Happy New Year everyone! I hope you enjoyed your holiday season and are enjoying the first few weeks of 2023.

The Charlotte housing market in 2022 was a crazy roller coaster ride, and that’s true for the entire United States. We saw unprecedented increases in inflation, interest rates, and volatility in our market.  

So, what better way to kick off the 2023 year than to review the housing market. Today we will look at the catalysts and trends that affected our Charlotte North Carolina housing market at the tail end of 2022, the current state of the housing market, and what we can expect from the Charlotte housing market in 2023.

 It seems like everyone has their own take on whats going to happen in this housing market.  Everywhere you look, you’ll find headlines preaching fear, uncertainty, and doubt. Our goal is to help you sift through all of the crazy headlines and focus specifically on the greater Charlotte area. Real estate is very local in nature and not all markets will be affected the same.   

  1. Housing Market Overview

  2. Mortgage Rate & Effect On Housing Market

  3. Number of New Listings

  4. Number of Pending Listings

  5. Number of Closed Homes

  6. Average Sales Price

  7. Charlotte NC Housing Market Predictions for 2023

“Find what moves you”
Contact us today

Find out how much your house is worth!

1. Market Overview

The Charlotte, NC housing market has seen its share of good news and bad news this year. The overall economic trends have affected the greater Charlotte area, however we faired much better than many other areas in the United States.  

June proved to be the “peak” of our local housing market, with the highest average sales price ($528,500). After June, we saw a downward trend in the average sales price in our area. The average sales price dropped by 6% from June to December, ending at $495,500.

 

Charlotte area Sales Price Peak in 2022:

From June to December, the average sales price in the United States dropped by 10%. So even though we experienced a softening market here in 2023, we faired much better than many cities in the United States.

United States Housing Market. Average Sales Price

“Find what moves you”
Contact us today

2. Mortgage Rate & Effect On Housing Market

 

The rapid increase in interest rates were the biggest factor affecting our local housing market. Mortgage rates started 2022 around 3.22% and peaked in November 10 at 7.08%. We did see a dip in the mortgage rates from November 10th until December 22nd (where they started to pick up again). We can actually see the affect this had on our Charlotte housing market data, in real time. We will discuss the real time affect this had on our housing market later in this article.

Mortgage Rates in the United States affecting the housing market

1. The Federal Reserve

The Federal Reserve met again on December 13-14. At this meeting they raised the federal funds rate again by 50 basis points, taking it to a targeted range of 4.25% and 4.5%. This takes the federal funds rate to the highest level in the past 15 years. On a positive note, they slowed the rate they were increasing the interest rate. This means we may be very close to seeing peak rates.

We know that the Federal Reserve’s #1 goal is to bring inflation under the 2% target. While we have a long way to go to get below 2%, we are starting to see strong signs inflation is coming down.

2. Inflation

In December we saw a decline in the consumer price index, which gets the Federal Reserve a step closer to beating inflation. The key inflation gauge fell 0.1% for the month, in line with market expectations and was the biggest drop since April 2020. Though the CPI for all items is still 6.5% ahead of where it was a year ago, were beginning to see a pattern of a decline in the rate of inflation. It’s peak was around a 9% annual rate in June of 2022. The question now is how much more evidence policymakers will need to see before they take their foot off the brake.

2. Mortgage rates in 2023

We are still a ways away from reaching the Federal Reserves goal for the Inflation Rate. Due to this, the Federal Reserve has indicated they are planning on keeping rates higher through next year, with no reductions until 2024. The expected “terminal rate,” or point where officials expect to end the rate hikes, was put at 5.1%, according to the FOMC’s “dot plot” of individual members’ expectations. 

This means we may see more pain in the housing market through out 2023. With more positive news on inflation, many are beginning to expect only a 25 basis point hike the next time the Federal reserve meets. The Federal Reserve’s next meeting is January 31/ February 1.

Remember the rule of thumb, for ever 1% change in mortgage rates, affects a buyers purchasing power by 10%.

Selling A House Shouldn’t be Stressful

There is a pro-active way to sell your home that gets results

4. Charlotte Home Prices

Even though we saw a 6% decrease in Charlotte home prices from June to December, we are coming off one of the strongest sellers market’s we have ever seen (We are still in a sellers market)!  So, even though inventory has increased and prices have fallen, historically, it’s still a great time to sell.  

The Charlotte average sales price in January 2019 was $284,000, which means if you have owned your home since 2019 you have seen a 75% increase in home value over the last few years. If you bought anytime in the last few years, more than likely you were still able to see an unprecedented increase in equity.  

 

 

Find out how much your house is worth!

2. Number of New Listings

In December, 637 new listings hit the market, which was an 37% decrease from the number of new listings in November 2022. We saw a 41% decrease in the amount of new listings year over year. 

