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.
