I have talked about affordability in my quarterly updates before, and it’s the main factor at play for 2019. In the near future we can expect the issue of affordability to push the market to become more stable. With prices and interest rates rising faster than income and wages, buyers are simply getting priced out of the market. For the first time in years, sellers will have to react accordingly.
In Charlotte, prices are still higher than they have ever been, yet pending home sales are down while days on market are up resulting from affordability and showings being kept at bay. We experienced the effects of these market forces firsthand in the 2018 fall market, in which I listed 10 properties representing all different price ranges over the month of September. We had few showings and only started to sell by late October after price adjustments and considering contingent offers. It’s clear that affordability will continue to influence the market moving forward.
Spring is always the best time to sell, and this is usually when the pricing is pushed. Over the last five years, home prices in Charlotte have gone up 5 to 7% year over year. We will still see some increase in 2019, but it’s going to be more around 2 to 3%. The inventory is still low and the right properties will go quickly. (By “right,” I mean properties that meet the expectations of buyers.) Those that have open floor plans, updated kitchens and baths, current paint trends, staging, landscaping, and are in pristine condition will sell. The market has gotten expensive for buyers who react accordingly, so they expect more for the price.
All in all, market stabilization will present a good opportunity for both buyers and sellers. As a result, buyers are going to have a little more time to consider properties and more leverage during negotiations. Spring of 2019 won’t be quite the frenzy we have seen over the last several years, and the days of multiple offers may be off the table; however, sellers are still going to be able to move their properties quickly and should gain considerable equity.
The continued high demand for new construction and infill lots means these properties will be less affected by the stabilization of the market. You’ll still see new homes selling over asking price in a matter of days, especially in Charlotte’s in-town market where many folks have the financial capability to come in with strong, all cash terms to beat out the competition.