Charlotte Housing Market: Prices, Trends & Forecasts 2022

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The Charlotte housing market has managed to keep relative pace with the national market. Thanks, in large part, to an influx of new buyers seeking attractive job opportunities and relatively affordable prices, homes have become a commodity in just about every neighborhood. While activity is firing on all cylinders, one metric appears to be holding the city back from realizing its true potential: inventory. Without enough listings to keep up with demand, prices will continue to rise in the face of competition. Having already taken notice, local investors have turned to long-term rental property strategies and will continue to do so until builders can bring new homes to market.

Charlotte Real Estate Market 2022 Overview

  • Median Home Value: $343,760

  • Median List Price: $412,156

  • 1-Year Appreciation Rate: +25.0%

  • Median Home Value (1-Year Forecast): +21.0%

  • Months Of Supply: 0.7 (-46.2% year over year)

  • New Listings: 4,513 (+8.7% year over year)

  • Pending Sales: 4,751 (+11.9% year over year)

  • Closed Sales: 4,604 (+2.1% year over year)

  • Days On Market: 20 (-23.1% year over year)

  • Median Rent: $1,693 (+15.5% year over year)

  • Price-To-Rent Ratio: 16.92

  • Unemployment Rate: 3.3% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 885,708 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $62,817 (latest estimate by the U.S. Census Bureau)


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Charlotte real estate market trends

Charlotte Housing Market Trends & Forecast 2022

Not unlike all of its primary city counterparts, the Charlotte housing market has kept in line with national trends. Most notably, the impact of the Coronavirus has altered the real estate landscape and the way buyers, sellers, and investors approach it. That said, with nearly two years of data to go off of, clear trends are starting to reveal themselves. As a result, here’s our own Charlotte housing market trends and forecasts projections for 2022:

  • Interest Rates Will Rise: Interest rates will most likely rise, Jerome Powell has already said as much. To temper inflation, the Fed is expected to increase rates as many as four times throughout 2022. As a result, the cost of financing a home will increase. Today, the average commitment rate on a 30-year fixed-rate mortgage is about 3.10%. At this time last year, rates were a much more modest 2.68%. Expect rates to increase more than they did in the last 12 months. In fact, many people are already preparing for higher borrowing costs in the Charlotte housing market, which explains the increase in activity. More people will look to get into a new home before rates begin their ascent.

  • Appreciation Will Continue At A Tempered Pace: The median home value in Charlotte continues to test new highs each month, and the trend will look to continue throughout 2022. A lack of inventory, the threat of increasing interest rates, and pent-up demand will all drive more buyer activity. However, prices are becoming more prohibitively expensive, which means there’s only so much farther they can go. As a result, prices will continue to rise, but forecasts are calling for a 21.0% increase–down slightly from the previous 12 months.

  • Rental Rates Will Increase: Looming interest rate increases, active buyers, and fewer listings all contributed to a 25.0% increase in Charlotte’s median home value last year. At the same time, rents only increased about 15.5%. It is safe to assume rental rates will increase at a faster pace throughout 2022. As more and more people aren’t able to buy in a market with only 0.7 months of inventory, they will be relegated to the renters market. As more people are forced to rent, supply and demand will quickly favor landlords and enable them to increase prices accordingly.

  • More Investors Will Turn To Long-Term Strategies: As profit margins are eroded by increasing home values and rental property indicators grow more attractive, more investors will look to become landlords in 2022. While acquisition costs will remain high, borrowing costs are still attractive and investors can capitalize on higher rents to justify their purchases. More importantly, however, the added demand will decrease landlords’ greatest threat: vacancies.

  • Negative Net Migration: Not unique to Charlotte city housing market trends, many residents are trading their homes in primary cities for more affordable living spaces in secondary cities or nearby suburbs. If for nothing else, major metropolitan areas are expensive and remain COVID hotspots. The work-from-home trends that have emerged in the last two years will enable more people to trade their expensive city homes for more affordable alternative elsewhere.

Charlotte Rent Price Trends

Similar to other major cities, Charlotte rent price trends have been on an upward trajectory for the better part of the pandemic. Over the last year, in fact, rent prices have increased 15.5%. The increase is due to the same supply and demand constraints facing the housing market. As more people are priced out of buying (or simply can’t find a home with all of the competition), demand for rental units has increased significantly. Today, the median rent in Charlotte is somewhere in the neighborhood of $1,693.

Today, renters can expect to pay the following for their respective units:

  • Studio: $1,198

  • 1 Bedroom: $1,194

  • 2 Bedroom: $1,273

  • 3 Bedroom: $1,521

  • 4 Bedroom: $2,047

For context, the median rent in the United States is approximately $1,309, or 29.3% below that of Charlotte’s. The discrepancy is noticeable, and it may increase over the course of 2022. While it’s too soon to tell how much rents will increase in the Charlotte housing market, it’s safe to assume the rate of increase will outpace last year. The more people who can’t buy, the more power landlords will have in adjusting asking prices.