The number of new listings coming to the market have continuously decreased throughout 2022. Now, this can partly be due to seasonal trends (fewer people choose to list their home in the 4th quarter). However, we can see that the year over year trends show a huge discrepancy in the amount of homes hitting the market. Most homeowners in the United States have a mortgage rate under 5% (many around 2-3.5%) , which could be persuading them to not make a move. If a homeowner wants to move, they would need to purchase a home at a much higher interest rate.   

The fact that many homeowners are choosing not to put their home on the market could be propping up the Charlotte housing market and prices. Even though there are fewer buyers and the buyers who are purchasing are faced with a huge decrease in purchasing power, there are still fewer homes for sale than we could usually expect to see this time of year. 

Decline of homes for sale in Charlotte North Carolina

Selling A House Shouldn’t be Stressful

There is a pro-active way to sell your home that gets results

3. Number of Pending Sales

In December 700 homes in Charlotte North Carolina accepted an offer. This was a 16% decrease from November 2022 & a 38% decrease from the amount of homes that accepted an offer in December 2021.  

Fewer homes listed = Fewer homes accepting offer’s.

One of the best leading indicators for the housing market is the number of new listings compared to number of pending sales. This helps us determine how to project the inventory levels we can expect in the future.

 

Buyers Market | Increase In Inventory

If the number of new listings continuously outpace the number of pending sales, then we can expect the amount of homes for sale will increase. This means that there will be more homes avaliable and buyers will have more homes to choose from. If this trend continues, then you can expect for the market to eventually transition to a buyers market. 

Sellers Market | Decrease In Inventory

If the number of pending sales continuously outpace the number of new listings, then we can expect the amount of homes for sale will decrease. This means that there will be less homes avaliable and buyers will have less homes to choose from. If this trend continues, then you can expect for the market to eventually transition to a sellers market.

 

December 2022 New Listings: 637 

December 2022 Pending Sales: 700

We saw the supply of housing inventory consistently increase through 2022, until December. This was the first time the number of pending sales outpaced the number of new listings since January 2022. We saw the supply of housing inventory consistently increase through 2022, until December. 

Increase in housing inventory in Charlotte North Carolina
Why did the number of pending sales outpace the number of new listings?

From November 10, 2022 to December 22, 2022 the average mortgage rate fell from 7.08% to 6.27%. This means that the home buyers in December had somewhere between 5 to 7% more purchasing power than the buyers in November. When you take the average sales price in Charlotte NC, this means home buyers could purchase $24,000 to $34,000 more home in December. This is a very interesting statistic that shows how much the real estate industry is affected by mortgage rates.  

Now, the mortgage rates did inflect back up on December 22, 2022 finishing the year at 6.42.  We can also expect another rate hike in February, so we will most likely not see this trend continue. 

 

4. Number of Closed Homes

In December 852 homes closed in Charlotte, which was a 6% decrease from November 2022 and a 42% decrease from December 2021. 

We have seen the number of closed homes continuously decline throughout 2022. The number of closed homes is a lagging indicator. Since we have seen fewer newer listings and fewer pending homes, we can expect to see the number of closed homes to be lower. 

5. Average Sales Price

In December, the average sales price was $496,500. This was a 2% Increase from November 2022. Charlotte home prices have increased 11% since December 2021. 

June was, in fact, the peak of the Charlotte housing market. In the last two quarters we saw home prices decrease by 6%. 

Even though Charlotte has seen an average home price drop of 6% since June, we still see a VERY healthy year over year appreciation of 11%. Charlotte is also outpacing the United States as a whole. The United States is only seeing a year over year appreciation of 1%, which means we may see this invert to the negative in the coming months.  

United States Housing Market

Even thought the Charlotte, NC housing market has soften, we are still outperforming the United States as a whole. The economic factors + mortgage rates will affect everywhere, however some cities will be affected more than others. 

6. Charlotte, NC Housing Market Predictions 

Surging mortgage rates have put some much needed pressure on the hot housing market in recent months after home prices hit record highs across the nation. The overall housing supply remains limited, as those who purchased homes in recent years at extremely low mortgage rates are staying put. This has kept inventory lower than what we could have expected.

Going into 2023, there are a few factors we’re paying very close attention to. These factors can strongly impact the United States, as well as the Charlotte area. Here are a few factors we are closely monitoring:

1. Year over year home price depreciation 

In the United States, we have not experienced home prices falling (year over year) in over a decade. The United States average sales price fell 10% from the housing market peak, and is only seeing a 1% year over year sales price appreciation.  

At this time, many indicators are pointing towards home prices continuing to depreciate.  Also, for every month that passes, we get closer and closer to the peak of the housing market. This means we can expect to see year over year home price depreciation in the next couple of months. 

Now, the United States average home price should invert before the average home price in the Charlotte area does. However, if these trends continue, we could see the Charlotte area experience year over year price depreciation as well. This becomes more and more true as we approach the peak of the market, in June.

