Exploring Metropolitan Charlotte: The Vineyards

 

As we continue our blog series, Exploring Metropolitan Charlotte, we take a look this month at some area attractions that many are not aware of: local wine vineyards.  Many people who live outside North Carolina do not know that the state is a home to a thriving and growing industry that most associate with places like California.  In fact, local vineyards are not only prospering as an industry, they also present attractions that offer events and entertainment. 

 

Raylen Vineyards in Mocksville features events year-round, from concerts that support local artists to holiday merchandise sales.  Treehouse Vineyards in Monroe provides a venue for Latin music, comedy and magic shows; and it allows rental of well-appointed tree houses to create a unique atmosphere.  Daveste Vineyards in the Lake Norman area has sponsored classic car shows, along with food, music, dance and other entertainment events.  And, of course, they all provide a tranquil atmosphere for wine-tasting their original creations.

 

Many area vineyards provide a venue for weddings and wedding receptions, birthdays, anniversaries, corporate events and much more.  With the region’s beautiful seasonal climate, vineyards are thriving as an industry.  But they also provide a myriad of unique day-trip and weekend destinations that allow the visitor to enjoy the outdoors in a casually elegant atmosphere.

For more information and to search the entire Charlotte area MLS FREE, go to our web site.

Exploring Metropolitan Charlotte: South End

 

We continue our blog series, Exploring Metropolitan Charlotte, with a look into the neighborhood known as “South End.”  Located just outside Charlotte’s city center known locally as Uptown, South End owes its beginnings to the railroads that connected industrial Charlotte’s textile mills to commercial centers such as Columbia and Charleston.  As the textile industry declined in the 1970’s and 1980’s, much of South End deteriorated and became known for abandoned factories and industrial buildings.  Rail lines played a huge role in the revitalization of South End in the mid-2000’s with the opening of Charlotte’s light rail commuter line called the Lynx Blue Line in 2007.

 

Since the Lynx Blue Line commenced operations, South End has experienced a $2+ Billion  revitalization, with more than an additional $1 Billion in planned redevelopment.  This has taken South End from a wasteland of abandoned factory buildings to a diverse mix of upscale residential, office, retail and commercial redevelopment.  Apartment construction has been particularly noteworthy, with more than 9,000 high-end rental units added to the area since 2012. With that revitalization, South End has become the second most expensive area in North Carolina for apartment renters.

 

Among the attractions in South End is the Design Center of the Carolinas, a 330,000 square foot mixed use complex of former historic textile factory buildings, featuring a wide variety of retail, office and residential tenants.  Another South End attraction is the Charlotte Trolley Museum, a fitting tribute to South End’s long ties to local and long distance rail transportation and the large role they have played and continue to play in the development of the community.

 

South End has become characteristic of the enormous and continuing growth of the Charlotte metropolitan area, driven by the city’s modern light rail system and its proximity to Uptown.  In an exploration of Charlotte, South End is an easy starting point via the Lynx Blue Line, and an interesting destination.

 

For more information and to search the entire Charlotte area MLS system FREE, go to: Eric Dorer Real Estate

Exploring Metropolitan Charlotte: North End

 

The area of Charlotte, NC, commonly known as “North End” is a compilation of old and new buildings and neighborhoods just north of Charlotte’s city center (called “Uptown”).  It is continuing to experience a spike in new development activity, due largely to its proximity to Uptown and the excitement being generated by the redevelopment of a former factory complex known as "Camp North End."

 

Camp North End is a development spanning approximately 76 acres that includes a huge factory that once manufactured Model T Fords.  It is being developed by a large New York firm, and phase one includes renovation of several old factory structures that are attracting commercial enterprises and entrepreneurs such as software developers, banking, arts groups and galleries, and entertainment.  It is the logical extension of development overflow from Uptown; and housing in North End neighborhoods, which has been reasonably affordable in view of its proximity to Uptown, has begun to see rapid increases in value. Communities such as Druid Hills and Brightwalk have experienced substantial gains in property values over the last several years.

