Charlotte, NC Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Wed, Jul 28 2021

Jump To Another Year In The Charlotte Real Estate Market:


The Charlotte real estate 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 2021 Overview

  • Median Home Value: $310,399

  • Median List Price: $414,997

  • 1-Year Appreciation Rate: +18.6%

  • Median Home Value (1-Year Forecast): +15.5%

  • Months Of Supply: 0.7 (-56.3% year over year)

  • New Listings: 6,148 (+12.0% year over year)

  • Pending Sales: 5,653 (-2.0% year over year)

  • Closed Sales: 5,505 (+4.8% year over year)

  • Days On Market: 13 (-65.8% year over year)

  • Median Rent: $1,570 (+10.4% year over year)

  • Price-To-Rent Ratio: 16.47

  • Rental Vacancy Rate: 8.1% (+3.4% year over year)

  • Delinquency Rate: 4.4% (-1.7% year over year)

  • Unemployment Rate: 4.3% (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 housing market trends

2021 Charlotte Real Estate Investing

Average U.S. home seller profits are higher than they have been in recent history, and 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 housing 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 $310,339, 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 likely 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 rental properties.

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 June, interest rates were as low as 2.98%, 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 properties’ 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.

2021 Foreclosure Statistics In Charlotte

According to Attom Data Solutions’ Midyear 2021 U.S. Foreclosure Market Report, a total of 65,082 U.S. properties received a foreclosure filing (default notices, scheduled auctions, or bank repossessions) in the first six months of the year. “That figure is down 61 percent from the same time period a year ago and down 78 percent from the same time period two years ago,” according to the report.

Foreclosures are down on a national level, but the metrics may be a little deceiving. It’s true: Foreclosures are down, but we have every reason to believe they will increase sooner rather than later. If for nothing else, fewer states are protecting renters with foreclosure moratoriums brought about by the Coronavirus.

“The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But 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.”

Investors should expect an influx in foreclosures over the rest of 2021, and Charlotte real estate investors are no exception. As recently as the first quarter of this year, North Carolina was among the top five states with the most quarterly increases in foreclosure starts.

“Those states that saw the greatest quarterly increase in foreclosure starts and had 500 or more foreclosure starts in Q1 2021, included California (up 36 percent); Ohio (up 25 percent); North Carolina (up 15 percent); Virginia (up 11 percent); and South Carolina (up 10 percent),” according to Attom Data Solutions’ Q1 2021 U.S. Foreclosure Market Report.

As the largest city in North Carolina, it’s reasonable to assume Charlotte played a large role in local foreclosure filings in the first quarter. Consequently, there’s no reason to believe the trend won’t continue. Local employment is on the mend but still above where it was before the pandemic, suggesting some homeowners are still having a hard time keeping up with mortgage obligations.

Real estate investors in Charlotte who position themselves well today may be able to lend a helping hand to distressed homeowners. By lining up funding now, the Charlotte real estate investing community may simultaneously help many of its neighbors avoid bankruptcy and foreclosure, and secure their next deal.

2021 Median Home Prices In Charlotte

The median home value in the Charlotte real estate market is $310,399. 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 (May 2020 to June 2021), the median home value increased by 18.6%. The median home value across the United States, on the other hand, saw median home values increase approximately 15.0% over the same period.

Will real estate prices continue to rise in Charlotte? Moving forward, the market is expected to continue appreciating. Again, the pandemic has created pent-up demand, and more people want to buy due to historically low interest rates. That, combined with just 0.7 months of inventory, 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 15.5% over the next 12 months.

The city’s rapid rate of appreciation may be due largely, in part, to its propensity towards population growth. This city 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 an increasing number of 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. If for nothing else, 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.

The Impact Of COVID-19 On The Charlotte Real Estate Market

There isn’t a single market across the entire country which the Coronavirus hasn’t impacted. As recently as the first quarter of last year, in fact, fear and uncertainty surrounding the pandemic resulted in a stagnant real estate market, if not one that took a few steps back. When nobody was sure exactly how to deal with the Coronavirus, bottlenecks occurred at the office of mortgage underwriters who were understaffed, scared homeowners pulled their listings from the market, prospective buyers were hesitant to enter the homes of strangers, and unemployment skyrocketed.

These factors, and many more just like them, brought about the first significant obstacle the real estate sector has seen in nearly a decade. It is worth noting, however, that the setback was temporary. In just a few months, real estate in Charlotte regained the momentum it lost in the first quarter of 2020. The main catalyst was the Fed’s decision to keep interest rates historically low. Expected to remain low for at least a few years, it’s never been cheaper to use institutional money to buy a house in Charlotte. More importantly, today’s rates are too attractive to pass up and have spurred many interested buyers.

Not only are buyers champing at the bit to take advantage of today’s interest rates, but there are likely more buyers in Charlotte in 2021 than there were at this time last year. Confidence is improving with unemployment and stimulus. While Charlotte’s unemployment rate is still higher than before the pandemic, it has improved dramatically. More people in Charlotte are exiting the unemployment pool each month, which means more prospective buyers can take advantage of the previously mentioned interest rates.

Buyers appear ready and willing to act immediately because they want to secure a low interest rate and because prices are expected to rise. The added interest from the reasons I mentioned has created more demand, and competition is fueling price increases in the Charlotte real estate market. More importantly, Charlotte was already struggling with inventory shortages. Supply and demand issues remain a real problem for now, but homeowners appreciate the resulting price increases.

The trends taking place in the Charlotte real estate market are not unique; they are present in just about every major city across the United States. The impact of COVID-19 on the Charlotte real estate market may have actually been a blessing in disguise. While the pandemic has been nothing less than tragic, the reality is that it may have catalyzed real estate in Charlotte.

