Key highlights from this report:
- The Charlotte, North Carolina housing market is highly competitive.
- Strong demand and limited inventory have boosted home prices.
- Charlotte real estate forecasts for 2021 suggest more of the same.
- It’s one of the most competitive housing markets in the Eastern U.S.
If you looked at home-price trends in Charlotte, North Carolina — and nothing else — you wouldn’t know there was a pandemic and economic recession taking place right now.
Home prices within the Charlotte metro-area housing market have risen steadily since the start of this year, and that will likely continue into 2021 as well. This market has shown surprising strength over the past eight months or so, at a time when other parts of the U.S. economy have faltered.
Inventory is playing a big role in this. Or rather, a lack of inventory.
Strong demand among home buyers, combined with limited supply, will continue to boost house prices through this year and into next. That’s our prediction for the Charlotte real estate market, as we approach the end of 2020.
Charlotte Home Prices Rise Steadily
According to the real estate data company Zillow, the median home value in Charlotte, North Carolina has risen by 9.1% over the past 12 months or so. That figure was reported in early November 2020.
Prices in the Charlotte area have risen steadily over the past few years, even in spite of a national health crisis and economic downturn. That might seem counterintuitive, at first. But there are some practical reasons for it:
- Many home buyers in this metro area work in computer-based “white collar” jobs that can be performed remotely. So they are not as vulnerable to job losses as someone who works in, say, the restaurant or hospitality industry.
- Record-low mortgage rates have motivated home buyers who were previously on the fence about making a purchase.
- Perhaps most importantly, there is a serious imbalance between supply and demand with the Charlotte housing market. Currently, there are plenty of buyers but not enough homes to go around.
While prices have risen across the board, the biggest gains have occurred at the lower end of the pricing spectrum (where first-time buyers tend to shop). Competition is particularly high for lower-priced “starter homes,” and this is boosting values.
According to a recent report from UNC Charlotte’s Childress Klein Center for Real Estate:
“…the increase in price has been more noticeable in lowered price homes. For example, a home priced at $48,990 in 2011 jumped in price to $145,000 in 2019.”
Based on this trend, buyers who are considering a purchase in 2021 might want to do it sooner rather than later. The way this market is behaving right now, those who postpone their purchases until the latter part of next year will almost certainly pay higher prices.
Inventory Has Declined, Presenting Challenges for Buyers
On November 5, Realtor.com published its “October Housing Market” report with key trends for major metro areas and the U.S. as a whole. They singled out the Charlotte housing market for having one of the biggest drops in new real estate listings.
To quote that report:
“Within the nation’s 50 largest metros, the number of homes for sale declined 38.6%. The metros with the largest declines in new listings compared to last year included: Nashville, Tenn. (-27.5%); Charlotte, N.C. (-22.9%); and Richmond, VA. (-21.8%).”
Meanwhile, the city’s population continues to grow at pace far greater than the national average. According to the U.S. Census Bureau, Charlotte’s population grew by a whopping 20.4% from 2010 to 2019. That was more than triple the nation’s growth rate for that same nine-year period.
With a strong job market and relatively affordable homes, the Charlotte area has been attracting new residents from other cities and states across the country. This will likely continue in 2021 as well.
The city’s population growth increases demand for housing on both the rental and purchase side. It’s also part of the reason why we are seeing strong home-price predictions for the Charlotte real estate market, extending into 2021.
And speaking of those long-term outlooks…
A Strong 2021 Housing Market Forecast for Charlotte
Given the heavily skewed supply-and-demand situation in the area, it’s no surprise to see positive predictions for the Charlotte real estate market in 2021.
In November, the research team at Zillow issued one such forecast. By their estimation, the median home value for Charlotte, North Carolina could “rise 7.7% in the next year.” That projection extends into the fall of 2021.
Granted, these forecasts are the equivalent of an educated guess. They’re based on housing-related dynamics that change constantly. So we shouldn’t get too hung up on the numbers here.
The bigger picture is that Charlotte’s real estate market will remain competitive well into 2021, with prices most likely rising for the foreseeable future.
Related: 5 predictions for the U.S. housing market
Low Mortgage Rates a Boon for Borrowers
Home buyers in Charlotte, North Carolina and nationwide are currently enjoying some of the lowest mortgage rates we’ve seen in 50 years. This is boosting demand for homes at a time when inventory remains low.
Last week, the government-sponsored mortgage buyer Freddie Mac reported the results of their latest nationwide rate survey. They said the average rate or a 30-year fixed mortgage loan dropped to 2.78%. That was the lowest average in five decades, at the time.
The chart below tells you all you need to know about recent mortgage rate trends. It shows the average interest rate for a 30-year fixed home loan (the most popular type of mortgage loan) over the past year. The low point shown on the far-right side is unprecedented.
While rates are expected to creep upward into the first part of 2021, they probably won’t rise much higher than 3%. That’s based on a pair of long-range forecasts, issued by the Mortgage Bankers Association and Freddie Mac.
The bottom line to all of this:
- Charlotte real estate market forecasts predict rising home values through this year and into next.
- Tight supply conditions are forcing buyers to compete for a limited number of homes.
- Low mortgage rates will continue to boost housing demand.
- Home buyers planning to make a purchase in 2021 might want to do it sooner rather than later, to avoid higher housing costs.
Disclaimer: This story contains predictions for the Charlotte, North Carolina real estate market extending into 2021. Some of them were issued by third parties not associated with the publisher. The Home Buying Institute makes no claims or assertions about future housing conditions.
Brandon Cornett is a veteran real estate market analyst, reporter, and creator of the Home Buying Institute. He has been covering the U.S. real estate market for more than 15 years. About the author