There’s been a lot of internet chatter about a national real estate market crash. So I polled 15 Charlotte real estate agents to gauge where Charlotte is headed.
In short, Charlotte’s due for a correction — but no one thinks a crash is on the horizon for the Queen City.
Why it matters: Buyers have been feeling the crunch of a tight market for over a year now. If our local experts are correct, buyers will feel some relief from the sky-high prices, but demand will keep the market from crashing here.
What it means: A correction means we’d start to see lower home prices, but nowhere near low enough to flip the market. Some experts predict a dip in home prices, while some see a slower rate of appreciation in store.
David Hoffman, owner of David Hoffman Realty, predicts home prices will cool 20% in the next year. Meaning if your house sold for $400,000 today, it probably would sell for $320,000 in the future.
- He considers a crash to be a home price fall of 30% or greater, which is likely for other markets in the north where homes have appreciated even more rapidly, he says.
Other experts, like Barry Reeves of The Real Estate Geek, predict home values will continue to increase, but likely at a much slower rate. Reeves tells me home values, are expected to appreciate another 25% from where they are today, but the question is over what period of time?
“Professionally and personally, I’d feel far more comfortable at about five or six years,” Reeves says. “That’s sustainable growth for the long term.”
What could a correction look like?
1. More movement. Once buyers do find a house, that often means they have one to sell which will create a little more healthy movement in the market. Due to the large amount of “desperate buyers out there with so little inventory,” Cottingham Chalk agent Lisa Warren says this might take a while, but once it does, it’s a domino effect.
2. Fewer bidding wars. Jeff Clay, owner of JClay Realty, says when the market does correct, homes might have 2-3 offers instead of 5-20 offers. He’s already starting to see fewer offers, but he doesn’t predict major changes in the short-term, though.
3. Pickier buyers. Bobby Sisk of Nestlewood Realty predicts buyers will start to hold out more, fed up with offering (and losing bids) over asking for homes that don’t even meet all of their needs/wants.
4. Price reductions. Sisk says price reductions could also occur. “But that’s also due to sellers who can sometimes have unrealistic expectations about where to list,” he notes.
The No. 1 prop for Charlotte’s market is demand.
“I am always very bullish on the Charlotte area,” Warren says. People are attracted to this city, and will continue to be as companies expand here, she explains.
Bree Pittman with Keller Williams also says the city’s “abundance of growth” will bolster demand. “I believe it is a sustainable [market], that will if anything correct itself and become more balanced.”
- When you consider all Charlotte offers — job opportunities, professional sports, a growing dining scene, proximity to mountains and beaches — it’s hard to imagine demand will dip in Charlotte, says Brandon Lawn, owner of Brandon Lawn Real Estate.
Experts predict a lot of the demand will come from transplants — and it’s already happening. Sisk says 80% of his buyers over the last two months have been newcomers.
No expert I talked to predicts changes in the market to be anything like 2008.
Historically in challenging economies, Charlotte fared better than other cities, Vicky Mitchener at Dickens Mitchener says. And she thinks Charlotte is even more of a stronghold now, with a more diverse economy and more transplants coming to the city than years past.
Genevieve Williams, owner of Genevieve Williams Real Estate, says the shift we feel in Charlotte is more comparable to what happened in 2018 — not 2008. “The 2021 market conditions are dramatically different than in 2008,” she said, “when there were much higher inventory levels and many loans being doled out were subprime.”
- Rising interest rates could create a temporary slowdown, like we saw in 2018, she says. That slowdown only lasted a few months.
Chip Jetton at Cottingham Chalk says median home prices are still relatively low in Charlotte, especially when you compare it with some other high growth cities like Denver, where the average home price is over $600,000 right now.
And, Jetton says, the inventory crunch we’ve been experiencing might insulate us from a large downfall.
Jeff King of Savvy + Co. predicts Charlotte will rebound relatively quickly if a crash or large correction does occur. “So, if homeowners can weather the storm for 3-5 years, they’ll be fine,” he says.
“While no one has a crystal ball, there is currently nothing that indicates a material change in the current real estate trends of high demand, low inventory, and cheap money,” adds Trent Corbin, founder of the Redbud Group.
The bottom line: What goes up, must come down. But Charlotte’s demand will keep it from falling quite as hard as other cities.