Abberly Green Apartments

117 Abberly Green Boulevard, Mooresville, NC 28117
Call: 844-379-4792 Email View Map

Opens: Monday-Friday: 9A-6P | Saturday: 10A-5P | Sunday: 1P-5P

Apartments Mooresville NC Blog

Home prices in Charlotte Area are Rising Fast - Mooresville, NC

Joseph Coupal - Thursday, June 23, 2016

Home prices in Charlotte and elsewhere are rising at a rapid clip as the housing market continues to recover from the last downturn.

But are prices climbing too fast?

The answer depends on the city. A report out this month says some markets, such as Miami and Washington, D.C., may be experiencing inflated prices like those that preceded the U.S. housing meltdown.

Real estate observers are keeping a close eye on the steady pace of price increases in Charlotte.

Pat Riley, president of Charlotte-based real estate firm Allen Tate Cos., said home prices in some local neighborhoods continue to appreciate more than he expected. He thought appreciation in Charlotte would be around 4 percent this year. But in some highly desirable areas, prices are increasing as much as 8 percent.

Tight supplies of homes for sale are largely to blame.

With a lack of supply, appreciation is going to be greater than anyone anticipated.

Others say Charlotte could get into trouble if the rate of price increases doesn’t taper.

Figures from the Charlotte Regional Realtor Association underscore the accelerating pace of the increases. In January, home prices in Charlotte were up 3 percent from the year before. By April, the year-over-year increase had surged to 8.6 percent. The association said this month that the steady price gains are raising concerns about future affordability.

Appreciation in Charlotte is rising “at a very high clip,” said Hogan Copeland, chairman of Smithfield & Wainwright, a Florida-based real-estate valuation firm.

This month, Copeland’s firm released data showing at least 14 states and the District of Columbia are posting sharp spikes in prices that could indicate overheating. The 14 are in what Copeland calls the firm’s “early warning system” for overvaluation.

“Within three or four quarters, you’re going to have an issue,” he said.

Competition drives prices

Even as home sales nationwide remain sluggish, prices are rising in much of the country as competition for tight supplies of homes heats up.

“It’s getting pricier,” said Robert Shiller, the Yale University economist who created the Case/Shiller Home Price Index.

While nowhere near the boom that preceded the bust in 2008, the price increases seem incongruent, Shiller suggested.

“We do see nationwide an increase in home prices and I don’t know if things are better. This boom has negative color to it,” said Shiller, expressing concern that bidding wars often reflect a lack of available housing in the most-desirable neighborhoods.

The price trend is making housing less affordable for many Americans, who saw wages grow by just 2.6 percent since April 2014. The midpoint price for a home in the U.S. rose by almost 8 percent between March 2014 and March 2015.

In Charlotte, low – and falling – supplies of homes for sale are driving up prices as new residents continue to flock to the region. Just this week, the U.S. Census Bureau said population growth between 2010 and last year made Charlotte the nation’s third-fastest growing city.

A lack of developed land for new-home construction is one factor in the low supplies. Another is too few people putting their homes up for sale.

Where do prices go now?

Historically, home prices nationwide have averaged 3-4 percent growth annually with little risk for owners. In the mid-1990s, home prices began soaring past 13 percent annual growth, before collapsing in 2008.

Smithfield & Wainwright compared home sales price data from the Federal Housing Finance Administration to the cost of renting a home or replacing one in areas across the country. When the sales price exceeds by 10 percent either the cost of renting or replacing a home, the firm argues, it signals a potential price bubble that could burst.

“The banks are exposed and the homeowners are exposed because they both have a false feeling that the house is worth that amount of money. And that’s false equity,” warned Copeland, the company’s chairman. The equity they think they’ve built up in their home may prove ephemeral.

The data should be viewed as an “early warning system,” said Copeland, since it implies that lenders and government-controlled mortgage titans Fannie Mae and Freddie Mac might be at elevated risk for losses if homes are selling for more than they are really worth.

In a healthy market, Copeland said, sales prices of homes are about 1 to 10 percent above what it costs to rent in that market or replace a home.

In Charlotte, a person selling their home here might end up paying much more to build a comparable-sized home. Even so, he said, the rapid pace of home prices increases here bears watching.

For more information on apartments in Mooreseville, NC, near Charlotte contact Abberly Green.


Abberly Green Apartments

117 Abberly Green Boulevard, Mooresville, NC 28117

Call: 844-379-4792
View Map

Opens: Monday-Friday: 9A-6P | Saturday: 10A-5P | Sunday: 1P-5P