The real estate market stats for March show a few new records. The average sales price for single family homes in Mecklenburg County has hit yet another new high at $534,635, up 12% over last year. Not only are home prices rising quickly, so are mortgage interest rates. The 30 year fixed rate in March was 4.17% up from 3.08% a year ago. This is over a full point increase from last year and a 1/2 point from February. When we couple these record prices with the higher interest rates, the result is the highest average home payment in Charlotte’s history. One word explains why you can’t afford to be afraid of these rising costs: inflation.
This past November I wrote briefly about inflation in Real Estate Prices and Inflation. Yet, the point needs to be emphasized again as fear of a market slowdown has increased. Yes, it is more expensive to buy today than it was a year ago. If I could go back in time with a bunch of cash I would buy more real estate. But since I can’t do that, I recommend the next best thing, buy more real estate now!
The current rate of inflation is 8.5% according the US Bureau of Labor Statistics. This means something you could get for $100 last year is now going to cost you $108.50. Your cash is losing its value at the current rate of 8.5% Real estate is one of the best known hedges against inflation. While inflation was at 8.5% last month, real estate prices were up 12%. With your money in cash, your investment is losing value. If its in real estate, you are gaining value.
The hesitation I’m hearing from people most often lately is that “we’re going to wait until real estate prices fall before we buy.” This is a dangerous move. The supply of housing right now is less than 1 month. A six month supply is considered to be balanced. Anything less is a seller’s market. We are seeing the reality of this with very short time on market for listed homes, multiple offers, and above asking price sales prices. As long as there are multiple offers and low supply, we are not going to see a drop in prices.
The primary tool that the government has for controlling inflation is to increase interest rates. As rates go up, so will monthly payment. Locking in a payment with a 30 year fixed mortgage can stop the bleeding and fix your housing expense. Today in the Charlotte area, the cost of renting a home versus owning is roughly the same. But as inflation continues, rents will also go up while a fixed mortgage will stay the same.
Those who choose to wait are likely to be kicking themselves in the future. Just like I’m kicking myself for not buying more real estate last year and the year before. It’s not too late. Give our team a call and we can help you invest in a home and invest in your future!
This week we’ll send out our monthly E-Newsletter with the full stats for Mecklenburg County single family homes. Here’s a sneak peak:
- Home sales are up 34% from last month, but down 17% from last year.
- Average home price is up 5% from last month and 12% from last year.
- Median home price is up 5% from last month and 19% from last year.
- Average price per square foot is up 4% from last month and 21% from last year.
- The current sales to list price ratio is 103%.
- Average time on market is down 30% from last month and 33% from last year.
- Pending sales are up 5% from last month, but down 16% from last year.
- Housing supply up 8% from last month, but down 11% from last year.
- Mortgage rates at 4.17% are up from 3.76% last month and 3.08% last year.
- Average house payment is up 11% from last month and 28% from last year.
- Average monthly rent is down 2% from last month, but up 11% from last year.
Photo by Goh Rhy Yan on Unsplash