 

Like much of Charlotte, older neighborhoods in North End are experiencing a transition from an older industrial, working-class vibe to a younger, trendy, upscale lifestyle.  Embracing the prosperity that continues to accompany Charlotte’s rapid growth during the last several years, North End is gradually redefining itself.  There are still “bargain properties” to be found among the older homes that may not have been updated in decades.  However, even properties in need of substantial renovation have become somewhat pricey, as redevelopment of the area has become more of an established fact than a matter of risk-taking and speculation.  It is probably a foregone conclusion that the area of Charlotte commonly known as “North End” is likely to shed its former character as an industrial center in favor of viewing itself as a popular extension of Uptown.  

For more information, and to search FREE the entire Charlotte area MLS system for homes, condos, townhouses, etc., go to our web site.

Federal Funds Rate Raised .75 Percent and the Economy Dips into Recession… How is the Charlotte Real Estate Market Affected?

 

On July 27 the Federal Reserve raised the federal funds rate of interest by 75 basis points, inflation is raging at a 40-year high and the U.S. economy just dipped into its second consecutive quarter of negative growth of gross domestic product (“GDP”)—the textbook definition of a recession.  It’s not a pretty picture.  So how will this affect the real estate market in the greater Charlotte area?

 

The reason a hike in the fed funds rate is significant is that most other interest rates in the economy are driven by the fed funds rate.  Of course, that includes mortgage interest rates.  But the good news is that mortgage interest rates have been at nearly historic lows for years leading into 2022.  The fed funds rate certainly affects other interest rates, but it does not set them.  And the mortgage market’s reaction to the increased fed funds rate was actually a bit of a surprise.  In the case of yesterday’s Fed rate hike, instead of causing mortgage rates to increase, today’s average for a 30-year fixed rate mortgage actually decreased 0.32% to 5.22%.  Why would that be?  The simple explanation is the market was expecting the Fed to raise the fed funds rate by a full 1.00%.  The increase of only 0.75% was actually viewed positively by the market.  And even more importantly, a rate of even 5.5% on a 30-year fixed rate mortgage is by no means “prohibitive” for most homebuyers or historically high.  

 

Let’s take a quick practical look at how mortgage rates affect home affordability.  The impact can be significant.  A homebuyer who paid $300,000 for a property in October of 2021 probably got a 30-year fixed rate of about 3.2%.  If the buyer financed 97% of the purchase price, as most do, the monthly payment of principal and interest would have been $1,266.  At 5.25%, the exact same purchase would carry a monthly principal and interest payment of $1,607.  That’s an increase in monthly carrying cost of $341.00 for the exact same property, on the exact same terms—except the mortgage interest rate.  Will this knock some buyers out of the market?  Probably.  Will it dramatically decrease the number of buyers who consider the same home affordable? Probably not. 

 

If mortgage rates continue to rise, the market is likely to experience some contraction.  A 30-year fixed rate of 7.25% would require the same buyer above to pay monthly principal and interest of $1,985, for example.  That is an increase of $719 over the monthly payment required in October of 2021; and that is more likely to push a larger number of potential buyers away from the housing market.  It really is common sense.

 

There have been many periods in U.S. history when mortgage interest rates exceeded 5.25%.  Indeed, there have been times when mortgage interest rates well exceeded 7.25%.  The average since 1971 has been 7.77%.  At one point in the early 1980’s, mortgage rates exceeded an average 18%!  So, putting this in some historical context, it is not pretty or positive, but it is certainly not yet an indication that the housing market is about to crash—especially in the Charlotte area.

 

In the Charlotte metropolitan area, the inventory of homes available for sale is still quite low.  The Charlotte market has been characterized over the last two or three years by low inventory and a high number of buyers.  So even if rising mortgage rates take 10%... or 15% of the buyer pool out of the market, it is very unlike we will see anything nearing a collapse of the Charlotte real estate market.  It is more likely we will see a slowing of the market, with historically high purchase prices moderating.  Check with me again, if rates rise past 7%. 

For more information and to search the entire Charlotte area MLS for homes, townhouses, condos, etc.-- FREE - go to www.EricDorerRealEstate.com.  #CLThomesforsale, #Charlotteproperty, #Charlotteinvestmentproperty

Is the Real Estate “Seller’s Market” in the Charlotte Area Ending?

