2020 has been an unprecedented year.
From a global pandemic to stay at home orders, it’s been a year unlike any other.
This craziness even extends to real estate.
Pent up buyer demand and a persistent inventory shortage have made Charlotte’s real estate market extra hot this summer.
What does this mean for your clients?
Well, it’s great news if they’re a seller.
And, there are perks if they’re a buyer.
Want to know more? Here’s a recap of everything you need to know about the 2020 summer Charlotte real estate market.
Charlotte Market Overview
According to Allen Tate, a top brokerage in North Carolina, there is a strong seller’s market this summer. The brokerage reports that low inventory, increased buyer demand, and lower interest rates mean there are more buyers than there are homes available. Here’s a detailed look at market:
Home Sales are Up
More homes were sold in Charlotte this summer compared to all of last year. In 2020, there were almost 5500 homes sold in July. That’s an 11.7% increase from 4900 sold in July 2019.
Stay at home orders made it difficult for buyers to purchase a new home and for sellers to put homes on the market. So, most buyers who were looking to buy in March, April, or even May had to pause their plans.
Once these rules were lifted, buyers who had been waiting months flooded the housing market. Combined with others who had planned to purchase this summer, these buyers created record demand and home sales in Charlotte.
Although more homes have been sold this summer when compared to 2019, there are fewer homes for buyers to choose from. Last year, there were over 10,500 homes on the market in July. That number decreased by 47.5%. For July 2020, there were only around 5,500 homes on the market.
Contributing to this shortage are seller fears from the pandemic. While virtual tours can help, sellers are still reluctant to put their homes on the market.
And, in Charlotte, it’s much faster to buy a home than to sell one. Some sellers hold off on selling their homes because they’re worried about selling too quickly. And as a result, the inventory on market reduces.
All of these factors can create a severe inventory shortage. If your client is a buyer, this leaves them with fewer choices. And, more competition for every house. While challenging for buyers, if they’re a seller, this can help you get more for their home. According to Allen Tate, “Low inventory levels are great for sellers, as it typically means anything that enters the marketplace–given the fact that it’s in good condition— will be under contract fast.”
Increasing Home Prices
Another trend is rising home prices. The median price for a home in Charlotte was up 7.5% this summer. In July of 2019, the median sale price was $265,000. Whereas in July of 2020, the median sale price was $285,000.
With shrinking inventory, each house becomes more valuable. Since there are so few homes, buyers are willing to pay more for one. Buyers know how competitive the market is, especially at the median home price, so they’re willing to bid over asking price to secure one of the few homes available.
Prices have increased steadily in Charlotte for the last decade. Low inventory combined with a booming local economy have contributed to this increase.
For sellers, it means they can get a great return on their investment. But, if your client is a buyer, rising home prices could essentially price them out of the housing market
Along with less inventory and rising prices, homes in Charlotte have spent less time on the market. In 2019, homes were on the market for 38 days. But, in July 2020, homes are on the market for only 36 days. That’s a decrease of 5.3%.
A lack of inventory and increased demand play a role in Charlotte homes selling faster than average. With so few options available, buyers rush to put in offers as soon as possible, which reduces the time houses spend on the market before selling.
Unfortunately for buyers, shrinking market time means they don’t have much time to think on a property. Waiting to put in an offer could cost them a home. For sellers, this is great if your client wants to sell their home fast. But, if they also need to buy a new home, it can make the timing for buying and selling challenging.
Low Mortgage Rates
While home prices are increasing, mortgage rates are at historic lows. For a 30-year mortgage in July 2019, the interest rate was 3.58%. In July 2020, the interest rate dropped to 2.91%. That’s a decrease of 18.7%.
In response to the pandemic, the Federal Reserve lowered interest rates to stimulate the economy. When it’s easier to borrow money, people and businesses will borrow more, which allows them to spend more – creating additional jobs and giving the economy a boost.
Although the Fed doesn’t have control over mortgage rates, these rates react to the same market factors that influence the Fed’s decision. With the economy slowing, mortgage rates decrease to incentivize more people to buy homes.
Lower interest rates mean that your client will pay less each month on their mortgage. The rate decrease from 2019 to 2020 can save them thousands over the lifetime of their loan. So, they have to pay less each month in interest. This makes it a great time to buy. Low interest rates also make it a good time to sell – because more buyers create a seller’s market.
Wrapping It Up
Although the pandemic initially slowed the market in March/April, Charlotte’s housing market has bounced back quickly this summer. Home sales and prices have increased since last year. While inventory, time on the market, and mortgage rates have decreased. These factors combine to create a strong seller’s market.
If your client is a seller, now’s a great time to sell! Plus, sale prices are forecasted to decline slightly in the next year. Selling now can help your client get the best price for their home.
If your client is a buyer, not to worry! Low interest rates make now a fairly good time to buy. At the least, low rates offset the lack of inventory and higher prices. And, it might be smart to buy now before rates go up in the next 1-2 years.
Looking for a way to sell your client’s home – without the risk of financed offers? Keep your eye out for Ribbon Cash Offers – Ribbon can upgrade your buyer to an all-cash offer and close in as little as 14 business days, without contingencies. Learn more about how Ribbon can help your client sell their home or buy a new one today.