Charlotte, North Carolina home prices fall for the second month in a row.  Are super high mortgage rates taking their tole on our local housing market? 

Many factors affect the Charlotte, North Carolina housing market, and a key driver behind its fluctuations is mortgage rates. These rates can determine buying power and affordability for many.

 In this post, we’ll explore the current state of the market, zeroing in on how mortgage rates are shaping decisions. Whether you’re a potential buyer or just keen on local market trends, this update is for you.

Charlotte North Carolina Housing Market Update:  

September 2023

1.The Federal Reserve And Mortgage Rates

2. Number of New Listings

3. Number of Pending sales

4. Number of Closed Homes

5. Average Sales Price

6. Market Overview 

7. What Does This Mean For Home Sellers

8. What Does This Mean For Home Buyers

1. The Federal Reserve & Mortgage Rates

The Federal Reserve’s decisions play a crucial role in shaping mortgage rates, even though they don’t set these rates directly. Their actions, primarily through the federal funds rate, significantly influence what consumers encounter when they’re in the market for a home.

In August, the Federal Reserve made the decision to raise rates. Following this move, there’s been a noticeable uptick in mortgage rates. Currently, many buyers are facing rates around the 8% mark, which is a significant increase from previous months.

The rationale behind the Federal Reserve’s actions usually revolves around economic stability – controlling inflation, influencing employment rates, and managing economic growth. With the recent rate hike, it’s evident that the Federal Reserve is making adjustments in response to current economic conditions.

For potential homeowners and investors in Charlotte’s housing market, this uptick means recalculating finances, re-evaluating buying power, and anticipating further market reactions. As we move forward, keeping a keen eye on the Federal Reserve’s decisions will be essential for those looking to make informed decisions in this shifting

Anticipating the Federal Reserve’s Actions for Q4 2023. 

On September 20th, the Federal Reserve meets to disclose its short-term interest rate predictions for 2023. With only two meetings left this year, this announcement will be pivotal in setting expectations.

Current forecasts hint that the Fed will likely hold rates steady for now. However, this meeting will shed light on potential moves in the final meetings of the year. While another rate increase is possible by year’s end, a decrease in rates seems unlikely.

For those monitoring the Charlotte housing market, this update will be crucial in planning for the coming months. 

The possibility of another rate hike before the curtain falls on 2023 remains on the table. Although the indicators don’t currently suggest a rate cut, in the dynamic world of economics, it’s the nuances and subtle hints that often foretell the story ahead. It’s a tale of anticipation and strategy, and for those keeping an eye on the Charlotte housing market, the next act promises to be an intriguing

An Ongoing Inventory Crunch 

As if surging mortgage rates weren’t enough of a challenge, the housing market is still grappling with another critical issue: a lack of available homes for sale. This inventory crunch is a nationwide phenomenon, and it’s hitting us close to home here in Charlotte.

The numbers don’t lie. Current data clearly illustrates the severe inventory shortage in our backyard. With fewer homes available, buyers are often forced into bidding wars, pushing prices even higher in a market that is already challenging due to rising mortgage rates.

Looking Ahead in the Charlotte Housing Market 

As we gaze into the future of the Charlotte housing market, the reverberations of higher mortgage rates are becoming increasingly evident. The influence of the Federal Reserve’s recent decisions is no longer just a matter of speculation; it’s now a tangible reality reflected in the data.

Higher rates have begun to apply pressure, resulting in noticeable shifts in market dynamics. For many, the dream of homeownership or investment is now weighed against the challenges of increased borrowing costs. While Charlotte remains a desirable location for many potential homeowners and investors, the financial landscape is changing, and this is something both buyers and sellers will need to consider.

For those considering entering or adjusting their position in the Charlotte housing market, staying informed and agile in the face of these evolving conditions will be essential. The coming months promise a mix of opportunities and challenges, shaped in no small part by the trajectory of mortgage rates.

2. Number of New Listings

In August, the Charlotte housing market saw a total of 1,266 new listings hit the market. This figure marks a 12% increase from the number of new listings that appeared in July, and it is down by 15% when compared to August of the previous year 2022.

Charlotte Housing Inventory: On the Rise? 

The Charlotte housing market is witnessing an uptick in activity, with a significant increase in new listings recently hitting the market. While this influx suggests a rejuvenation of property offerings, it’s essential to put these numbers in perspective.

Compared to last year, 2022, the current figures are still 15% shy. Taking a broader lens, if we roll back to the 2019-2021 period, the disparity becomes even more pronounced. Today’s numbers lag by 28-30% when matched against the robust inflow of new listings during those years.

