For many, this real estate market feels like the story of David and Goliath – buyers, seemingly in an underdog situation, are up against what seems like a much stronger adversary in sellers. In a recent analysis published by Ely Portillo from the UNC Charlotte Urban Institute, buyers in the Charlotte market are up against an even bigger foe: Wall Street.
That’s right, according to the recent analysis, Wall Street-backed landlords now own close to 11,500 single-family homes in Charlotte. Companies like Invitation Homes, American Homes 4 Rent, and Tricon American Homes are scooping up hundreds and thousands of homes in the area. Their target? Single-family, starter homes, and they’re pushing many people such as lower-income and first-time home buyers out of the market with their all-cash offers and short closing periods. A few key facts from UNC Charlote Urban Institue’s analysis:
- The average price point of single-family rental houses owned by the companies analyzed was around $206,000, well below the average of all single-family homes in Mecklenburg County. Have a home to sell near this price range? Odds are, you could see plenty of all-cash offers upon listing.
- The single-family rental companies tend to focus on middle-income neighborhoods, with fewer purchases in the higher income “wedge” of southeast Charlotte or the northern part of Mecklenburg that includes Davidson and Cornelius.
- While the analysis focused on Charlotte and Mecklenburg County, most of the companies also own hundreds or even thousands of more houses in the surrounding counties, especially in high-growth areas like Union and Iredell counties.
- Despite the big numbers, the companies still hold a relatively small portion of the single-family home market: 4.3% in Mecklenburg. Did you know there were more than 268,000 homes in the county?
So, what does this mean for Charlotte’s housing market? With a historically low supply of homes, the increased competition makes it even more difficult for buyers (fear not if you find yourself on the buy-side; we have some tricks up our sleeves to help you secure the winning bid – keep reading below). The low supply and high demand equate to a continued increase in home prices, which we saw in May as the average sales price in Mecklenburg County reached an all-time high of $507,680. To say the market continues to be on fire, is an understatement! At least in the mid-term, those Wall Street-backed companies are likely to hang on to their purchases as they continue to grow their rental portfolios. This is good news for a market looking to maintain its increasing property values.
For buyers looking to create their own David and Goliath success story, working with an experienced real estate team like the W Realty Group is the first step in becoming this story’s hero. Here are a few “stones” that can help you take down any competition, no matter how large they appear:
- Make it known you aren’t an investor through your Realtor and a “love letter”, if accepted by the seller – more and more sellers are factoring this into their decision if deciding between two strong offers.
- Consider leveraging companies such as Ribbon, which enable individuals to make all-cash offers on primary residential homes. This allows you avoid barriers such as financing contingencies, appraisal gaps, and longer DD/closing periods.
- Work with your Realtor to contact the listing agent and see if you can find out what matters most to the seller (sure they care about a high offer and Due Diligence/Earnest monies, but perhaps they’re more motivated by a specific timeline and something such as a lease-back could be advantageous for your offer).
- Consider non-contingencies as part of your offer (e.g. appraisal, inspection, etc.), but know the risks you take with this approach!
Have questions about navigating the real estate market? We are here to listen and help guide you along the way. Know someone who is thinking of buying or selling? We’d love to help them too! Feel free to share this blog with someone who might be interested and if there are other topics or real estate questions you want answered, let us know. As always, here’s a quick market summary for single-family homes in Mecklenburg County showing comparisons to the previous month and the same month last year:
- Home sales are up 8% from last month and 36% from last year
- Average sales price is up 7% from last month and 25% from last year
- Median sales price of $380,000 is up 4% from last month and 17% from last year
- Average days on market is down 33% from last month and 68% from last year
- The housing supply continues to dwindle at 2.64 months, down 1.5% from last month and 23% from last year
- Mortgage rates have fallen back under 3% on average, slightly lower than last month and 0.3 basis points lower than last year