Once the United States experiences year over year home price depreciation, we can expect the news to jump on this fact and cause a ton of fear, uncertainty and doubt in the market. We will be inundated with negative headlines, and news of “the sky falling.” The media, most likely, will compare this market correction to the housing market crash in 2008. Even though this couldn’t be farther from the truth.

 

When fear, uncertainty and doubt are created buyers may become nervous or hold off on their home buying goals. This could create more turbulence in the market. More than likely, we will experience this sometime in the first quarter or beginning of second quarter.

 

2. Interest rates and Federal Reserve

 

 As we’ve seen in the data, mortgage rates have a large impact on our Charlotte housing market. Interest rates fluctuating (positive or negative) will have a large affect on how our local housing market will react.  

As stated before, the Federal Reserve’s main goal is to get inflation below 2%. So we will be closely monitoring the inflation data and the Federal Reserve’s meeting. The next time the Federal reserve 

The Federal Reserve will meet again Jan 31 & Feb 1. Right now, they are expected to raise the federal prime rate by 50 basis points. However, based on the most recent inflation numbers, it is becoming more and more likely that we could expect only a 25 basis point hike. However, we will more than likely see high rates throughout 2023. Due to this, we should expect the market to soften a bit more. 

Strong demand for the Charlotte area will insulate us from experiencing as severe of a downturn as many other areas in the United States. Charlotte, NC is rapidly growing, which is attracting people from across the states and even internationally. There’s an influx of buyers from California, Chicago, New York, New Jersey, and Connecticut.

3. Home sales will fall to their lowest level since 2011

Experts are predicting the lowest number of home sales in over a decade. This is  due to affordability issues, high mortgage rates, and a potential recession. People will only move if they are forced to. 

If fewer people put their homes on the market it could continue the trend we saw in 2022.  Fewer and fewer people deciding to put their homes on the market. This could keep inventory lower than we otherwise would have expected. This could put more pressure on home buyers and give them fewer options to choose.  

4. Fewer buyers due to an increase in multi-generational housing

Right now home buyer affordability is the lowest we have ever seen. Many people are faced with the issue of not being able to afford a home, or even a rental. This is forcing many people to combine households, or live with their parents.  

Depending on how prominent this trend is throughout 2023, this could have a large affect on the amount of buyers in the market. 

 

5. Unemployment rate increases

The Federal Reserve predicts the unemployment rate to rise to 4.6% by the end of 2023. This potentially means that 1.5 million more people out of work than now. I know we have all seen the headlines: Amazon, Salesforce, Twitter, Vimeo, CiscoMeta, and Upstart have all announced upcoming layoffs. 

 If layoffs continue, or increase, then we may see that more homeowners will need to sell their homes. This could increase the inventory we see in the area, and could affect sales price. 

For home sellers

The market has softened from the peaks we saw in Q1 & Q2, however we are coming off the best time in history to sell a home. You are still seeing double digit year over year price appreciation. Also, if you bought in 2019, your homes value has increased by 75%.  Will you see more competition on the market? Yes! However, homes are still selling, you just need the right agent with the right approach

If you are considering selling your home, make sure you choose the best Realtor. Watch this video to make sure you are asking your potential realtor the RIGHT questions:  10 Questions You Must Ask Your Realtor Before Hiring Them. 

For home buyers

Buyers purchasing power has been decimated this year. Housing affordability nationwide is the worst it has ever been on record due to spiking home prices and interest rates, Bloomberg reports. 

However, if you are in the market to purchase a home, you will find more avaliable homes to choose from. You may find you can negotiate more on the sales price and other terms. You could ask the seller to pay for your closing costs and/or a home warranty.

Strong strategies for buyers:

1. Ask for the seller to pay for your closing costs, and use the closing cost concession to “buy down” your mortgage rate.

2. If you have a home to sell, you can make an offer contingent on your home selling. Home sale contingencies have been almost impossible over the past few years, however, with the market softening more sellers are open to accepting a home sale contingency. 

Should you buy a home right now?

 

It really depends on what you are looking to accomplish, your goals, and your timeline. If you are wondering if NOW is the right time to purchase, visit Is NOW a Good Time to Buy a House in Charlotte? We explore who should be purchasing a home and who should wait a little bit. We would love to connect with you, discuss your real estate goals and help you determine if now is a good time to buy/sell or if it is better to wait. 

 

Is It a right time for you to buy or sell? 

It really depends on what you are looking to accomplish, your goals, and your timeline. We would love to connect with you, discuss your real estate goals and help you determine if now is a good time to buy/sell or if it is better to wait. Feel free to call us, text us, or email us. We would love to be your real estate resource of choice! 

 

Contact us through:

📱Call/Text Direct (704)-631-3977

📧Email: info@thefinigangroup.com

 

 

“Find what moves you”
Contact us today