 

Anyone who doesn’t live under a rock is well aware of the extreme “seller’s market” real estate has been experiencing for several years—especially during the last year or so.  The Charlotte region is no exception.  The market in the Charlotte metro area has been characterized by low inventory of homes for sale with a large number of buyers seeking those homes.  This dynamic has led to bidding wars among buyers and closed sale prices well above listing prices.  The situation has actually only escalated over the last year.  As of May, 2022, the inventory of all homes available for sale, regardless of size or price, in the Charlotte area has actually declined 12.2% from its already low levels in 2021.  This would not seem to point toward a cooling of competition for available homes.  But there are other factors that most experts expect to cause an increase in inventory and a decline in the number of interested buyers over the next six months to a year.

 

One of the major differences between the housing market of 2021 and 2022 is the rapid increase in mortgage interest rates—and the expectation that those rates will continue to increase as the Federal Reserve attempts to check inflation over the next twelve months or so.  Few experts expect a housing value crash in the coming 6-12 months.  It is more likely there will be a correction in the housing market, resulting in decreased home values of 10% or so.  The reason for this is that increased mortgage rates place homes out of reach for many homebuyers (see my blog post for June 2022 for an exploration of this), and even if inventory of available homes does not rise significantly over the next year, fewer buyers actively seeking the homes that are available will put pressure on home prices.  Supply may not increase much, but demand is likely to decrease. 

 

The continuing lack of inventory into the foreseeable future is what is likely to save the market from an all-out crash.  In the Charlotte metro area over the last year, median closed home sale prices actually increased a whopping 18.9%. That momentum is likely to be carried forward for several months as mortgage rates gradually rise.  That is because inventory is expected to remain low.  But sellers should not expect this to last long into 2023. 

 

The current market is still characterized by sellers requiring high due diligence fees (non-refundable fees paid directly to the seller to compensate them for taking their home off the market when it goes under contract) and “as is” sales in which the seller does not make any repairs or concessions for property condition.  Those who had been reluctant to sell because they would only have to find a replacement home might consider the notion of renting for a year, watching the market cool, and buying a replacement home at an anticipated reduced price, year-over-year.    

 

In the relatively short time this market is expected to persist, any home owner considering a sale of their property might want to get their home on the market sooner, rather than later.  Things are about to change.  They won’t change in a week or a month, but they will change.  Potential home sellers: you can’t say we didn’t warn you.

For more information, or to search the entire Charlotte area MLS system FREE, go to www.EricDorerRealEstate.com

How Long and How Far Will Interest Rates Rise… How Does This Impact Home Buyers?

Everyone knows mortgage interest rates are rising.  The rate for a 30-year fixed rate mortgage in November of 2021 was about 3.2%.  By contrast, in just six months or so, rates have gone up to a national average for a 30-year fixed rate mortgage of 5.48%.  The conventional wisdom is that the Federal Reserve should keep the prime rate of interest (the rate the Fed charges banks) above the rate of inflation in an effort to keep prices from spinning into a perpetual upward spiral, and the Consumer Price Index (a major indicator of the national inflation rate) is currently increasing at an annual rate of 8.5%.  So, if the Fed adheres to conventional wisdom, it should raise the prime rate of interest to above 8.5% to counter inflation.  As much as any other indicator, this should forecast where mortgage interest rates are likely to go in the second half of 2022.

 

So what are the implications of this for home buyers?  Let’s look at a couple of examples: Most home buyers opt to put as little money down as possible.  In the case of an FHA backed mortgage or most conventional mortgages, that means the buyer needs 3% down in cash.  Then depending on income and credit, the lender will finance the balance of the purchase.  Therefore, a buyer who purchases a home for $320,000 will typically finance $310,400 (97% of the purchase price).  At a 3.2% rate in October of 2021, principal and interest payments on a $310,400 mortgage would have been $1,342 per month.  At a 5.5% interest rate, the same 30-year fixed rate mortgage with beginning principal balance of $310,400 would cost $1,762 per month.  If rates go up to 8.5%, the same mortgage will cost $2,387 per month—more than $1,000 per month more than financing the same $310,400 would have cost in October of 2021!  This not only makes the same home less affordable to a large number of buyers, it makes that home unattainable altogether to many buyers.

