Charlotte’s real estate market is hot. Can it stay that way?

We just wrapped up an election, and with Covid-19 cases on the rise and a vaccine in the works, there seems to be a general air of uncertainty. How does that play into the housing market? Does it? We asked the experts what the future of Charlotte’s real estate market looks like.

“I’ve never seen more ingredients for intense uncertainty than right now,” says Dan Cottingham, who founded his real estate agency, Cottingham Chalk, almost 40 years ago.

Even so, the Charlotte market has held strong in 2020. Cottingham says elections typically don’t have a huge direct impact on real estate.

“The desire to own a home was not invented by Wall Street or Madison Avenue,” Cottingham says. “It is an American dream.”

David Hoffman, former economist and founder of the David Hoffman Group, says that emotional pull to live out the American dream is really what motivates people to buy. Even during economic downturns like we’re seeing now, or amid election uncertainty.

Quick recap of 2020: Spring is usually the peak for real estate, but due to the pandemic, the peak hit this summer and into early fall.

Inventory and mortgage rates hit historic lows and housing prices were at an all-time high.

Despite the lack of inventory, or maybe because of it, people gobbled up whatever hit the market quickly. Homes flew off the market in 29 days in September 2020, compared to 39 in 2019, for example.

High home prices may sound discouraging, but the lower mortgage rates helped people keep their payments down.

No one can predict with 100 percent certainty where the market will be in the future. But here’s a look at what could reasonably play out in Charlotte’s real estate scene, according to the experts.

Upside: “The market has got some positive runway in front of it because of one thing and one thing only: interest rates,” Cottingham says.

He also thinks confidence plays a huge role in the market. Confidence in the Charlotte market has continued to grow after it recovered from the 2008 financial crisis.

“When you take a drastic drop off in real estate, like we had with the financial crisis, generally your recovery is going to look very similar,” he says.

And we’re still on the way up.

If you look at the number of existing home sales in America, the peak we’ve hit is 7 million in a single year, Cottingham says. In recent years, there’ve been an average of 5.2-5.4 million existing home sales, and right now we’re at 6 million. Cottingham predicts we’ll hit 7 million in the next 12 months.

Timeline: Once we hit 7 million, he says the market could stay hot for about two years. That puts us around 2023 when the market could start to cool.

Trent Corbin, president and CEO of Redbud, also predicts Charlotte will remain hot.

“Money is cheap, demand is high, supply is low, and Charlotte’s population is rapidly growing,” he said. “There is no better formula for price growth in the real estate market.”

Downside: Hoffman predicts things could cool more quickly, though.

“There are already signs it’s not as hot,” he said. “As soon as inventory picks up, everything changes.”

Condos struggling: It’s already happening with condos, which are generally the first indicator of what’s to come (followed by townhouses, then single-family homes), he says. The supply of condos is starting to outpace the demand, so asking prices are dropping and condos are sitting longer.

Broker Lisa Warren has noticed a similar shift; single-family homes are selling in 24 hours, but her condo listings aren’t flying off the market at nearly the same speed.

“We’re about to see supply creep up and demand go down,” Hoffman predicts. “This is a healthy cycle, by the way — it’s what we see every five to 10 years.”

Supply: Hoffman, Cottingham, and Warren all believe Charlotte’s inventory will go up by spring 2021, even if there’s a second wave of coronavirus. People have learned to live with it now, and they’ve found ways to go through the home-buying process safely. Sellers who decided not to put their homes up this year, will likely try once things pick up again after the New Year.

Corbin says none of the metrics he tracks currently lead him to believe there will be a sharp uptick.

Demand: Cottingham says demand will remain relatively high, compared to the last 15 years, as there’s still pent up demand from the crash in 2008. You can see it through an increase in first-time home buyers, he says.

For 10 of the last 15 years, first-time home buyers have made up less than 30 percent of the market, Cottingham says. Now, first-time buyers make up about 38 percent — a sign of a healthy market. And, again, with interest rates as low as they are, he doesn’t see that changing.

Hoffman also sees demand remaining high, at least in the short term. But if inventory rises by spring 2021 like he thinks it will, demand will drop.

“People won’t feel the urgency,” he says. “People want options logically, but they act on emotion which happens when there’s no supply.”

And when Charlotte opens up and there’s a vaccine, people will start spending more time outside of their homes again.

Experts may predict different timelines, but eventually, housing prices could decrease or stay stagnant in Charlotte as inventory goes up and demand goes down.

Volatility in the stock market: We’re already seeing the early stages of this bubbling with the stock market, Hoffman says. Though elections historically haven’t had a direct impact on real estate, volatility in the stock market around an election is normal.

When the market drops, investors’ net worth goes down. When their net worth decreases, they have less confidence to buy and there’s less demand for expensive houses. If there’s no demand for expensive homes, prices have to come down, Hoffman explains.

Prices on single-family homes could dip as early as summer 2021, by Hoffman’s estimates.

However, Cottingham and Corbin don’t see inventory or demand shifting drastically anytime soon, which means home prices will largely remain high through 2021 and possibly beyond.

Mortgage rates: The wild card this year has been mortgage rates. And there’s no way to know for sure what will happen. But, Hoffman says, if they’re hitting a floor now, it’s much more likely they’ll go up in 2021 than continue to go lower.

What does this mean for you?

If you’re a homeowner and plan to sell in the next five years, sell now, Hoffman says. You may not have as much equity as you do right now in a year or two years.

If you plan to buy in the next several months, odds are you’ll be buying at a time when housing prices are at an all-time high. But mortgage rates should still be near historic lows, which will make your monthly payment more affordable.

If you plan to buy in 2021 of after, there’s a possibility of more options at lower asking prices. It’s unlikely rates will be any lower than they are now, however, that’s not to say they’ll spike significantly either.

One aspect of the region’s real estate market that’s booming? Luxury lakefront homes. Read more here.