Real estate prices have been consistently climbing in Charlotte since 2009. This past summer the average price for a single family home hit $331,000 in Mecklenburg County which is up from the bottom of $241,000 back 2009. That’s a $90,000 increase in average selling price and a 37% total gain in only seven years. Last month alone prices were up almost 12% over the same month last year. Considering that over time, the average appreciation in our county has historically been 2-4%, it seems like there might be another bubble. Price appreciation cannot keep up a pace of double digit growth, so when is the bubble going to pop? Admittedly, even as a seasoned professional who has been watching the market data closely since 2003, I often ponder this question.
But not so fast! While the Charlotte market has experienced some exaggerated swings from year to year, the longer term averages over time paint a very different picture. And the moral of the story, that we’ve known all along deep down, is that over time the bumps will even out. And it generally doesn’t take as long as one might think. Looking at the average annualized return based on average sales price, the ten year average for Charlotte is a mere two percent. The five year average is five percent. Here is a chart showing the average annualized returns from the peak prices of 2016 back to the year listed on the left side of the chart:
Since Year Average Return
Even after the severe swings we’ve experienced through boom and recession, real estate continues to prove itself as a stable investment over time. And when looking at the numbers from this longer term perspective it appears that there is no bubble. While the current rate of appreciation is not likely to continue, a bursting bubble is probably not on the horizon either.
Oh and if you want to see the latest stats for Mecklenburg County single family home sales, you can always find them here on our website: http://wrealtygroup.com/market/stats/