 

This raises at least two obvious questions: (1)Will increased interest rates dampen the demand that has fueled the current extreme sellers’ market—a market that is characterized by bidding wars and ever higher prices? (2)Is a buyer better advised to buy now, before interest rates rise further, or wait for prices to begin to moderate as mortgage interest rates rise into 2023? 

 

A discussion of the cost and benefits of owning a home vs. renting a home is beyond the scope of this June blog post.  Suffice it to say that home ownership provides tax benefits and a hedge against inflation that few other assets offer.  As the prices of everything rise, so generally do home prices—often at a better rate than inflation.  Home prices rose nationally in the year between 2021 and 2022 by an average of 16%, for example.  If inflation is running at the national average of 8.5%, housing values have been actually increasing at twice the rate of inflation.  So housing has been and will likely continue to be a very good investment.  If a buyer can purchase a home with a lower interest rate mortgage today than he or she could in December of this year, and if home values continue to rise, it might actually make good sense to buy sooner rather than later—especially if rents in the Charlotte market require the buyer to pay about the same to rent a home as to buy one.

 

But what effect will rising interest rates have on home prices in general?  As homes become less affordable, the pool of potential buyers willing to enter into “bidding wars” that drive home prices ever higher will almost certainly be reduced.  That should place downward pressure on home prices in general.  However, there is currently such a low inventory of homes available for buyers to purchase in the Charlotte metro area that even a reduction in the overall number of buyers shopping for homes may not be sufficient to cause a significant decrease in home values because there are so few homes on the market.  Some experts predict that those wild increases in home values in 2021 and 2022 of 16% or 18% are likely to moderate to 5% or 6% per year in 2023.  But that analysis still has housing prices rising, not falling.  The increase in home values and prices is expected to continue at a slower pace, but not fall—and certainly not crash, as some have speculated.  

 

In the Charlotte metropolitan area, the factors that would lead to housing market “crash” are just not present.  During the Great Recession of 2009-2010, home prices crashed because lending practices had been so relaxed that prices had been driven up by buyers who probably should not have been qualified to purchase.  This lead to a wave of mortgage foreclosures and a collapse of real estate values.  Today, lose lending practices are much less a factor in driving increases in property values.  The main factor today is low inventory, and that is not likely to change in the Charlotte market in 2022 or 2023. 

 

Every buyer has his or her own distinct set of circumstances and motivations, and each should make the decision to move forward based on careful analysis of those particular circumstances.  But, as a general proposition, it can easily be argued that buying a home before mortgage rates increase further is a sensible move to make.  This is especially so if the rate of increase of home values is expected to moderate, but home values are not expected to drop in the next year or two. 

To learn more, and to search the entire Charlotte area MLS system FREE, go to our web site.

How Can a Home Buyer Win in this Hot Charlotte Sellers’ Market?

Anyone who has even a passing interest in buying a home in the Charlotte metropolitan area has discovered that the current market is very low on inventory and high on buyers competing to purchase that inventory.  This has continued to put upward pressure on prices, created “bidding wars” between buyers, and forced successful buyers to offer concessions such as higher due diligence fees (see below for an explanation of due diligence fees) and a willingness to contract for a home in “as is” condition.  Combining this with the continuing upswing in mortgage interest rates, which are over 5.50% for a 30 year fixed rate loan at the time of this blog post.  So how can a home buyer “win” in this current environment?

 

The answer to that question is largely determined by how you define “win.”  Win does not have to mean beating all other buyers in a bidding war to get a home under contract.  Even those who have compelling reasons to find housing quickly in the Charlotte area—those who are being transferred for work… those who have sold a home into this hot sellers’ market to cash out their equity and need to find another home… those who want to lock in a mortgage interest rate before rates climb well above current levels… need to take a deep breath, do their homework, and make their decisions based as much or more on reason and analysis than emotion.  Winning should be a matter of making intelligent, strategic choices as much as simply beating other buyers to a home.

