Low inventory has been the defining factor of the real estate market in Charlotte for several years now. In fact, the data shows that the housing supply here has been falling steadily since mid 2010. For clarification, the housing month’s supply (or inventory) is defined as the number of months it would take for the current inventory to sell out based on demand. As real estate professionals, we consider a six month supply to be a balanced market. When supply rises above six months, then we have a buyer’s market. When it falls below, then it is a seller’s market.
In the spring of 2010, it was a strong buyer’s market with a 12 month supply of housing. But that figure began a slow fall from that point until now. In the fall of 2012, the supply had dropped down to six months at which time the market had officially shifted to a balanced market. That balance didn’t last long though, and in the fall of 2014, housing supply fell into seller’s market territory. The trend continued, and the low inventory went lower and lower year after year right through mid 2018. The lowest point was in December of 2017, when supply had dipped to 2.7 months. But in August of last year, the downward trend of supply apparently came to an end. For the past nine months, the supply number has slowly crept back up. In May, it had risen back to 4.65 months. To be sure, this is still a seller’s market. But the slow climb has been steady. At this pace, we could be back to balanced within another year, and then back to buyer’s market.
Real estate prices in our city continue to rise. The average sales price for Mecklenburg County in May was $386,573 which is about $12,000 higher than the previous monthly record. Prices rise more quickly in a seller’s market due to limited supply. But with inventory on a slow rise, the rate at which prices are increasing is likely to begin a slow down as well.
Now that’s not a bad thing! Keep in mind that over the long term, price appreciation of 3-5% is normal and healthy. We’ve experienced substantially greater appreciation for years now. The higher than normal appreciation rates have been going on since 2012. So a return to normal is okay and should be expected.
So what does all this mean? For buyers, the increased inventory means a great selection of homes to choose from! Plus, interest rates have fallen a good bit since last year. So even though home prices have risen, the average house payment is actually lower this May than it was the same month last year. For sellers, it is still a great time to sell! Inventory is still very low, prices are rising, and property is moving quickly. However, based on the trends I see in the data, this window of opportunity appears to be closing.
As always you can find the monthly housing stats for Mecklenburg County here: http://wrealtygroup.com/market/stats/ And if you or someone you know is thinking about buying or selling a home this summer, please reach out and let us know. We’d love to help! Happy 4th of July and enjoy those summer vacations!