We are more than half finished with the
Summer of 2020, and the COVID-19 virus surged a bit in North Carolina in
July. The Governor extended Phase 2
re-opening for several weeks, although real estate services are considered
“essential” under Phase 2 and, therefore, real estate activity saw a significant
increase in July. So is this a good time
to sell a home in Charlotte metropolitan area, in spite of continuing pandemic
concerns?
The short answer to the above question
is an unqualified “yes.” This isn’t just wishful thinking en route
to a hopeful return to some normalcy. It
is clearly supported by the July data. According
to the Charlotte Regional Realtors’ Association (“Canopy”), in July of 2017
there were 24,337 active listings. In
July of 2019 there were 22,932 properties for sale. But in July of 2020, only 18,576 properties
were actively listed for sale.
Conclusion: inventory of homes for sale remains very low in the
Charlotte area, and that puts sellers in a very good position. There are fewer homes competing for buyers,
and conversely there more buyers considering a limited number of homes
available for sale. This is a classic
“Sellers’ Market.”
The above conclusion is borne out by the
closed sale price to list price ratio.
In July of 2017, home sales closed at a price that was 98.7% of the listing
price on average. That ratio was the
same in July of 2019. But in July of
2020, Charlotte area homes sold on average for 99.4% of the price at which they
were listed. Again, this data comes from
Canopy.
Combining this with historically low mortgage
interest rates, which make a home purchase more
affordable to the buyer, and we are presented with an extraordinary opportunity
for sellers to cash out the significant increases in market value most homes
have seen in the Charlotte area over the last several years. As of August 3, 2020, the typical 30 year
mortgage carried an interest rate of 3.09%, down 5 basis points from the week
earlier. A typical 15 year mortgage
carried at rate of 2.72%, down 3 basis points.
All of this reflects an undeniable
continuation of the Sellers’ Market we have seen for some time. In fact, with the uncertainty associated with
the outcome of the upcoming November elections—and the implications that
outcome may have on the economy in general, and the real estate market in
particular, this may well be an optimal time to sell a home. COVID-19 will eventually be brought under
control—probably sooner rather than later, if the recent talk of a vaccine
before the end of 2020 is true. The
November elections may actually present more of a wild card that sellers might
wish to avoid by selling before the results are known.
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