and 7.7% year to year
Pending sales are up 11.6% year to date and 19.3% year to year
Closed sales (+4.9%), median sales price (+5.2%), and average sales price (+5.1%) are all up year to date . While days list to close (113 OR -6.6%), percent list to close 96.1%, inventory (-23.3%) and months supply of inventory 3.0 (-31.8%), all shrink. Whats all this telling us? Supply is not keeping up with demand which is escalating pricing, and lop siding the local market to the Sellers side. Add to present conditions, Charlotte’s population growth, and it’s hard to see things changing in the next couple of years.
Still noticeably absent are first time buyers, sidelined by expensive student debt and lending uncertainty post 2008. The home ownership rate for households under 35 is at its lowest percentage in 30 years at 34%, while home ownership for households headed by those over 65 has remained steady at 80%.
(Data was made available from Charlotte Regional Realtor Association for the entire Carolina MLS Area)
As we dive into the heart of the Spring selling season, we may start seeing some negative housing headlines. They will be misleading. Employment figures are positive, and mortgage rates are extremely low, but both March listings (-.2%) and year to date listings (-1.7%) are showing declines over those of 2015, as are closed sales in March (-1.4%). What’s happening? First time buyers remain “careful”, and year over year inventory levels have decreased 27.8%!
What about condos?
Some quick condo facts provided by the Carolina Regional Realtor Association:
- Pending sales of condos are up 22.0% in the first quarter with the largest gains (+46.7%) from those listings above $300,001
- Average list to close on all condos dropped (10.3%) to 104 days
- Average days on market before contract fell 25.4% to 53 days
- Median sales price for a condo increased 4.6% to $152,000
- % of original list price received increased to 96.1% in the first quarter
- Inventory of condos For Sale shrank 27.4%
- Months supply of condos fell 40% to 2.1 months
It is clearly a Sellers’ market!
First quarter 2016 has brought continued improvement to both Charlotte’s economy and with it it’s housing market. From Forbes.com, Charlotte is the nations 13 fastest growing CMA:
Its 2015 population grew at 1.84% and is expected to grow at a 1.28% clip this year
Jobs grew at 3.48%, as unemployment shrank to 5.26%
Median pay for college educated workers was $64,500
These factors are heightening home buyers confidence as we charge into the Spring selling season. Jobs feel more secure, homes are trading at higher prices, and on average Charlotteans are making more money. Some detail from the Charlotte Regional Realtor Association for the week ending 3/19:
- New listings increased 1% to 1,275
- Pending sales increased 28.7% to 1,147
- Inventory decreased 25.3% to 10,272
- List to close decreased 3.1% to 127 days
- % of original list price received increased to 94.9%
- Months Supply of homes for Sale shrank 31.8% to 3 months
This combination of factors has been good for home sellers, and has been a boost to the luxury home and condominium markets. Home buyers, especially first time buyers who so far have been relatively absent from this recovery, would benefit from more inventory and with it a slow down in price increases.
The next six months looks good in Charlotte; but after that with this wild and woolly election taking hold, there is reason for caution.