This data serves as a reflection of the market’s evolving dynamics and can provide potential buyers and sellers with insights into the market’s trajectory and potential opportunities.

The Ripple Effect Of Low Mortgage Rates

These historically low mortgage rates are acting as a powerful incentive for homeowners to stay put. Selling and buying a new property often means taking on a new mortgage. For many, this could result in higher monthly payments, given that current rates for new mortgages are now higher than what many existing homeowners are locked into.

This reluctance to sell isn’t just about the numbers, it’s contributing to a palpable tension in the Charlotte housing market. With so few homeowners willing to list their properties, prospective buyers are left with fewer options, which can lead to competitive bidding wars and continually rising home prices.

3. Number of Pending Sales

In August, 1,081 homes in Charlotte accepted an offer.This marks a 3% increase from July and an 14% drop compared to August of the previous year. Though we’re seeing an uptick in homes with accepted offers compared to previous months, we remain notably behind the figures from last year. This gap is a clear testament to the chilling effect of soaring mortgage rates.

The data paints a picture of dwindling buyer activity. With higher rates, many prospective homeowners are finding themselves sidelined, unable to make the leap due to inflated monthly payments.

It’s essential to remember that for most buyers, it’s the monthly commitment, not the overall price tag, that determines feasibility. Put simply, every 1% change in mortgage rates can affect how much a buyer can afford by about 10%. This means that as rates go up, many buyers can afford less. Right now, we’re seeing this play out, changing the dynamics of the Charlotte housing market.

New Listings Outpacing Pending Sales

In August, the number of new listings added to the market outpaced the number of pending sales by approximately 17%.  This has been a continued trend throughout this year and means more homes are coming onto the market than are selling.  This usually leads to a growing inventory.

This growing inventory is largely attributable to recent rate hikes. Even in a climate of historically low inventory levels, these rate increases appear to be making a tangible impact on the Charlotte market. What is the result? A steadily increasing number of listings available at any given time, a trend that has held strong throughout this year.

A Sellers Playground: But For How Long? 

Despite the uptick in available homes, make no mistake, Charlotte remains a heavily tilted seller’s market. Buyer affordability has been squeezed significantly due to rising interest rates, and the number of homes available, while growing, is still relatively low compared to demand. This combination continues to favor sellers, who often find themselves fielding multiple offers and enjoying favorable sale conditions.

For sellers, the current market dynamics present an opportune time to capitalize on high demand and potentially secure a premium price for their property. For buyers, the situation is more nuanced. While increased inventory offers more options and potentially less competition for each listing, reduced affordability due to higher mortgage rates presents a significant hurdle.

4. Number of Closed Homes

In August, the Charlotte housing market saw 1102 homes successfully reach the closing table. This figure represents a sharp 9% increase compared to the number of homes closed in July. Even more notably, it marks a 16% decrease from the number of closings recorded in August of the previous year.

It’s important to note that closed data is, by nature, lagging data. It reflects deals that were likely initiated a month or two prior, making it a somewhat delayed indicator of market activity. Nevertheless, a pattern is emerging. Both month over month and year over year comparisons reveal a consistent downward trajectory in the number of closed homes.

Why is Charlotte experiencing this decline in closed transactions? The answer seems to lie largely in the supply side of the equation. Simply put, fewer homeowners are choosing to put their properties up for sale. This reluctance to list is constricting the supply of available homes, which in turn, is resulting in fewer closed deals.

5. Average Sales Price

In August, Charlotte’s housing market continued its downward trajectory, the average sales price for a home in August was $520,000. This figure marks an 2% decline from July’s average sales price, but still reflects a solid 3% increase compared to August of the previous year. This was the second month in a row the average sales price in Charlotte, North Carolina declined.  

With this being said, we’re still seeing positive year over year appreciation in the Charlotte, North Carolina area.  Intrestingly, the U.S Housing market is up about 5% year over year.  So, it looks like the Charlotte market is doing worse than the nation as a whole for the first time this year! 

The surge in mortgage rates, influenced by the Federal Reserve’s rate hike in their July meeting, is clearly shaping our housing landscape. By late July and into August, the spike in mortgage rates became pronounced, echoing the decisions made at the federal level.

6. Market Overview:

As we navigate the current Charlotte housing landscape, a few key patterns emerge:

1. New Listings vs. Active Listings: Despite an influx of new property listings outpacing accepted offers, active listings have unexpectedly dropped by about 2% from July to August. This discrepancy is largely due to a rising number of properties being pulled from the market, with 1,337 listings in August either expiring or being withdrawn.

