“This too shall pass,” they say. “Real estate prices can’t keep climbing like this forever,” they say. Markets go through cycles and it seems that 2022 has been a pivotal year. So what’s happened over the past year?
Home prices – Exactly one year ago, I wrote a blog entry called “New High for Median Real Estate Price in Charlotte.” At that time, the median home price hit $400,000 for the first time ever for single family home sales in Mecklenburg County. The median continued to rise to a high of $475,000 in June and then came back down to $436,000 in November. Noteworthy is that the median home price is currently 9% higher than it was this time last year. The drop from summer until now is typical of the season market. Low supply continues to drive price growth.
Inflation – The Consumer Price Index was at 7% this time last year. It rose to a peak of 9.1% in June which corresponds with the high mark for median sales price in 2022. The Federal Reserve didn’t start increasing the Fed Funds Rate until February of 2022 and the last increase was in November. Their actions appear to be having the desired effect as the inflation rate was back down to 7.1% by November. There is a delayed effect between the raising of the Federal Funds Rate and the effect on inflation. Based on the data trends, we can assume inflation will continue to come down over the coming months.
Mortgage Interest Rates – The 30 year fixed mortgage rate started 2022 off at just over 3% and, following 10 Year Treasury Index, began to rise around the same time that the Fed began to raise the Fed Funds Rate. The 10 Year Treasury peaked towards the end of October and the 30 Year fixed mortgage followed. The Freddie Mac 30 year mortgage rate peaked at just above 7% and is now back down to just above 6%. Assuming that inflation continues to come down, the economists and experts I follow agree that interest rates are likely to fall further in 2023.
Home sales – The number of single family homes sold in November 2022 was 41% lower than the sales in the same month in 2021. With interest rates double what they were last year and median prices up 9%, demand slowed. When we say that the Fed is trying to “curb inflation,” this is what we mean. Their efforts are working. This means some short term pain for those in the real estate business because there aren’t as many sales to go around. But it’s a temporary situation and all of this data combined and considered over time, suggest that inflation and interest rates have peaked for now and things should start to stabilize.
Inventory – For the past several years, limited supply has been the factor most impacting the real estate market. With the decrease in demand due to the above discussion, supply has slowly begun to increase. However, with only 1.5 months supply in Mecklenburg County it is still a sellers market, so don’t expect prices to fall anytime soon.
There is an old saying that the best time to buy real estate is five years ago, and the second best time is right now. After 20 years of being in the real estate business, I understand that saying first hand and I wholeheartedly agree. Real estate is the best way for the general population to build wealth and it is still a good time to buy. With increasing supply, there should be more choice and less competition for buyers in 2023 making the home search process a bit less stressful. That sounds like good news to me.
I’d like to wish you the happiest of holidays and thanks for trusting my team and I to serve your real estate needs over this past year. In two weeks it will be a new year and we’ll be ready to serve with a fresh start.
In the meantime, we’ll be sending out our monthly E-Newsletter with a summary of all the market stats for Mecklenburg County single family home sales, comparing November 2022 with the prior month and the same month last year. Here’s a sneak peak:
- Home sales are down 18% from last month and 41% from last year.
- Average sales price is down 1% from last month, but up 14% from last year.
- Median sales price is down 5% from last month, but up 9% from last year.
- Average price per square foot is even with last month, but up 12% from last year.
- Sale to list price ratio is at 98%, compared to 99% last month and 102% last year.
- Average time on market is up 32% from last month and 120% from last year.
- Pending home sales are down 4% from last month and 44% from last year.
- Supply is down 6% from last month, but up 198% from last year.
- Mortgage rates at 6.13% are down from 6.9% last month, but up from 3.07% last year.
- Average house payment is down 7% from last month, but up 66% from last year.