If you are looking for a starter home and are having a hard time finding something in your price range, there’s a reason for that. The beginning of the second quarter of 2017 is seeing a seller’s market – real estate prices are up and interest rates are still relatively low. This means that those with a limited amount to put down on a house cannot afford some of the higher prices, leaving them to continue renting. Let’s dive into why home buying in Charlotte is tough at the moment.
A Vicious Circle
This is problematic for more than those looking for starter homes. Those who are ready to sell their starter homes and move up to a larger home cannot afford the higher prices of homes that are the next step up. Thus, they are staying in their homes, which means less starter homes are on the market.
Furthermore, all of the investors who bought properties at rock bottom prices are continuing to rent, since the rental market is at a high. Rents are high, and people are paying those rents, so the investors do not have motivation to sell their investment properties. This also removes some of the affordable housing off the market.
Why Home Buyers Are Not Necessarily Getting the Better End of the Deal
The average price of a starter home in the Charlotte area is in the $250,000 range. Since prices have gone up, it will take longer to build equity in a property, especially since the current trend must break at some point. In an article written in April 2016 for the Charlotte Observer, Mark Vitner, a senior economist for Wells Fargo, and Mike Ortlip, the senior vice president at Grandbridge Real Estate Capital, and Louis Stephens, the managing director at JLL were predicting that uncertainty and risks could cause the market to fall. Thus far, that hasn’t happened. If the market continues at its current rate, buyers will be able to build equity, but over a longer time.
Increase in Job Opportunities and the Housing Market
The current trend is mixed-use development. This means that apartments and shops are in the same building. This increases job opportunities, but also creates more rentals. Mixed-use developments are not going up in cities – they are taking spaces in suburban areas, and are now being classified as “urban-suburban” areas.
According to Stephens, mixed-use was still new to the Charlotte area in 2016, but developers have learned that millennials and the city wants. The mixed-use developments push housing out even further into rural areas, which means that there is even less housing that is affordable for starter homes or those who want to move from their starter home to something larger.
While these changes in the market make it more difficult for people to buy starter homes and for those in starter homes to upgrade, it’s not impossible. Buying a mid-range starter home gives you a better chance to build equity and have the ability to upgrade in a few years. The better job market also brings new money into the area and may cause salaries to increase since employers may be willing to pay more for quality employees to ensure that new businesses thrive.
It may take longer to find the perfect property for you, but if you work with a real estate agent who knows the market inside and out, such as the agents at On Point Carolinas Realty, you will find the perfect property at a price that is in your price range. Our agents scour the markets for properties that become newly available so that we are able to let you know as soon as a property hits the market, whether it’s our listing or not.