It is no understatement that the past 2 years in our real estate market were a bit unorthodox. Real estate, along with any industry, has trends that can be seen over time. As we started 2017 I broke down the real estate trends I saw and what I predicted would happen last year based on my experiences and insight. And wow, they sure did influence the real estate market we're coming into in 2018!
This past year had a theme of “low inventory.” As a result, home prices continued to rise, and multiple offers were everywhere! This gave most real estate agents a lot of experience working multiple offer situations, for both buyers and sellers.
2017 was a year with continued low interest rates, which translated into better affordability for home buyers. The most competitive price point in 2017 were homes around $200,000, and I believe this will continue into 2018. Not only do we have many first-time home buyers, but we continue to have loads of investors – with lots of cash to spend - who have been in our market since 2010-11 and who will remain here into this year.
So let's revisit last year, and what it means for this new year.
Karen’s Predictions for 2017:
PREDICTION 1: Home prices will continue to increase.
- In 2016 we saw price increases across the board, with the Median Price increasing 7.5% over 2015. I expected prices to rise into 2017, but not quite as steep. The market remained strong in 2017, and it remained a great time to sell.
Median sales price actually increased 9.2% to $226,000. Sellers received 96.9% of their list price.
PREDICTION 2: Inventory is going to stay low
- At the beginning of 2017 we were at fewer than three months of inventory across the market, and that was very, very low (a balanced market is six months of inventory). I anticipated this low trend to continue into 2017, and now it has continued into 2018. The surprise: available home inventory is even lower now, at just under 2 months!
- While closed sales increased 5.9%, but the number of homes available was 19.4% lower. Our number of new listings actually increased year-over-year... but I think this speaks to the pent-up demand from buyers. Even though we had more listings, they got snatched up quickly, and our available inventory is lower than it was a year ago.
- We still have an influx of people who are moving to Charlotte, and there just isn’t enough available housing for everyone. New construction plays a role here, however, buyers are buying nearly as quickly as builders are building; builders can’t keep up with the demand overall. Therefore, even as more sellers list their homes for sale this year, we will continue to see low inventory and decreasing days on market.
PREDICTION 3: Millennials will have a bigger portion of home sales
- I predicted we were going to see Millennials as a larger component of the home buying crowd in 2017, now that the older segment of millennials are climbing out from under that weight of recession, debt and lack of work. Rental rates in Charlotte are still very expensive – we are among the top 25 markets as far as rising rental rates – so it’s becoming more difficult for millennials to continue to rent in the city. This, coupled with still-low interest rates, new jobs, and better income and savings, makes housing more affordable to own. With rents showing no signs of halting their climb, buying will continue to be the more affordable and sensible option.
PREDICTION 4: Our investor traffic will remain high
- Since 2010, at the height of foreclosures, Charlotte has been very investor-heavy, and I didn’t see this slowing in 2017. As I mentioned earlier, rental rates are quite competitive and high here. This means investors are seeing decent yields. We continued to see the large-scale investors – those who bring millions in cash to buy multiple properties at once – blanketing the market. Unfortunately this caused owner-occupant buyers, particularly those who are looking in the under $200,000 price point, to continue to have a difficult time beating the investors in multiple-offer situations. This is why it is so important to work with an agent who knows what they're doing in multiple offer situations!
PREDICTION 5: The “HGTV / New Construction Effect” will continue
- The “HGTV Effect” and “New Construction Effect” play a large part on the overall aesthetic of homes, as well as on our market! Given the amount of new construction we have around our town, when the buyer looks, they get swept away by how new and perfect everything looks. Even though we are in a sellers’ market, this effect does impact the resale market. For sellers of resale homes to sell quickly and for top dollar, preparing a home for sale – decluttering, staging, accurate pricing – are all demands of today’s buyer. Move-in ready is the name of the game for the bulk of buyers. They do not want projects to take on; rather, they want to pull the moving truck up on closing day and move right in. The more our market is saturated with new homes (and HGTV is on the air), buyers will be seeking perfection!
There you have it! Five real estate predictions for 2017 that came true, and will continue into the new year! I will keep you updated on the trends as we go through this year. Have a safe, happy, healthy and successful 2018!