 

The above advice should be viewed in the context of reasonable expectations and an acknowledgment of reality in this market.  An otherwise attractive home is likely to go under contract at or above the listing price in this market.  That is just currently a fact of life.  But that does not mean that all caution and wisdom should be cast aside in a mad rush to get something under contract.  Competent buyer representation should involve a comparative market analysis of a home a buyer may be interested in, establishing a ceiling price above which the buyer is advised to walk away from negotiations to avoid overpaying.  Another metric well worth consideration is what it would cost to rent a comparable home, and consideration of the costs and benefits of buying vs. renting in the short term to allow more time to find a deal that makes sense.

 

Another increasingly important facet of an offer in this market is the “due diligence fee.”  A due diligence fee is the non-refundable fee paid directly to the home seller as compensation for taking a home off the market when it goes under contract and the buyer has home inspections performed and mortgage underwriting completed.  The due diligence fee is ultimately credited as an advance payment by the buyer toward the purchase price of the home when the sale closes.  However, if the contract fails to close for any reason, the due diligence fee is retained by the seller.  It has become increasingly common for sellers to require higher due diligence fees as a condition to going under contract.  This can be a risky undertaking on the part of a buyer because it essentially removes much of the leverage a buyer might have had to withdraw from the contract in the event condition issues are found in the home after inspection.  A seller is unlikely to agree to repairs or repair credits when he or she is holding a $10,000 due diligence fee in a hot market because they know they can retain the due diligence fee, promptly place the home back on the market and probably have it under contract with another buyer in short order. Buyers need to carefully consider these issues in consultation with their agent.

 

The bottom line is that, in most cases, it still makes more economic sense to buy a home rather than rent one.  But now more than ever thorough, careful analysis is critical.  A buyer has to have a logical point at which it makes more sense to walk away from negotiations, and a strategy for making his or her offer more attractive, without necessarily relying on outbidding all competition.  In this very tough market for buyers, it is still possible to strike a deal that makes sense in the context of a specific buyer’s particular set of circumstances.  But “winning” needs to be defined in that context, rather than simply getting an attractive home under contract.

 

For more information and for a free search the entire MLS inventory of Charlotte area homes available for sale, visit www.EricDorerRealEstate.com.

 

Exploring Metropolitan Charlotte: Myers Park

 

We continue our exploration of metropolitan Charlotte, NC, with an introduction to the Myers Park neighborhood.  Myers Park is an affluent community just to the south of Charlotte’s city center.  Characterized by large homes with manicured yards, winding streets lined with mature trees, and upscale dining, shopping and entertainment, the neighborhood maintains a tastefully opulent atmosphere. 

 

Uptown Charlotte and all it has to offer, from NFL football to NBA basketball… from the Blumenthal Center for the Performing Arts to an intimate jazz club are just minutes away.  An international art collection is on display at the Mint Museum Randolph a short drive away.  And gourmet grocery stores and trendy upscale dining lines Selwyn Avenue.  Many of Myers Park’s residents work in banking and finance at the numerous national and regional headquarters of institutions such as Bank of America, Truist and Ally Financial. 

 

This rich cultural and economic environment comes at a cost.  Housing in Myers Park can be pricey—from $300,000 or so for a two-bedroom condominium to well into the millions for custom single-family homes.  The average home price in Myers Park is above $750,000, and that price will probably buy a home that might be considered somewhat modest in most other areas of Charlotte.

For more information, and to search FREE the entire Charlotte area MLS for homes, townhouses, condos and more, go to www.EricDorerRealEstate.com.

#CLTRealEstate; #Charlottehomesforsale, #Charlotteinvestmentproperties

 

Charlotte continues to be one of the most rapidly growing cities in the U.S., and Myers Park remains one of the top neighborhoods of choice for those who can afford to live there.  It maintains an eclectic atmosphere of casual opulence that rivals the more exclusive areas of cities like San Francisco and Miami, while retaining its own unique beauty and personality.  

Exploring Metropolitan Charlotte: the “NoDa” Neighborhood in Charlotte

Located about a mile east of Uptown Charlotte, the neighborhood on and around North Davidson Street ("NoDa") and 36^th Street has become a popular and developing arts district.  With the extension of Charlotte’s light rail line allowing commuters easy access to the commerce, employment and entertainment centered in Uptown, NoDa has seen a boom in development and redevelopment of residential and multifamily housing.  It is known by locals for its eclectic mix of contemporary arts, trendy restaurants and increasingly upscale housing.

