CHARLOTTE, NC (WBTV) - Record-low interest rates have brought more buyers into the housing market nationwide including in the Charlotte region.
However, the number of homes for sale nationwide is also at record lows. The lack of supply versus the current demand is real in Charlotte and the surrounding communities where homes are selling in less than 24 hours.
One local couple searching for a home in Shelby knows this all too well.
“We started out with rose-tinted glasses and thought ‘Well, we have time,’” said Alexander Tiren.
With a March 2021 wedding date set, Tiren and his fiancé, Alexia Schaeffer, thought starting their search for their first home back in October was plenty of time.
“In December we were like, ‘I think this checks all of our boxes, let’s make the offer,’” added Tiren.
But the pair says even their over-asking-price offer on that home wasn’t enough against a cash bid.
“That was kind of a little bit of a wake up and we started making offers pretty quickly after that,” said Tiren. “I think it was five offers within about 5 weeks or a month and a half and all of them we were outcompeted on.”
It’s a story David Kennedy, the President of Canopy Realtor Association in Charlotte, is familiar with. One contributing factor? Kennedy says more people are moving to Charlotte from more expensive housing markets and do not mind paying top dollar for homes. That is driving up prices.
“You couple that with an inventory issue and you have people who are wanting to buy and they’re just not able to get the amount of inventory they need and you get into multiple bids,” said Kennedy. “It’s a tough road.”
Kennedy also says you can trace the inventory issue back to the 2007-2009 recession when medium-size home builders went out of business because they couldn’t stay afloat.
“We have an inventory gap for every year, over the better part of a decade,” said Kennedy. “So, the amount of new households being formed is more than the amount of homes being built, and that’s been going on for over a decade. So, that’s the biggest issue, and it just gets exacerbated by new buyers coming into the market like we see now.”
When Canopy MLS issued its February report, only 3,370 homes were for sale across the Charlotte region’s sixteens counties. That is a nearly 60 percent decrease in inventory compared to January 2020. In the same report, the median and average sales prices on homes have increased by more than 30 and 40 thousand dollars respectively year-over-year.
“Keep in mind the activity we’re seeing on the MLS is roughly based on those buyers and sellers who have not been as impacted by the pandemic as some other people,” added Kennedy.
Kennedy says the numbers do not reflect the number of people who want to buy a home but can’t because of the lack of affordable housing. It is a problem that could get worse with rising home prices.
But what about those record low interest rates? Is it worth paying top dollar for homes now so you don’t miss out? Financial Expert Chris Hogan with Ramsey Solutions says do not let the craziness of this market cause a bad financial decision.
“If you’re feeling stressed out because you’re watching home prices go up and you’re starting to get panic this is the emotional thing,” said Hogan. “I’m telling you and this is a red flag!”
Hogan says he thinks the current interest rates are going to hang around for a while and does not think they will skyrocket anytime soon. “But here’s the deal,” added Hogan, “I’m never going to allow a rate to dictate when I buy. It is going to be a matter of my financial position. Am I prepared? Am I ready to buy a home, and be on a plan to own it.”
Hogan offered up advice on how to make sure you are ready to buy a home. He encourages potential buyers to be out of debt and have set up an emergency fund before they purchase a home. Hogan also says your mortgage payment should not be more than 25% of your take home pay. If you’re looking for more help, Hogan says you use a mortgage calculator can learn more through the Ramsey Solution Home Buyers’ Guide.
In the meantime, Alexia and Alexander say they have decided to rent for now given the state of thing, but Alexander says he still plans to carry Alexia over the threshold of their apartment after their wedding next month. They hope to find their first home at some point, and they are most looking forward to having their own yard for their rescue dog Zucker.