Charlotte Real Estate Market: 2020 Summary

  • Median Home Value: $267,230

  • 1-Year Appreciation Rate: +9.7%

  • Median Home Value (1-Year Forecast): +8.5%

  • Average Days On Market: 68

  • Median Rent Price: $1,500

  • Price-To-Rent Ratio: 17.81

  • Unemployment Rate: 6.0% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 872,498 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $60,886 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 9.56%

  • Foreclosure Rate: 1 in every 9,306 (1.0%)

Charlotte Real Estate Investing 2020

Charlotte real estate market trends were the direct result of the pandemic in 2020. At the beginning of the year, real estate in Charlotte was moving in line with national trends. Prices were increasing due to the unique convergence of both high demand and a distinct lack of inventory. There weren’t enough listings to satiate demand, and prices skyrocketed; that was before the pandemic. When COVID-19 was officially declared a global emergency, the local real estate sector experienced a setback, but only temporarily. Activity in the Charlotte housing market declined significantly by the end of the first quarter but rebounded faster than anyone could have imagined.

As it turns out, the pandemic was actually a catalyst for activity. When the Fed announced interest rates would remain low for years (to combat inactivity), prospective buyers jumped off the fence to participate in record-low borrowing costs. Pent-up demand, in conjunction with low rates, created an environment ripe for buying. As a result, home values increased almost exponentially. In response to the increase in home values, the Charlotte real estate investing community was forced to reevaluate the area’s best exit strategies. Investors quickly realized long-term rental properties presented the best opportunities. Rehabs and flips remained attractive when the right profit margins presented themselves in 2020. Still, low borrowing costs, high home values, and increasing rental demand all leaned heavily in favor of long-term rental strategies.

Local investors began rental portfolios or added to existing ones to shelter business operations from high home values. The ability to pay down a mortgage with someone else’s money was too attractive to pass up at a time when homes cost more than ever.

Charlotte Real Estate Market: 2016 Summary

  • Median Home Price: $190,300

  • 1-Year Appreciation Rate: 5.9%

  • 3-Year Appreciation Rate: 22.5%

  • Unemployment Rate: 5.1%

  • 1-Year Job Growth Rate: 2.7%

  • Population: 836,973

  • Median Household Income: $52,916

Charlotte Real Estate Investing 2016

Charlotte real estate news was generally positive in 2016. Median home prices for the Queen City reached $190,300 in the first quarter, compared to the national average of $215,767. What’s more, appreciation and employment rates remained on par with the average. The differentiator between this city and the rest of the country ended up being its long-term value, as total equity gains far outpace the national average on a long-term basis, which the Charlotte real estate investing community loved to hear. Home affordability outpaced the national average, making the Charlotte housing market one of the more affordable markets in the nation at the time.

The first quarter of 2016 put up very similar figures to the national average. Still, the North Carolina city did surpass the nation in several aspects, including home affordability, new housing construction, and employment rates.

The unemployment rate was 5.1% during the first quarter of 2016, slightly above the national average. Compared to the previous year, unemployment rates improved 0.3%, while the national average saw a 0.5% improvement. In terms of employment, the job growth rate was higher than the national average, growing at 2.7%, compared to 2.0% in the first quarter. At the time, the North Carolina economy was stronger than the nation’s, according to the National Association of Realtor’s State Economic Activity Index.

Charlotte Real Estate Market: 2014 Summary

  • Median Home Price: $203,600

  • 1-Year Appreciation Rate: 13.0%

  • 3-Year Appreciation Rate: 33.0%

  • Unemployment Rate: 6.5%

  • 1-Year Job Growth Rate: 2.7%

  • Population: 792,862

  • Percent Of Underwater Homes: 21.5%

  • Median Income: $51,251

Charlotte Real Estate Investing 2014

Large-scale investors in single-family rental homes developed a reputation for scouring the city for opportunities. However, real estate investors had to learn how to deal with increasing home values, even in 2014. On average, homes were worth $203,600. However, despite continued appreciation, homes were below the national average. Homes across the nation appreciated 4.6% over the previous year, resulting in an average value of $212,267. Over the same time, homes appreciated 13.0%. By all accounts, Charlotte’s real estate news was positive in 2014.

Despite lagging behind the national unemployment rate in 2014, the local economy is a bright spot for the entire housing sector. At the time, the city had an unemployment rate of 6.5%. The national average was 6.1%. However, local employment growth was strong compared to other markets. In just one year, the city improved its unemployment rate by 2.2%. Driven primarily by the trade, transportation, and utility sectors, Charlotte’s real estate trends buoyed an economy on the brink of surplus.

Charlotte Housing Statistics in 2014:

Charlotte housing market statistics

Charlotte County Map:

charlotte-county-map

Have you thought about investing in the Charlotte real estate market? If so, what is it about the Charlotte real estate investing community that has you interested? We would love to know your thoughts on real estate in Charlotte in the comments below:


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Sources

https://www.zillow.com/charlotte-nc/home-values/
https://www.zillow.com/home-values/
https://www.zillow.com/research/data/
https://apps.carolinarealtors.com/files/Charlotte-Region_LMU_2021-06.pdf
https://www.bls.gov/regions/southeast/nc_charlotte_msa.htm
https://data.bls.gov/timeseries/LAUMT371674000000003?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true
https://www.census.gov/quickfacts/fact/table/charlottecitynorthcarolina/POP060210
http://www.freddiemac.com/pmms/pmms30.html
https://www.attomdata.com/news/market-trends/foreclosures/attom-data-solutions-q1-and-march-2021-u-s-foreclosure-market-report/
https://www.attomdata.com/news/market-trends/foreclosures/attom-mid-year-2021-u-s-foreclosure-market-report/

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