Months ago, former economist and real estate agent David Hoffman told me we’re going to see the market shift in 2021. It’ll start with condos, then townhouses, then single-family homes, he said.
“It’s all happening behind the scenes now,” he told me.
Why it matters: Lack of affordable inventory is a huge issue in Charlotte. And many potential buyers could certainly benefit from more options, and potentially lower prices.
Hoffman says he’s looking at the ratio of coming soon/active homes compared to pending. Active or coming soon is what’s on the market, or will be within 21 days, and pending is what’s under contract.
By the numbers: Hoffman pulls these numbers frequently to share with his team. These ratios were what he saw as of early February 2021 (compared to late 2020).
- Late last year, there was 1 active condo listing for every 3 pending (a 1:3 ratio). There wasn’t enough supply to meet the demand.
- There are now more active than pending condo listings, a 4:1 ratio. There’s now more supply than demand.
- The number of townhomes and single-family homes coming to market increased, too. The ratio of coming soon/active to pending is 2:2. It was 0:4, Hoffman said.
But how this impact home prices? Demand shifts. When there are more homes on the market, people have room to be pickier and won’t feel the emotional pull to act as quickly as they have the last year.
- In 2020 we saw low inventory and high demand, which drove home prices up. If more homes come to market in 2021 and don’t sell as quickly, that’s a sign demand is down.
- If inventory goes up and demand goes down, prices will come down, too.
- When? Hoffman predicts we’ll see the single-family home market shift by late summer.
Patterns: Hoffman told me this is what he saw happen in the early 2000s, starting around 2006. Eventually supply outpaced demand.
- “It’s like a roller coaster, it doesn’t start coming down until you’re at the very top,” Hoffman said. “The question is are we at the very top? My answer is yes.”