The last month has been full of market uncertainty and lots of questions about what’s going on, what to expect with rising interest rates and inflation. There’s also been some recent turbulence in banking fueled by the media and lack of information. Here’s what’s going on in Charlotte, which is a seasonal market and has always been that way for at least the 20 years that I’ve been paying attention.
Last month I reported that there were only 579 single family home sales in Mecklenburg County in January, a number that was down by almost 40% from the same month the prior year. The low sales were clearly a product of a spike in mortgage interest rates that peaked in October. The home sales number is back up to 774 in February. This is still significantly lower (17%) than February last year, but shows that the bottom has been reached for 2023. January and February have been the two months with the lowest number of sales every year since I’ve been practicing real estate. As is typical, we can expect to see the number of sales rise from here as we get into the busiest parts of spring.
Additionally noteworthy in February is that average home prices rose 6% and the median price rose 4% since last year. Home prices typically rise through the spring, so if history is correct we should see further price growth in the coming months.
Today, the Federal Reserve increased the Federal Funds rate by .25%. A rate increase was already expected by Wall Street and there are signals that the rate increases may slow from here. Mortgage interest rates are tied to the 10-year treasury yield, which dropped after today’s move by the Fed. So it is possible that the mortgage rates may fall some as a result, rather than increasing further.
In the past few weeks, there were two banks heavily connected to wealthy venture capital that experienced some serious trouble, causing more fear and uncertainty. These banks were serving a high number clients with deposits well above FDIC limits, so these deposits were at a much higher risk and this situation is not common to the average bank. However, the uncertainty created by the situation may have actually contributed to the Fed not making more aggressive rate hikes, which could ultimately benefit the mortgage market.
Bottom line from my perspective is that spring is here and this is the time when real estate gets busy. Our office is seeing a substantial increase in activity and buyers seem to be getting comfortable with the idea that interest rates in the 6’s are here to stay for now. Inventory is still low, multiple offers are still happening and real estate continues to be one of the best investment tools for wealth building.
Here’s a brief summary of the market stats comparing single family sales for Mecklenburg County in February, to the previous month and the same month last year.
- Homes sales are up 34% from last month, but down 17% from last year.
- Average sales price is up 7% from last month and 6% from last year.
- Median sales price is even with last month, but up 4% from last year.
- Average price per square foot is up 5% from last month and 3% from last year.
- Sale to list price ratio is 99%, up from 98% last month, but down from 102% last year.
- Average time on market is up 20% from last month and 130% from last year.
- Pending sales are up 8% from last month but down 24% from last year.
- Supply is down 49% from last month, but up 184% from last year.
- Mortgage rates at 6.6% are up from 6.13% last month and 3.76% last year.
- Average payment is up 12% from last month and 46% from last year.