A significant change in mortgage rates over the past twelve months has driven a shift in the real estate market. The effect is a slowdown in the number of sales, yet prices continue to rise over the previous year. The decrease in units sold is easily explained because buyers have lost buying power. The change in rates has caused the average house payment to increase by 55%, comparing December’s stats to the same month last year. And the number of home sales in December was 39% lower than a year ago.
One may infer that fewer sales means prices would fall as a result. However, that has not been the case and this is because the housing supply still remains low and well within the definition of a “sellers market.” The record low supply that our market started with when rate increases began has protected homeowner equity over the past year. As long as supply and demand remain in check, prices will continue to hold steady. The average sales price for a single family home in Mecklenburg County in December was 8% higher than they same month in 2021.
The Federal Reserve’s actions to curb inflation appear to be working, The inflation rate peaked at 9.1% in June and it is already down to 6.5% as of December. Mortgage rates have also fallen from their peak in October which is good news for a borrower’s monthly payments.
In Charlotte, the real estate market typically is slowest in January and picks up steam as we head into spring. I don’t think we can really say what all of this means for the outlook for the rest of the year until we get into the spring market. But the low supply and falling rates, balanced against reduced demand and longer time on market suggest to me that we are getting back to a more “normal” and healthy market. The dust seems to be settling and real estate continues to prove itself as a great investment
Here’s a summary of market stats comparing single family home sales in Mecklenburg County for December 2022:
- Home sales are up 2% from last month, but down 39% from last year.
- Average sales price is even from last month, but up 8% from last year.
- Median sales price is even from last month, but up 9% from last year.
- Average price per square foot is down 2% from last month, but up 9% from last year.
- Sale to list price ratio was 98% which is the same as last month, but down from 102% last year.
- Average time on market is up 21% from last month and 122% from last year.
- Pending sales are down 2% from last month and 38% from last year.
- Supply is down 15% from last month but up 268% from last year.
- Mortgage rates at 6.15% are down slightly from last year, but up from 3.1% last year.
- Average payment is down 2% from last month but up 55% from last year.