The Impact Of The COVID-19 Pandemic On The Charlotte, NC Real Estate Market
Nicole Leininger March 3, 2022
Nicole Leininger March 3, 2022
When the COVID-19 pandemic began in 2020, the U.S. economy was all but ground to a halt. Uncertain economic conditions that normally create market instability had Charlotte, NC real estate experts preparing for the worst. While the economy as a whole has yet to recover, a real estate boom is shocking the entire country and it shows no signs of slowing down.
During the first few months of the pandemic, few could predict how property values would be affected throughout North Carolina. With many Americans in service-focused industries losing their jobs and struggling to make ends meet, market volatility had nearly everyone terrified about what was to come. The turmoil had economists projecting a second Great Recession that would tank real estate values.
However, swift intervention from the United States government managed to keep the market on track and breathe new life into the Charlotte, NC real estate market. Federal programs granted some relief to those being economically impacted by the pandemic. Some businesses were able to secure paycheck protection for their employees, and some mortgage lenders were able to offer forbearance or loan restructuring. However, low and stable interest rates have made the most positive impact on the real estate market.
As soon as it became apparent that the pandemic was a significant threat to the U.S. economy, the Federal Reserve cut interest rates to an all-time low and launched a $700 million full-scale effort to ease the burden on Americans. Since Federal Reserve interest rates are ultimately tied to the rates mortgage lenders offer homebuyers, mortgage rates also went down.
These unprecedented low mortgage rates enticed new home buyers into the real estate market. People quickly realized that a mortgage was very affordable and, in fact, often a cheaper payment than monthly rent. Additionally, current homeowners were suddenly able to afford more house for the same mortgage payment and began looking to upgrade their homes.
The low interest rates worked well to stimulate the Charlotte, NC real estate market because they are temporary. Economies can be cyclical, and rate drops like those of recent years generally do not stick around forever. Buyers realized that this was the time to buy and, if they waited, they might be leaving money on the table.
Home prices continue to rise in Charlotte and throughout most of the country. With so many buyers competing for inventory, homes are selling for more than ever. The median list price for homes in Charlotte was $369,900 toward the end of 2021. That’s a 15.2% increase year-over-year.
In Charlotte and in most other areas around the country, the low inventory and high demand will continue to drive prices upward in 2022, but the climb may be slower as the Federal Reserve begins to raise interest rates. The first rate hike of 2022 is expected in March and will likely be a quarter-percent raise.
There are different categories in the housing market, and each of them is doing well. However, lower-priced homes are more popular right now and are selling at faster rates than high-end homes. This could be attributed to the low interest rates enticing first-time home buyers into the market.
Often, first-time homebuyers carry student loan debt, which affects their buying power and lowers their budget. They generally purchase properties on the low to mid-range of the price scale rather than luxury homes and condos in the high six-figures. In 2021, buyers aged 31-40 purchased homes with a median value of $300,000, while buyers 30 and under purchased homes with a median value of $229,000. Buyers of homes in the luxury price range tend to skew older, and those homeowners have largely been staying put during the pandemic.
Homes are flying off the market in record time, which is great for sellers. For buyers, however, the Charlotte, NC real estate market is pretty tight. Inventory is extremely low during these times of uncertainty because current homeowners are holding onto their homes to retain some sense of stability.
When homes do hit the market, they aren’t staying there very long. In 2021, most homes only sat on the market for an average of 16 days. In some areas, time on the market is as low as a week. The low inventory can be very frustrating for potential buyers, as less homes on the market means searching for a property can take several months.
If you are looking to buy a home in Charlotte, there are steps you can take to make your home search easier. For example, work with a mortgage lender to get pre-approval and find out the budget you have to work with. It is possible you will end up in a bidding war for a property, so you need to know the maximum you can afford to offer. Having your financing prearranged makes your offer more attractive and expedites the process once you are under contract.
Additionally, working with a real estate agent can keep your search moving forward. Agents have access to the MLS real estate listing database and can filter listings with your wants and needs to produce a shorter list of properties that might interest you. This can help save you tons of time in searching for-sale-by-owner sites or driving through neighborhoods looking for properties.
Having an experienced agent by your side can also help you strategize and make your offer stand-out compared to the others. Besides offer price, there are several other factors sellers consider when choosing that winning bid. Having a game plan and strategy can help get your offer accepted the first time, saving time and energy for all parties involved.
A real estate agent can also act as a support system, especially for first-time home buyers. Your agent will help guide you through the offer, negotiation, and contract processes and will be there to offer advice through the closing. Without an agent, you’re left to work with attorneys and handle the process on your own.
Whether you are looking to buy or sell real estate in the greater Charlotte or Lake Norman areas, Nicole Leininger is the perfect real estate agent to help you navigate current real estate market trends and market conditions. Contact Nicole today to start the search for your home.
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