2. Mortgage Rate Influences: The housing market is feeling the weight of increased mortgage rates. The Federal Reserve’s decision to hike rates in their July meeting resulted in a noticeable uptick in mortgage rates by the month’s end and into August.

3. Buyer’s Purchasing Power: For prospective buyers, the changing rates mean a direct impact on their purchasing power. A mere 1% change in rates can alter what a buyer can afford by around 10%. This has led to shifts in buyer activity and the overall dynamics of the market.

4. Housing Affordability & Price Trends: The pressures of high mortgage rates are impacting housing affordability, introducing visible stress factors in the Charlotte housing market. Notably, house prices have declined by 2% in the past month, marking a decrease for two consecutive months.

In summary, the Charlotte housing market is experiencing the ripple effects of external economic factors, particularly the Federal Reserve’s decisions. Both sellers and buyers need to be agile and informed to make the best decisions in this evolving market environment.

The silver lining for sellers in this fluctuating market is the persistently low inventory. Low inventory generally equates to less competition among sellers, which can uphold demand. As a result, while we might witness price fluctuations both upwards and downwards, the market is poised to demonstrate resilience.

However, a word of caution: if the Federal Reserve opts for more aggressive rate hikes in the future, the impact on the housing market could be more pronounced than what we observed in the first half of the year. Sellers should stay informed and prepared to adapt to these potential shifts, always aiming for strategic decisions that align with the market’s rhythm.

7. What Does This Mean For Home Sellers

In the ever-evolving Charlotte housing market, understanding the implications of the current dynamics is crucial for home sellers. Here’s a distilled look at what these shifts mean and how sellers can best position themselves:

1. 1. Strategic Pricing: With the recent dip in house prices and the potential for further fluctuations, sellers must be astute in their pricing strategies. A well-priced home, in line with current market expectations, not only attracts more potential buyers but can also expedite the sale. Engaging with local real estate professionals to analyze comparative market data can be invaluable in this aspect.
   2. Market Timing: The uptick in homes being withdrawn or remaining unsold highlights the importance of market timing. While it’s traditionally recommended to sell during peak seasons, understanding local demand and broader economic indicators, like interest rate movements, can guide your listing decision.
   3. Leveraging Low Inventory: One of the current market’s advantages for sellers is the sustained low inventory. Fewer homes on the market mean less competition, potentially giving sellers an edge. However, this doesn’t guarantee an easy sale. It underscores the importance of presenting your home in its best light – through professional staging, quality photography, and targeted marketing.
   4. Staying Informed: The Federal Reserve’s decisions on interest rates can have ripple effects on local housing markets. If there’s a possibility of further rate hikes, sellers should be aware of the potential impacts on buyer demand and adjust their selling strategy accordingly.

While challenges persist, proactive and informed decision-making can provide home sellers with the tools they need to navigate this market successfully. Collaborating with seasoned real estate professionals and staying attuned to market shifts will be pivotal in the months ahead

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. 

8. What Does This Mean For Home Buyers

As prospective buyers in the Charlotte housing market, understanding the nuances of the current landscape can be your ticket to making an informed and strategic purchase. Here’s what the prevailing market conditions mean for you:

1. Mortgage Rates & Purchasing Power: The upward trend in mortgage rates directly affects your buying capacity. For every 1% rise in rates, your purchasing power could diminish by around 10%. Being aware of this relationship allows you to budget effectively and set realistic expectations for the kind of properties you can afford.

2. Opportunity Amidst Price Fluctuations: While the recent dip in house prices might be viewed as a deterrent by some, for buyers, this presents a potential opportunity. If you’re in a position to make a purchase, now might be a chance to get a slightly better deal than a few months ago. However, always remember that real estate is a long-term investment, and short-term fluctuations should be considered in the broader context of your housing goals and the market’s historical trends.

3. Low Inventory Challenges: The persistently low inventory means you might face stiffer competition from other buyers. Being pre-approved for a mortgage, having your finances in order, and being ready to act swiftly when the right property comes along can give you an edge in such a competitive environment.

4. Long-Term Vision: While current conditions might seem challenging, real estate should be viewed with a long-term lens. Factors like the neighborhood’s growth potential, proximity to amenities, and the quality of local schools often have lasting impacts on property values, irrespective of short-term market shifts.

   In a nutshell, while the current market does pose some challenges, potential homebuyers equipped with the right information and a clear strategy can still find valuable opportunities. Partnering with knowledgeable real estate agents and keeping abreast of local market trends will serve you well in your home-buying journey.

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Charlotte NC 28277