 

Like so much of this region of North Carolina, NoDa began as a textile mill community.  Historic architecture is typified by small, single-story mill cottage homes and larger two-story Victorian residences.  After the depression, the textile mills never recovered and much of NoDa fell into disrepair, its historic buildings often suffering abandonment.  But by the mid-1980’s, as Charlotte in general began to see enormous growth and development, young artists took advantage of depressed real estate prices to revitalize and beautify much of the old mill town, one building at a time.  By 1995, artist Steve Holt had established Studio 23 and WrightNow galleries as home for exhibitions by renowned artists, and the transformation of the community into a trendy arts district was well under way. 

 

Due it its close proximity to Uptown and its artistic vibe, many of the older mill cottages are disappearing and being replaced by larger upscale custom homes and condominium residences, with prices generally ranging from the low $300,000’s for properties in need of some renovation to the upper $600,000’s.  New construction projects tend to favor mixed use, with retail shops at ground level, and condominium apartments above.  Demographics favor well educated younger professionals, but the community still retains much of its historic and artistic feel.

 

Activities unique to NoDa include popular “gallery crawls” on the first and third Fridays of each month, NoDa outdoor movie nights, NoDa Pumpkin Carving, Charles Avenue Block Party and NoDa All-Arts Market. For those attracted to a distinctly artistic environment, while retaining easy access to Uptown Charlotte and all it has to offer, NoDa provides an interesting and eclectic alternative to other Charlotte neighborhoods.  

For more information, and to search the entire Charlotte area housing market for homes, townhouses, condominiums, and more FREE, visit www.EricDorerRealEstate.com.

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Outlook for the Charlotte Area Real Estate Market in 2022

 

Many Charlotte area residents, and many people contemplating a move to Charlotte, have been wondering what to expect for the metropolitan real estate market going into 2022.  Will it be a good time to buy… a good time to sell?  Will values and prices continue to rise rapidly, as they did in 2021? Is there a “housing bubble” and is it about to burst?  Let’s try to bring some context to these questions and suggest some answers.

 

The median home price in the Charlotte metropolitan area was $310,400 in 2021, an appreciation rate of 18.6% over one year.  There is currently an estimated 0.7 month supply of inventory available for sale, which is a decrease of 56.3% year-over-year in available homes.  That last statistic alone tells an important story—there remain far more motivated, qualified buyers in the Charlotte real estate market than there are sellers providing homes for buyers to purchase.  There is no huge expectation that this will change dramatically in 2022.  A nice statistical summary of Charlotte real estate performance over the last 4 years is presented by FortuneBuilders via this link.

 

With such a shortage of inventory to meet demand, and with an otherwise very strong local economy, it is unlikely this will change dramatically in 2022.  The UNCC Belk College of Business projects another year of economic growth for North Carolina in general in 2022.  The state continues to attract businesses and individuals, and Charlotte remains the state’s largest city.  Employment growth is expected to continue, and this will further drive demand for homes in the face of reduced inventory.

Something that might put the brakes on real estate throughout the country is inflation, which has shown greater strength in 2021 than in almost 40 years.  This will drive the Federal Reserve to raise the prime rate of interest charged banks, and that will cause banks to raise the interest rates they charge on mortgage financing.  But the Fed rarely moves quickly or dramatically, fearing shock to the economy.  So mortgage rates are likely to rise in 2022, but not quickly or in large increments.  With current interest rates still hovering around 3.5% on a 30-year fixed rate mortgage, financing is likely to remain quite affordable through 2022.

 

The bottom line is it looks like 2022 is most probably going to bring a similar real estate market in Greater Charlotte to the market experienced in 2021.  As the national economy stumbles against strong inflation headwinds in 2022, it is difficult to project much beyond 2022.  But sellers will continue to see a strong “sellers’ market” in Charlotte, and buyers who purchase at historically high prices may see their values continue to rise for months, while locking in financing at relatively low interest rates.  It is unlikely there will be any dramatic changes in any of these things in 2022.

 

To learn more, and to search the entire Charlotte metropolitan area MLS for homes, condos, townhouses, land, etc. FREE, go to Eric Dorer Real Estate.

#CLThomes #CLThomesforsale #Charlottehomesforsale