Charlotte Real Estate Market Shows Strength, Rising Prices

Summary: Charlotte home prices have appreciated over the last year, at a time when prices were still declining in many metro areas. This and other factors lead us to believe that the Charlotte real estate market could be one of the more stable markets through 2012 and 2013.

Earlier today, the much-awaited Case-Shiller/S&P Home Price Index was released. It contained pricing data and trends through the end of March 2012. The results were mixed. Some cities with already declining home prices continued to decline (I’m looking at you, Atlanta). Other cities switched direction from appreciation to depreciation, or vice versa. Charlotte was one of the metro cities where home prices rose from February to March of 2012.

The table below shows home price trends for all cities in the Case-Shiller 20-city composite. The column at the far right shows price changes from March 2011 – March 2012.

Case Shiller, March 2012
Case Shiller data through March 2012

According to the latest data available, residential real estate prices in Charlotte rose by 1.2% from February to March 2012. This more than makes up for a loss of 0.4% during the previous reporting period. The year-over-year numbers also show a trend toward appreciation, albeit a small one.

More People Employed, Able to Buy Homes

The Charlotte housing market is being helped along by various economic improvements, including job growth. The city’s employment picture has greatly improved over the last year.

In April 2011, the unemployment rate for the Charlotte-Gastonia-Rock Hill metro area was 10.6%. That was then, and this is now: Data released by the North Carolina Department of Commerce last week showed that the area’s unemployment rate fell to 9.1% in April 2012. “I wouldn’t be surprised if we’re below 8 percent by the end of the year,” said John Connaughton, an economics professor at UNC Charlotte.

Rising employment puts more residents in a position to buy a home, which helps lift and sustain housing prices over time. These and other trends should further stabilize the local real estate market over the coming months.

A Good Time to Buy in Charlotte?

We’ve always encouraged home buyers to focus on regional and local trends, when deciding to buy a house. Over the last few years, we have seen an increase in the regionalization of home prices. Some cities have been in a state of recovery for months, while others continue to spiral downward. Consider the difference between Phoenix, which has a one-year home price change of 6.1%, and Atlanta, which has a one-year change of -17.6%. Steady appreciation on the one hand, and serious depreciation on the other. It underscores the importance of doing local market research.

Having said all of that, is now a good time to buy a house in Charlotte? This question must be answered by individual buyers, based on their financial situations and life plans. Home pricing trends are only one part of the bigger picture. Would-be buyers should also consider their income stability, and their ability to cover a mortgage payment for at least the next few years.

Mortgage rates are still very low. The 30-year fixed-rate mortgage hit another all-time low last week, with interest rates averaging 3.78%, according to Freddie Mac. Housing in the Charlotte metro area is relatively affordable, as well. The median sales price from February to April 2012 was $144,000, according to real estate search engine Trulia.

So most of the local economic indicators would seem to support a buying decision. Charlotte home prices appears stable. Mortgage rates remain low. Housing in the area is relatively affordable. It all comes down to the buyer’s financial picture.