The Charlotte, North Carolina real estate market appears to be doing well in 2015, at least where home prices are concerned. A recent industry report revealed that house values in the Charlotte metro area rose 0.9% from January to February of this year. Prices are up 5.4% year over year.
Charlotte Home Prices Up 0.9% in February, 5.4% Annually
The latest edition of the S&P/Case-Shiller Home Price Index was released earlier today. The widely cited report measures home-pricing trends across the country, and also for 20 key cities. Charlotte, North Carolina is one of the 20 cities monitored by the index.
According to the latest report, home prices within the Charlotte housing market rose 0.9% in February, compared to the previous month. (There is a one-month reporting lag with this particular index.)
Home prices rose more rapidly in January than February. Last month, Case-Shiller reported a December-to-January gain of 0.5% for this metro area, compared to the more recent 0.9% gain. This is good news for homeowners, particularly those who are planning to sell sometime in 2015.
In addition to tracking prices from month to month, the index also reports annual trends. And here again, the news is positive. According to the latest report, home prices in the city rose 5.4% from February of last year to February 2015.
Major Population Growth Boosts Housing Demand
To say that Charlotte’s population is growing would be an understatement. According to data compiled by the U.S. Census Bureau, Charlotte had the second-highest population growth among the nation’s 25 largest cities from 2010 to 2013. The projected 2014 population for the entire metro area is 2,511,577.
More residents means higher demand for housing, on both the rental and purchase side. There’s a growing pool of home buyers in the Charlotte real estate market, at a time when inventory is fairly static. When demand outpaces supply like this, it tends to push prices north. And that’s exactly what we are seeing in the Charlotte housing market, as of spring 2015.
Low Mortgage Rates Also Driving Demand
Last week, the average mortgage rate for a 30-year home loan in Charlotte, North Carolina was 3.65%, according to a leading survey of the mortgage industry. That’s close to the record-low set a few years ago. Thirty-year mortgage rates have been hovering below 4% since January 2015. This is luring more home buyers into the market, especially when combined with the threat of rising prices.
Charlotte home buyers who choose a short-term adjustable-rate mortgage (ARM) could land an even lower interest rate. The average rate for a 5/1 ARM loan at the time of publication was 2.84%, according to Freddie Mac. (This is a loan that carries a fixed interest rate for the first five years, and then adjusts annually thereafter, as explained here.)
Is the Charlotte Real Estate Market Cooling?
Home prices in the Charlotte metro area rose considerably over the last couple of years, and they are expected to continue rising over the next 12 months. But homeowners probably shouldn’t expect the same level of appreciation as what we saw last year. Most economists are predicting more moderate gains going forward, for the Charlotte real estate market and for the nation as a whole.
The economists at Zillow recently issued a 12-month outlook for this market. They expect home prices in the area to rise by around 3.1% over the next year, compared to a reported gain of 5.5% over the last 12 months. So while Charlotte is still a strong market that favors sellers over buyers, it could level out some over the coming months.