Charlotte Foreclosure Statistics 2022

Foreclosure filings started to ramp up towards the end of last year. If for nothing else, banks and lenders weren’t allowed to foreclose on distressed owners because of government-initiated moratoriums for the better part of two years. It wasn’t till the end of 2021 that government assistance started to end, which explains the latest increase.

According to ATTOM Data Solutions’ last Foreclosure Market Report, “lenders started the foreclosure process on 25,209 U.S. properties in Q3 2021, up 32 percent from the previous quarter and up 67 percent from a year ago — the first double-digit quarterly percent increase since 2014.”

Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company, has confirmed the reasoning behind the latest increase. According to Sharga, “Mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. So it’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

However, it should be noted that the Charlotte housing market operated counter to national trends. While most metropolitan areas saw an increase in foreclosure filings, Charlotte saw the largest decrease in quarterly foreclosure starts at the end of last year. Down 32.0% quarter over quarter, foreclosures in the Charlotte housing market were reduced thanks to the collaborative efforts of the local government and the mortgage industry.

“So far the government and the mortgage industry have worked together to do an extraordinary job of preventing millions of unnecessary foreclosures using the foreclosure moratorium and mortgage forbearance program,” Sharga added. “But there are hundreds of thousands of borrowers scheduled to exit forbearance in the next two months, and it’s possible that we might see a higher percentage of those borrowers default on their loans.”

Charlotte Median Home Prices 2022

The median home value in the Charlotte real estate market is $343,760. However, it is worth noting that real estate in Charlotte has seen slightly more movement to get to where it is today. In the last year, the median home value increased by 25.0%. The median home value across the United States, on the other hand, saw median home values increase approximately 19.3% over the same period.

Prices have appreciated almost exponentially in the Charlotte housing market, which begs the question: Is Charlotte a good place to invest? To be clear, it is possible to invest in a market as hot as Charlotte, even with prices where they are. Again, the pandemic has created pent-up demand, and more people want to buy due to historically low interest rates. Combined with just 0.7 months of supply, that suggests competition alone will increase home values until more listings can be brought to market. In fact, forecasts call for a median increase of somewhere in the neighborhood of 21.0% over the next 12 months.

The city’s rapid rate of appreciation may be due largely to its propensity towards population growth. Charlotte is one of the country’s fastest-growing metros, adding upwards of 100,000 people every year. “With a projected 23.7% increase in population from 2014-2025, the area will soon hold a total of 2.8 million people,” according to HomeUnion, Inc. The area’s low cost of living and increasing job opportunities give more and more people each year a reason to call the Charlotte housing market home, which bodes incredibly well for the Charlotte real estate investing community.

Sellers currently maintain leverage over buyers and prices have appreciated a lot in a relatively short period of time. However, despite recent increases, it appears as if there is still room for appreciation on the horizon. Therefore, investors who acquire real estate today may be able to expect at least some appreciation.

Charlotte Real Estate Market Investing In 2022

Average U.S. home seller profits are higher than they have been in recent history, and real estate in Charlotte is no exception. Following years of historical appreciation, homes are selling for more than they have in years past, which bodes well for the Charlotte real estate market.

Is it a good time to buy a house in Charlotte? The answer will depend on what you hope to do with the newly acquired asset. The Charlotte real estate investing community, for example, has two indicators working in its favor: demand and relative affordability. With a median home value of $343,760, the Charlotte real estate market is slightly higher than the national average. However, forward-looking indicators suggest real estate in Charlotte has a lot of room to grow. Therefore, today’s high prices may actually represent a bargain relative to future valuations when put in context.

The increase is due to factors onset by the Coronavirus, which begs the question: Is Charlotte a good place to invest in real estate? At the very least, one scenario is most likely to play out more than any other: Investors who get in now may benefit from appreciation and increase demand for their final products. As a result, today’s investors are turning to their rental property portfolios.

Any of today’s most popular exit strategies serve as a viable investment strategy for real estate investors. However, one stands out above the rest: rental properties. With prices higher than they have been in quite a long time, profit margins are slim. That’s not to say flipping and wholesaling can’t be done, but rather that the current real estate environment appears to favor long-term investment strategies.

While acquisition costs are up, investors have the ability to offset today’s high prices with years of cash flow by renting out their assets. In as little as a few years, investors may be able to justify today’s higher purchase with substantial rental income. Not only that, but landlords will be able to pay down mortgages with other people’s money.

Perhaps even more importantly, it’s never been cheaper to borrow money from banks. As recently as the end of last year, interest rates were as low as 3.10%, according to Freddie Mac. The lower borrowing cost can simultaneously justify buying at today’s higher prices and increase monthly cash flow from properties placed in operation. The less landlords have to pay for a monthly mortgage, the more they can pocket with each rent check they collect.

If that weren’t enough, the city’s lack of available housing would increase rental demand. While more people are ready and willing to buy in the Charlotte real estate market, there are only 0.7 months of inventory. Healthy markets typically have about seven months of inventory, which leaves real estate in Charlotte severely lacking. As a result, even those who want to buy will be forced to rent, turning prospective buyers into renters. Until more inventory is brought to the market, landlords will rest assured their properties have demand.

The benefits of investing in the Charlotte real estate market are in no way limited to those mentioned above. In fact, there are several more reasons someone should consider investing in the Charlotte real estate market:

  • Job Growth

  • Quality Of Life

  • Affordable Real Estate

  • Charlotte Is Landlord Friendly

  • Growing Student Rental Market

Job Growth

A strong job market suggests investors will have more capable buyers and renters to cater to, making the prospects of investing all the more attractive. That said, the Charlotte housing market is particularly strong because of local job growth. According to BestPlaces, “Charlotte has seen the job market increase by 2.7% over the last year. Future job growth over the next ten years is predicted to be 45.2%, which is higher than the US average of 33.5%.”

The largest increase was seen in the Leisure and Hospitality Sector, as the reopening of the economy is imminent (if it hasn’t already happened). It wasn’t only the Leisure and Hospitality Sector that saw growth, however; every sector experienced some level of growth, except for Manufacturing.

The encouraging job growth has also gone a long way in improving local unemployment. Charlotte’s unemployment rate is also faring better than the national average, 3.3% and 3.9% respectively.

Quality Of Life

The Charlotte housing market boasts a high quality of life, which adds to the idea that more people will want to call it home. In fact, U.S. News ranks Charlotte number 20 on the “Best Places To Live” in the country list. The resulting demand will ultimately work in investors’ favor.

However, it should be noted that the Charlotte housing market is starting to host a younger demographic. At 26.4%, people under 20 make up the largest distribution of people living in the area. The distribution of people under 20 may be due, largely, to the growing number of job opportunities. “The city has a strong economic identity – it’s the second-largest banking hub in the U.S. behind New York City – that’s helped drive consistent population growth for decades,” according to U.S. News.

In all, Charlotte’s quality of life has resulted in a positive net migration of industry-minded individuals. Those investing in and around Charlotte should take note of the age distribution and cater to the needs of younger buyers and renters.

Affordable Real Estate

Affordability will continue to draw buyers to the Charlotte real estate market, especially at a time when home values are testing new highs each month. In recent years, the Charlotte real estate market has appreciated considerably and is now above the national average. The average home in Charlotte costs about 8.5% more than the average home in the United States. That said, Charlotte offers a better value than similar-sized cities, relative to housing costs and median household incomes.

Charlotte Is Landlord Friendly

More and more investors in Charlotte are turning towards long-term rental strategies because higher home values are eroding the profit margins on flips and recaps. Additionally, lower borrowing costs and increased demand are starting to make the underlying fundamentals on rental properties even more attractive. If that wasn’t enough, however, the Charlotte housing market is considered landlord-friendly.

Growing Student Rental Market

As the largest city in North Carolina, Charlotte is home to several large universities: The University of North Carolina (Charlotte campus), Queens University of Charlotte, Davidson College and Johnson C. Smith University. In all, there are close to two dozen universities in and around the Charlotte real estate market. The number of universities explains the city’s younger demographic, and the growing student rental market is something investors need to pay special considerations to.

Summary

The Charlotte housing market has weathered the COVID-19 storm and appears to have come out on the other end even stronger. Demand remains persistent in the face of constant appreciation, and yet the city’s relative affordability looks like it will continue to attract more buyers. That’s not to say inventory shortages won’t remain a concern over the course of 2022, but rather that Charlotte’s underlying fundamentals appear stronger than most markets. As a result, local investors will look to continue their careers with confidence and excitement.


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Sources

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https://apps.carolinarealtors.com/files/Charlotte-Region_LMU_2021-11.pdf
https://www.bls.gov/regions/southeast/nc_charlotte_msa.htm
https://www.bls.gov/regions/southeast/summary/blssummary_charlotte.pdf
https://realestate.usnews.com/places/north-carolina/charlotte
https://www.census.gov/quickfacts/fact/table/charlottecitynorthcarolina/POP060210
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https://www.attomdata.com/news/market-trends/foreclosures/attom-november-2021-u-s-foreclosure-market-report/
https://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-2021-rental-affordability-report/
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